This lender halved clients, doubled assets under management

Bloomberg

Less is sometimes more. The private banking arm of Germany’s cooperative lenders, a group of around 900 local banks with total assets of 891 billion euros ($1 trillion), has almost halved the number of customers while also nearly doubling assets under management within a few years. DZ Privatbank now takes care of more than 18 billion euros for the first time ever, CEO Stefan Schwab told Bloomberg in an interview.
“We had 650 million euros in net inflows this year,” he said. The lender currently counts around 30,000 customers, compared with 50,000 clients and 10 billion euros in assets under management at the beginning of 2011. “We shifted our focus to larger mandates, which make asset management more efficient.”
On average, assets under management per client trebled from 200,000 euros to 600,000 euros over the past eight years. And it could climb even further, as the bank seeks to hit 20 billion euro in assets under management within two years.
“Our inflows in new business have risen sharply,”according to Schwab, who had previously worked at BHF Bank and Dresdner Bank. “When a customer came to us in 2011, he used to invest 200,000 euros or 300,000 euros. Today, it’s 1.6 million euros on average.” Most of the money comes from wealthy business owners, he added.
Schwab sees the opening of branches and offices throughout Germany as positive for DZ Privatbank. “Until 2011, we only had two central locations in Luxembourg and Zurich. Without a broad geographic expansion, we would certainly have lost significance and funds in Germany,” he said. Today, the lender operates a total of eight branches, including in Frankfurt, Hamburg, Dusseldorf, Stuttgart and Munich. “Private banking has been and will remain a people business.”
The company gets the majority of its customers through the local cooperative banks. They approach wealthy clients and arrange contacts to the group’s private bank. “The local cooperative banks receive up to 50 percent of the revenues from asset management, with the exact amount depending on how much they engage.”
Germany’s savings banks, the other big group of lenders in that country, also has its own private banking arm called Frankfurter Bankgesellschaft, a subsidiary of Landesbank Hessen-Thüringen Girozentrale (Helaba). Recently, the company opened a new branch in Dusseldorf. Assets managed for clients currently stand at more than 10 billion Swiss francs, with the target being about 12 billion francs by the end of 2019, a spokeswoman said.