Before being listed in the market, Deutsche Bank AG’s DB asset management wing is undergoing a transformation. Recently, the bank announced that Deutsche Asset Management (Deutsche AM) will be rebranded as DWS by first-quarter 2018. The rebranded arm will be given a new logo, expressing its forward thinking.
In April 2017, CEO John Cryan revealed plans to save the bank from being shut down. One of the plans was to sale of minority stake in Deutsche AM through an IPO. This is likely to happen in 2018. Cryan expects to raise about €2 billion, enabling the bank to cope with the legal costs.
Control to Remain With Management
Deutsche Bank plans to bring all its asset management units under one global name. DWS will be given the structure of partnership limited by shares or KGaA. Per the German law, investors and employees’ representatives have less hold in the decision-making process in KGaA compared to a company listed normally or AG.
Thus, Deutsche Bank will continue to retain control over its operations even after the asset management unit is listed in the share market.
Nicolas Moreau, CEO of Deutsche AM said, “We want to unlock the full potential of Deutsche AM to facilitate growth. Our future legal structure demonstrates the long-term commitment of Deutsche Bank to our business while giving us the operational autonomy to advance our growth strategy.”
Deutsche Bank’s chief administrative officer Karl von Rohr will become the chairman of the Supervisory Board of the new brand.
Targets Under the Rebranded Arm
On Capital Markets Day in London, Moreau disclosed the key goals under this global brand.
Firstly, the bank promises to grow assets under management by 3-5% in the medium term, against 5.5% fall last year. Secondly, an incentive model will be created to attract fresh talent and retain key employees. Proceeds from the capital raise are likely to be utilized toward this compensation plan.
Lastly, the bank expects to continue enhancing shareholder value through consistent growth in revenues and prudent costs savings.
Our Viewpoint
We believe this rebranding might give the asset management unit a fresh look and attract investors’ attention ahead of the planned capital raise, making Cryan’s expectation of raising a high amount possible.
Also, this would cross another milestone in the CEO’s turnaround list of satisfying shareholders.
Shares of Deutsche Bank have gained 7.5% over the past six months, underperforming the 8.4% growth for the industry it belongs to.
Currently, the stock carries a Zacks Rank #3 (Hold).
Key Picks
Some foreign banks worth considering are Bank of N.T. Butterfield & Son Limited NTB, Credicorp Ltd BAP and ING Group ING. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bank of N.T. Butterfield & Son’s Zacks Consensus Estimate for current-year earnings has been revised 2.2% upward in the last 60 days. The company’s share price has risen almost 20.6% year to date.
Credicorp’s current-year earnings estimates have been revised slightly upward over the last 60 days. Also, its shares have gained 31.4% so far this year.
ING Group’s Zacks Consensus Estimate for current-year earnings has moved 1.3% up over the last 60 days. Its share price has rallied 26.8% year to date.
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