Germany's flagship bank recently announced its intention to focus more on private banking and wealth management, yet it just finalized a deal that will sell BHF Bank: a subsidiary that specializes in private banking and wealth management. It's unlike Germans to be indecisive. Was gibt?
It's all about the euros
BHF was acquired in 2009 as part of the larger acquisition of Sal Oppenheim, a big private bank. Deutsche has been trying to offload BHF for a while now, but past efforts were scotched by Germany's financial-markets regulator, BaFin.
If approved by regulators, the deal is worth $498 million for Deutsche. And there's the rub: It's all about the Benjamins, or in this case, the euros. By selling BHF, Deutsche can inject some much-needed capital into its balance sheet, helping it meet the new Basel III reserve requirements, all while removing the profit-and-loss roller coaster that can come with owning a subsidiary.
Everybody's doing it
Private banking and wealth management is all the rage right now. Morgan Stanley's
As post-financial crash regulation builds in countries all over the world, banks are looking for revenue streams and banking models that are safer and less likely to blow up in their faces than, say, derivatives trading, or other similar feats of investment-banking derring-do.
Cleaning up and strengthening balance sheets while internally building out private banking and wealth management services is a good start. But Deutsche had better hurry: It's not the only bank out there in mad pursuit of the world's wealthy. To learn more about the most-talked-about bank out there, check out our in-depth company report on Bank of America. The report details Bank of America’s prospects, including three reasons to buy and three reasons to sell. Just click here to get access.
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Fool contributor John Grgurich has a German Shepherd, who is never indecisive, but owns no shares of any of the companies mentioned in this column. Follow John's dispatches from the bleeding edge of capitalism on Twitter @TMFGrgurich.
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