Moreau exit shows tough road ahead for European banks’ asset management hopes


Dominic O’Neill
Published on:

The sacking of DWS’s chief executive barely six months after its IPO shows that asset management might not be the great hope for a firm like Deutsche Bank.

Nicolas Moreau’s summary replacement as the head of Deutsche Bank’s asset management arm today is just the latest sign of pressures facing Europe’s asset managers, especially those with global ambitions.

European banks are increasingly turning to asset management to shore up their returns, as the business requires less capital than more traditional banking activities. Deutsche Bank is a case in point, with asset management core to Christian Sewing’s plan to reduce the firm’s reliance on more volatile investment banking and markets revenues, the latter being businesses where it is even harder for Europeans to compete.

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Nicolas Moreau

DWS’s IPO this March should have drawn useful attention to this valuable part of Deutsche’s franchise. It is one of the few areas in which the bank has a commanding market share in Germany, about 25%. 

However, poor performing funds in Germany contributed to outflows in the second quarter, further weighing on a share price that has steadily declined since the IPO. At the same time, Deutsche’s market share and image is much less robust in the US than Germany.

Outflows of €2.7 billion in the third quarter – mainly due to the US business – ultimately spelled the end for Moreau, following outflows of €4.9 billion in the second quarter. Flows in the third quarter were even flat in passive funds, which has provided much of inflows recently at firms like DWS and close peer UBS Asset Management, although they are lower-margin businesses.

When Moreau spoke to Euromoney earlier this summer he was at pains to boast the benefits of the firm’s newfound distance from Deutsche after a rebranding to DWS late last year, and then the IPO. “The brand was intended to make sure that we were perceived as an asset manager in our own right, and not just as a department of Deutsche Bank,” Moreau said. “Even when the bank was facing some challenges we were still on-boarding business.”

Moreau’s replacement, Asoka Woehrmann, now faces an even greater challenge in demonstrating to the market that DWS is the right vehicle to act as a consolidator in the European asset management industry: a large part of the point of its IPO.

“It will take us time,” Moreau admitted to Euromoney about his challenge of gaining credibility with the market to raise more capital to engage in acquisitions in the future. Garnering the prestige to compete for buy-outs with more efficient firms like Credit Agricole’s Amundi – which has successfully grown via acquisitions since its 2015 IPO – will now require even more time.

For Moreau, a Frenchman who previously worked at AXA, the distance from Deutsche may not have been great enough. But perhaps Woehrmann will try harder to work more closely with the bank’s private and corporate clients: arguably the core competitive advantage, even of relatively large bank-owned asset managers like DWS.