GERMANY/US - Northern Trust (Northern) has bought Deutsche Bank's passive asset management business for US$260m, propelling it into the top three index managers in the US.
Deutsche has finally hived off its global passive equity, enhanced equity and passive fixed income businesses as part of a strategic overhaul first announced in May.
”After an in-depth strategic review, based on Deutsche Asset Management’s (DeAM) size and global presence, we have made the decision to concentrate our efforts on active management,” said Tom Hughes, member of the group executive committee and global head of asset management at Deutsche Bank.
“This will enable us to provide more focused products and services to our clients.”
The passive business represents around US$120bn of total assets under management, or less than 2% of DeAM’s revenues.
”Our global investment and distribution platforms are among the broadest and deepest in the industry allowing us to deliver significant value added expertise to our clients. With this increased focus on our key strengths, we will continue to build on our position,” added Hughes.
Deutsche’s 30-strong global passive investment team will all transfer to Northern.
Both parties expect to seal the deal within three to six months, subject to regulatory approval and other closing conditions.
Northern said that its expects the move to be “slightly dilutive” to earnings in the first year. The firm’s total assets under management will increase to approximately US$447bn from US$327bn, placing it among the 10 largest investment managers in the US and among the top three US institutional index managers, behind State Street Global Advisors (2) and Barclays Global Investors (1).
Stephen Timbers, president of Northern Trust Global Investments, said: ”This acquisition is an excellent strategic fit for Northern Trust. The complementary nature of the asset base fits nicely on our existing quantitative management platform, while the additional product capability allows us to expand our international and enhanced index offerings significantly.
“The enhanced product line also provides a natural bridge between our index capabilities and our highly competitive line of active equity and fixed income products. This acquisition also supports our related businesses, including our rapidly growing transition business which will benefit from increased trading volume, and our securities lending activities.”
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