Deutsche Bank mulls separation of RREEF property arm

Deutsche Bank is considering the spin-off of its RREEF alternative fund management arm in light of new regulation, associated costs and growing competition expected to impact on the business' growth prospects.

In a statement this week, the German investment bank said it is conducting a strategic review of its global asset management division in an attempt to deal with changing market conditions. 'All strategic options are being considered,' it said.

The review covers the entire asset management division with the exception of the DWS franchise in Germany, Europe and Asia, which the bank has already determined is a core part of its retail offering.

'The outcome of this review will be driven first and foremost by our fiduciary duty to, and the interests of, our clients,' said Kevin Parker, global head of asset management and a member of the Deutsche Bank group executive committee. 'Our aim is to find the best strategic option to maximize the performance and potential of the asset management division.'

While the bank remains committed to asset management, this review is part of its effort to maintain an 'optimal business mix and be among the market leaders', it added.

RREEF manages about 600 employees worldwide and has assets under management of around EUR 45 bn.

Europe's largest lenders are being forced to accelerate sales of non-core assets to raise capital and meet more stringent capital requirements under new Basel III regulations. Last week the property financing industry lost two major lenders after Société Générale Corporate & Investment Banking and Commerzbank's Eurohypo suspended new UK and continental European property lending.

The move is in response to new demands by the European Banking Authority which stipulate that European banks must increase their Tier 1 capital to 9% by June - or collectively find more than EUR 100 bn in extra capital.