(UPDATE2) Deutsche Bank US Wealth Disarray Deepens
Private bankers and high-net-worth brokers at Deutsche Bank’s U.S. operations are learning new lessons daily about the darker side of working with very wealthy clients under the awning of a global financial giant. For example, how do you explain to them that your parent bank is in turmoil, your bosses have lost management’s confidence and you are looking for a new home?
Following our scoop on Friday about Chip Packard’s impending departure as head of Deutsche Bank Private Wealth Management division in the Americas, we have learned that his boss, Jerry W. Miller, is on his way out. Also leaving is Simon Mendelson, head of product management and development.
Miller did not return a call to his office but a person answering his phone said he and Mendelson were on conference calls on Tuesday morning. A reliable source at Deutsche Bank, which as of January separated its wealth management from its asset management businesses, confirmed the impending departures. Miller had run the combined group for the Americas from New York.
“Given the recent restructuring and separation of asset and wealth management, Jerry Miller notified me of his intention to step down from his role,” Quintin Price, the German bank’s global head of asset management, wrote in a memo to employees on February 4. “To provide continuity, Jerry has agreed to transition the business over the next several months and will continue to lead Deutsche Asset Management in the Americas until then.”
A bank spokeswoman characterized Miller’s move as a resignation.
Over the past weekend, a reader gave us a slightly different view of the personnel changes beyond Miller’s move:
“With him, Simon Mendelson has also ‘resigned.’ The entire AWM [asset and wealth management] team has now been either fired or broken apart. Asset Management will be put back up for sale…. Consulting firms have been hired to do this with the [DB] Investment Bank helping. This is similar to the brokerage group being sold to Raymond James.”
That’s a lot to absorb, but here is what we know.
Miller, a former Morgan Stanley division head, was hired in May 2013 to spur growth in the bank’s U.S. brokerage business, formerly known as Alex. Brown, in its traditional private banking businesses and in sales of its funds and institutional asset management products. later, by way of BlackRock and McKinsey, to develop and run distribution of funds and other “products and solutions” across the brokerage and private banking groups.
Alas, things fell apart in the management structure of the parent bank, and the recent crisis in European banking markets has hastened strategy and management changes under new Deutsche Bank AG head John Cryan. The new boss, who will become sole CEO in May, separated wealth management from institutional asset management, as is common in most organizations. He also ousted Michele Faissola, Miller’s former boss, who was head of asset and wealth management until January 1, 2016.
As we know, U.S. brokerage head Haig Ariyan is now trying to corral the approximately 170 brokers who worked for him in Wealth Management Americas into a new business that is being purchased by Raymond James Financial and will be christened the Florida company’s Alex Brown division. But Ariyan, who did not return calls for comment, was this month also given temporary oversight of his former colleague Chip Packard’s private banking unit until a new head can be found, a Deutsche spokeswoman told us last week.
The bigger news for the financial world, as our reader above noted, is that Deutsche Bank might again try to sell its massive (about $836 billion) global asset management division. , with objections coming strongly from the now decapitated Faissola, our source said.
In recent comments, however, Cryan gave asset management a vote of confidence. “[W]ithout it, certainly now, the quality of our earnings would not be as high as they are and we want them to be higher,” he said after Germany’s biggest bank reported a net loss of 6.8 billion euros in 2015. “Everyone is delighted with the performance of the asset management business last year. It’s doing extremely well at the moment.”
Cryan, a British banker, also has touted the Americas as one of Deutsche Bank’s “key asset management growth markets.”
Bank officials said they expect to name new heads of private banking and asset management in the U.S. to replace Packard and Miller over the next two to three quarters, and are pushing hard to complete the Raymond James deal.
As we said, if you’re a DB banker or broker, there’s a lot for you and your clients to absorb. Just ask your former U.S. colleagues at Credit Suisse and Barclays Bank.