Too-big-to-fail banks and mutual funds have had a troubled marriage over the years, but it looks like the banks are trying to make it work one more time.
reporter Sree Vidya Bhaktavatsalam published a comprehensive look
at global banks' efforts to get back into asset management. He pieces together the recent news from banks' asset management business to tell a convincing story: with trading profit declining, banks are turning to their funds businesses to reap profits.
is hanging on
], and UBS
] is cutting back its investment banking efforts in favor of wealth management, while Goldman Sachs
], JPMorgan Chase & Co.
], and Wells Fargo
] "are considering expanding asset-management divisions as they seek to grab market share from companies such as Fidelity Investments
Money management fees account for a growing proportion of banks' revenue, as combined investment banking and trading revenue has fallen at least 17 percent in each of the last two years, according to Bloomberg
. Hence the bankers' hunger for the steady fees that managing funds brings in.
Asset management is a "terrific business," as a banker tells Bloomberg
, but much of Bhaktavasalam's story is a reminder of why so many banks failed out of it in the first place. The banks' exit from asset management over the last decade-plus "reflects a combination of poor performance, the rise of mutual-fund sales through fee-only independent advisors rather than bank-owned brokerages and the impact of a mutual-fund trading scandal uncovered by then-New York attorney Elliot Spitzer in 2003," he writes.
So what are the odds that large banks that have spent the last decade selling off their funds businesses can make a comeback?
The story quotes Simon Adamson
, an analyst with CreditSights Ltd
, on Deutsche's chances.
"Deutsche's asset and wealth-management business has historically underperformed and not added a lot to profit," he said. "It won't be easy to convince people that Deutsche now really has a long-term strategy for the business in place."
Stay ahead of the news ... Sign up for our email alerts now