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Deutsche Bank bets on Saudi fee bonanza – Business Day (registration)

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“We have a clear growth agenda for EMEA [Europe, the Middle East and Africa] and the Middle East is our number one priority,” Hinder said.

“There will be more capital flowing into the region as Saudi Arabia is opening up,” he said.

The wealth-management unit’s invested assets plunged 26% in the fourth quarter to €216bn as clients withdrew funds and investors questioned the bank’s ability to withstand billions of dollars in fines.

Net asset flow at the unit turned positive in the first quarter and the bank has said it plans to hire about 100 private bankers over the next 18 months across Asia, Europe and the US. The 20 private bankers Hinder mentioned are part of that 100.

Deutsche Bank did not have “much choice” but to invest in the business, said Piers Brown, an analyst at Macquarie Bank, which has an outperform rating on the stock.

Strategy revamp

“I don’t think wealth management is a main priority at the moment for Deutsche, but it’s reasonable to put some additional resources into that business to increase revenues and improve cost to income ratios.”

While Deutsche Bank’s strategy revamp emphasised corporate banking, the lender is following rivals in seeking to reap the rewards from steadier wealth management, which can also be used to offer investment-banking services to the rich. The bank employs about 12 private bankers in Saudi Arabia, Hinder said, and 80 in total.

Deutsche Bank, which also offers investment banking in Saudi Arabia, is among global banks going into the kingdom in preparation for an expected fee bonanza and wealth creation. The kingdom is becoming more attractive to foreign lenders as it overhauls its economy and plans to list Saudi Arabian Oil in what could be the largest initial public offering.

Only a handful of international banks, such as JPMorgan Chase, Deutsche Bank and BNP Paribas, have licences to open branches in the kingdom. HSBC Holdings, Royal Bank of Scotland Group and Credit Agricole operate in the country through minority stakes in local lenders.

Credit Suisse Group, which has been prioritising wealth management over investment banking, have also sought a licence in the kingdom, its head of international wealth management Iqbal Khan has said.

“You’re hearing from many competitors how they are trying to get a foothold in the region and Saudi Arabia,” said Hinder.

“We have finalised the revamp of our platform last year and will now massively expand our product offering throughout the next year and hire relationship managers in the kingdom,” he said.