Comment: The rich retain their faith in Deutsche – for the time being
Deutsche Bank might have revealed a loss of €141m and write-downs of €2.7m today, but the rich keep on placing their money with Germany’s largest bank.
The bank said €4bn of net new money was deposited at its private wealth management unit in the first quarter. That might not be a lot compared with the rumoured $4bn deposited at JP Morgan Private Bank in just one week in March, but it shows the wealthy still trust the bank enough to place their cash with Deutsche.
The figure is also just marginally down on the amount of new money entering the bank’s main wealth unit’s coffers in the fourth quarter of 2007, when the credit crunch was only beginning to bite.
But of some worry for Deutsche is the fall in revenues at its PWM unit, which dropped 4% year-on-year to €4m – this compares with a 22% rise in revenues in the same quarter a year ago.
Deutsche said the decline was due to the impact of deteriorating market conditions on asset-based fees and the stronger Euro.
Looking ahead for the rest of the year, the bank’s wealth unit will be happy that the German economy is slowing down less rapidly than the other big industrialised economies and has a consensus forecast of expanding by 1.7% in 2008.
Nevertheless, Deutsche’s local relationship managers must be a bit concerned about the increasing number of wealthy Germans departing for countries with less tough tax regimes.
Recently, the country’s 10th wealthiest man, Reinhold Wurth, threatened to leave the country to protect his family’s capital from tax – and many other wealthy citizens are also saying they might leave.
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