Woori Bank and Deutsche Asset Management have signed a cooperation agreement to jointly develop their respective investment management businesses. According to Deutsche, this deal will go beyond the usual Korea distribution link up.
Choy Peng-hua, Asia CEO at DeAM, says, "This strategic alliance focuses on the sale of investment products. The ultimate goal for both parties is to increase the wealth management capabilities of Woori Bank by tapping into the global experience of DeAM."
He notes DeAM, which has $800 billion of assets under management globally, has achieved a similar success in Germany, where it achieved over 25% of market share in the mutual funds business despite having a retail banking market share of less than 10%. "In contrast," Choy says, "Korean banks today only have about 15% market share of the investment trusts business," with securities firms dominating distribution.
"We believe over time this is going to change. Woori Bank, with about 700 branches across the country, will be able to benefit from this, given its objective to expand fee income business."
DeAM owns 100% of Deutsche Investment Trust Management Company in Korea, which was established in June this year to market and manage onshore funds. Since then DeAM has signed a distribution agreement with LG Securities, and will be looking to launch new products with other distributors, says Choy. "We envisage developing a small number of close mutually beneficial relationships with the major distributors in Korea including security houses and banks," he notes.
This number will remain concise. Choy notes the new Asset Management Act expected by next year will increase foreign competition among ITMCs and Asset Management Companies. "Thus," he says, "we want to focus on working closely with a limited number of targeted distributors in order to maximize our sales. A focused approach will give us higher priority in distributing our products through these channels."
But the firm is not in discussions with anyone else to establish an alliance along the lines of its agreement with Woori. The two partners will look to introduce new products for both Korean retail and institutional investors, and provide Woori bank customers access to DeAM offshore products.
Earlier this year, Deutsche signed a deal with Singapore's Keppel Insurance to also design and introduce investment products together. In that deal, DeAM also was named the sole investment advisor for Keppel's insurance assets, including S$400 million in investment-linked policies.