Deutsche Reshuffles DeAM Management

December 6, 2004 ( - Deutsche Bank AG, Germany's biggest bank, is shaking up the management of its US fund unit that saw an asset outflow of $31 billion since the beginning of 2004.

The reorganization of Deutsche Asset Management (DeAM) will split the company into three divisions to cater to institutions, mutual fund customers and clients who buy hedge funds and other alternative investments, said Kevin Parker, global head of fund management, at a Frankfurt press conference, according to a Bloomberg report.

In addition to his role as chief executive, Parker will head the institutional division, the company said today. Axel Benkner, chairman of the DWS business in Germany, will co-head the mutual funds division with William Shiebler. Benkner will be head of Europe outside the UK and Shiebler will be in charge of the Americas. Paul Berriman will remain as head of UK operations.

Peng Wah Choy will head the business in Asia outside Japan and Australia. The alternative investments division will be run by product heads rather than a single person, the company said

DeAM has been struggling to stem the tide of client defections because of sub-par investment performance, according to Bloomberg. The overhaul involves the departures of Paul Manduca, who led the unit’s European business, James Goulding, who oversaw Asia , and Josh Weinreich, global head of absolute-return strategies, according to the report. DeAM has total assets of about $700 billion

American customers pulled a net $4.8 billion from Deutsche Bank’s Scudder stock and bond mutual funds during the first 10 months of this year, according to data compiled by Financial Research Corp., following a combined $7 billion of net outflows in the previous two years.

“There has been a regulatory cloud hanging over the entire industry,” Parker said at the press conference. “Those businesses will be on hold until a lot of the issues have been resolved.”

US mutual fund companies have had to pay penalties totaling $2.9 billion over the past year for allowing market timing and late trading in their funds as a result of still ongoing federal/state investigation. Scudder hasn’t been implicated in the scandal, spokeswoman Esther Nass-Setzmann told Bloomberg.

.“We plan on stopping those outflows,” said Parker, 45, who was global head of equities at Deutsche Bank’s securities unit before being named head of Deutsche Asset Management in September. “It’s very important to get your strategy right rather than making decisions just to make decisions expeditiously.”

Parker said he’s concerned about the firm’s UK business. The Railways Pension Scheme and the retirement fund of Prudential Plc, Britain’s second-largest insurer, are among the customers who have withdrawn funds from Deutsche Bank this year.