Deutsche Bank failed to push through the sale of RREEF, its global alternative asset management business, to US-based asset manager Guggenheim Partners, because its asking price was likely too high in the current climate, according to those who track the market.
Deutsche Bank failed to push through the sale of RREEF, its global alternative asset management business, to US-based asset manager Guggenheim Partners, because its asking price was likely too high in the current climate, according to those who track the market.
The collapsed sale of RREEF, which has around EUR 47 bn of assets under management, is the latest in a string of businesses that Deutsche Bank has tried but failed to sell to Guggenheim Partners. The German lender has also tried unsuccessfully to sell DWS Americas, the Americas mutual fund business; DB Advisors, the global institutional asset management business; and Deutsche Insurance Asset Management, the global insurance asset management business, which together comprise Deutsche Bank’s US asset management division.
Analysts estimate that the combined US operations up for sale could sell for between EUR 1.5 bn and EUR 2.2 bn. Deutsche Bank could not be reached for comment. Guggenheim Partners declined to comment.
Deutsche Bank’s next best bet may be to sell RREEF to another US investor looking to increase its exposure to the German market, Thomas Beyerle, head of research at IVG Immobilien, told PropertyEU.
Germany’s biggest lender announced in November that it would put RREEF up for sale, prompted by new regulation and rising costs. It had been in exclusive talks with Guggenheim Partners since February. The sales have reportedly been prompted by Deutsche Bank’s capital shortfall, forcing the lender to put some business divisions up for sale in order to boost its capital ratio.
The European Banking Authority warned Deutsche Bank in December about its EUR 3.2 bn capital shortfall in order to meet the target of 9% core tier 1 capital ratio. Deutsche Bank is expected to give further details regarding the future of its asset management business in September.
German banks are having a tough time navigating the ongoing sovereign debt crisis in Europe. Last month, Moody’s downgraded the ratings of seven German lenders, including Deutsche Bank, Commerzbank and Landesbank Baden-Württemberg, citing the ongoing debt crisis, which could lead to new losses that banks might struggle to cover. Last week, Commerzbank announced that its real estate lending subsidiary Eurohypo is pulling out of the market altogther.
