DB (US) reported its first loss in four years, and will suspend share buybacks and advance wealth management business.
Deutsche Bank (DB.US) reported its first quarterly loss in four years, as it slowed trading and was weighed down by litigation provisions. To improve its performance, the bank plans to hire more US private bankers to drive business growth. It will also pause share buybacks.
Arjun Nagarkatti, Deutsche Bank’s head of wealth management in the US, plans to add as many as 12 private bankers this year and will focus more on deepening in San Francisco and Los Angeles. The team has already poached wealth advisers from rivals such as Citigroup and Bank of America since the start of the year.
Mr Nagarkatti said the company’s goal was to achieve double-digit income growth over the next few years.
This is an ambitious plan. Deutsche Bank has been focused on expanding its wealth management business since it began its turnaround plan in 2019, but its wealth and private banking revenues stagnated in the first quarter and fell in the second.
Deutsche Bank manages $441bn of assets for wealthy clients, the largest in the industry, which manages more than $1trn, compared with Deutsche’s relatively small presence. Rivals such as Goldman Sachs, HSBC and JPMorgan are all seeking to balance the volatility of their investment banking business with the costs of managing the money of the rich.
The US is one of several regions Deutsche Bank is focusing on for growth in wealth management. Its private banking business head, Claudio de Sanctis, outlined the bank’s plans last year to double the assets it manages for wealthy families in Southeast Asia and the Middle East, and hired a team of Swiss private bankers in September to expand.
Nagarkatti declined to reveal how much of Deutsche’s wealth management assets came from the regions he oversees, but said the business that serves ultra-rich Americans helped the division add about twice as much net assets in the first quarter.
The bank’s first quarterly loss in four years, Deutsche Bank’s chief financial officer James von Moltke said it would not seek a second share buyback this year, “given the prudent approach we are taking this year, we will not be seeking a second buyback authorisation.”
He said that a positive outcome at the postal bank trial, due next month, would “definitely change our positioning.”
Von Moltke said Deutsche Bank still had the ability to significantly exceed its €8bn capital allocation plan over the medium term, despite the setback.