ABN's German Private Bank Boosts Client Assets, Cutting Jobs
(Bloomberg) -- (Machine translation provided by Google and reviewed by Bloomberg editors)
Frankfurt based Bethmann Bank AG, which is currently undergoing austerity measures, netted around 200 million euros in client funds in the first quarter. "The start to the year was strong," CEO Hans Hanegraaf said in an interview with Bloomberg News. The assets under management now amount to 38.7 billion euros.
A driving force for the unit of Dutch ABN Amro Bank NV, which primarily caters to private clients with assets starting at 500,000 euros, is an offer for private investors to put money into private equity - an area that is usually reserved for institutional investors due to high investment amounts. That part of the business was added about four years ago with the acquisition of Credit Suisse Group AG’s private banking business in Germany.
"In times of low interest rates, many customers are interested in finding additional sources of return," Hanegraaf said. "The demand for private equity is there." Such investments promise chances of higher returns, but also involve greater risks.
Most recently, the German business of ABN Amro, which includes corporate banking besides Bethmann’s private banking, came under some pressure. Overall, operating profit before taxes fell to 8 million euros last year from 72 million euros in 2016, mainly due to Bethmann. According to the 2017 annual report, ABN Amro reduced Bethmann’s goodwill valuation to 63 million euros from 99 million euros, "based on expectations of profitability and capital usuage". By 2020, the number of jobs at the private bank is expected to fall to 480 from 535.
One billion dollars invested in private equity
With regard to private equity investments, Bethmann selects appropriate funds worldwide and makes them available to investors through exclusive investment solutions, Hanegraaf said. The minimum investment amount is 200,000 euros. So far, more than 3,000 investors have participated in these solutions with a total of about one billion dollars.
Other companies are also benefiting from private investors’ demand for private equity investments. Berlin based Liqid Asset Management GmbH just launched a second such fund. The minimum investment amount is also 200,000 euros. "We closed our first private equity fund early because it was even more successfully received by investors than we expected," according to Christian Schneider-Sickert, Liqid’s CEO.
Bethmann Bank also expects growth in the lending business. "We want to expand this area," Hanegraaf said. "This can help increase returns, but our core remains wealth management."
The lending business is not just about so called lombard loans, but also about helping entrepreneurs to finance the purchase of other companies or to provide interim financing for real estate purchases, the CEO added. The loan portfolio is still relatively small.
Preparations for relocation in Frankfurt are under way
The preparations for the company’s move from its headquarter Bethmannhof to Marienforum, close to Deutsche Bank AG in Frankfurt, are already in full swing. It will start in the first quarter of 2019, Hanegraaf said. Marienforum will also be home to ABN Amro’s German business client unit.
Not all Frankfurt employees will join in this relocation due to the reduction in staff which is in part related to the acquisition of Credit Suisse’s activities. At that time 160 employees of the Swiss Bank moved to Bethmann.
"The purchase of Credit Suisse’s business was a good decision," Hanegraaf said, not least because of its private equity activities. "We are open to further acquisitions. Our parent wants to expand the private banking business outside of the Netherlands, so we will review every offer."
Frankfurts Bethmann Bank holt 200 Mio €, während Job-Abbau läuft
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