“When Deutsche Bank bought Bankers Trust in 1999, it was time to think about new opportunities for the asset management business,” he says. “In Asia, we are a strong top-tier player in the institutional market. We had almost every major institutional account in Hong Kong and Singapore, so we needed to ask ourselves where to go next. If we go into a market with a local partner, you run the risk of having lots of assets but no control, and if you go into a market alone, you have all the control but you may have very few assets. We had to work out how to go into these new markets.”
His firm’s strategy has been to emphasize its links with parent Deutsche Bank. “It is the fashion for fund houses to appear completely independent, but we see our opportunity as being part of Deutsche Bank,” Hanbury explains. “Products today are more complex. We can tap the bank’s balance sheet and offer a broader range of structured products. And we can make relationships work at 10 different levels, not just one.”
The first foray in Asia follows this logic. In March 2000, Deutsche Asset Management took a 20% stake in Taiwan’s China Trust Group securities investment trust enterprise (SITE) business, along with China Securities. The three-way partnership’s SITE is new. Hanbury expects its first products to roll out in the next few weeks.
The partnership should help Deutsche sell offshore products through China Trust and China Securities, and help them with international product as the SITE matures. Furthermore, China Trust is owned by the Koos Group, and Hanbury says this relationship is one piece of a broader relationship between Deutsche Bank and the Koos.
Hanbury says Korea offers the greatest opportunities in the next three years or so because it is almost virgin territory for foreign fund managers. Moreover, local rivals have sustained a bad reputation during the financial crisis. “There is a real clamour for foreign partners,” he says. He hopes to be able to announce a deal in Korea within six months, a relationship that would give Deutsche more control than in Taiwan and also give it a crack at the retail market.
In China, the firm has recently announced a partnership with Beijing-based Dacheng Fund Management, after a year or so of discussions with all the fund managers. Hanbury says a deal with a Chinese fund manager makes more sense than with a securities house. “Fund managers there are ahead of the game,” he says. “They have an investment capability in closed-end funds and are quickly developing one for open-ended funds.” He notes that China is generally tackling pension reform with considerably more zeal than other Asian countries, and he believes Deutsche Asset Management can offer Dacheng considerable value over the next decade in running defined contribution schemes.
Hanbury also mentions that Deutsche Asset Management is looking for a presence in India, where pensions law is likely to be deregulated and where there is a well-established investment culture. In addition, Deutsche Bank has a strong presence there. But he was unable to divulge details.
