Deutsche Bank’s recent move to merge its asset- and wealth-management arms has led to some of its fund executives in Hong Kong being regulated by the city’s banking regulator rather than the securities watchdog.
The staff in question are Marco Montanari, Asia-Pacific head of passive asset management at the newly integrated Deutsche Asset & Wealth Management (DAWM) division; Anson Chow, associate for passive investments at DAWM; Liza Ding, Asia director of marketing; and Sophia Kim and Charles Wong, both Hong Kong-based executives.
The switch from Securities and Futures Commission to Hong Kong Monetary Authority licences took place at the end of January. It has no material effect on their activities; they remain free to conduct the same business as before, but are now part of Deutsche Bank rather than Deutsche Securities Asia.
Deutsche declined to comment on whether any other individuals within the DAWM unit were undergoing licence changes.
As part of the DAWM integration, the bank will largely dispose of the brands grouped under the new division, including retail business DWS, exchange-traded funds unit db X-trackers, institutional arm DB Advisors, DB Private Equity, Deutsche Insurance Asset Management and alternatives division RREEF. The bank brought the brands under one business in September during a restructuring process.
However, the db X-trackers brand will not disappear completely; it may not be used for the entire business in future, but will be retained for individual ETF products, says a spokesman.
DAWM combines the bank’s active, alternative and passive AM activities, as well as its retail and institutional distribution functions. “Combining the asset class-based portfolio management teams will allow us to fully harness their collective strengths,” says Montanari.
For example, the firm’s retail capabilities will help to fill gaps in the institutional equity space, he adds, and institutional cash, fixed income and multi-asset capabilities will be leveraged on the retail side.
“Our passive and hedge platforms, formerly part of the corporate bank and securities division, complement an already solid menu of passive and alternatives products,” notes Montanari.
Ravi Raju, previously Asia-Pacific CEO of Deutsche Private Wealth Management, is now head of DAWM for Asia-Pacific, based in Singapore. The brand overhaul is being overseen by the division’s new global head of marketing, Alexander Maresch, who moved over from DWS in November.
The integration of AM with WM activities follows similar moves by other banks recently, such as Credit Suisse.
Still, the passive AM division is committed to building up in the region. For example, Montanari says it hopes to list a new ETF in Hong Kong within the first half of 2013, and is in discussions with authorities to that end.
Meanwhile, the firm is progressing with plans to put together a range of physically backed ETFs to complement its existing synthetic, swaps-based products.
“We already have a few products in Europe and we plan to expand that range in the next month,” says Montanari. “Once it’s bigger and more consolidated, we will then consider bringing these products to Asia, initially by selling under private-placement rules, then potentially cross-listing, pending discussions with the authorities.”
As for which physically replicated ETFs would be sold in Asia, he says the first few the firm has created are linked to developed markets but that Asian investors tend to buy their home markets. Hence db X-trackers will probably need to put together more funds with local Asian underlyings.
But that will raise the issue of the lesser liquidity in many markets in the region as compared with those in, say, the US. Lower liquidity means it's harder to create and redeem ETF units.