A footnote somewhat buried in today’s (October 29) news about Deutsche Bank’s sweeping restructuring plans, known as ‘Strategy 2020,’ is that Germany’s largest bank plans to fully embrace sustainable investing.
In a statement regarding how Strategy 2020 will affect its asset management division, Deutsche says that, among other things, it aims to “develop sustainability and impact investing as a mainstream asset class.” Further detail was not given.
A spokesman for Deutsche’s asset management division said that while he was delighted to hear the news, the new management had yet to specify what the move meant. “Understandably, the first priority is to implement the restructuring. We expect to hear more in early 2016.”
Even before today’s announcement, Deutsche had a sizeable sustainable investment business. According to the last figures published, sustainably managed assets at the bank totalled around €5bn. This compares with €10bn run by Union Investment, the asset manager owned by cooperative banks which is the market leader in Germany.
Whatever Deutsche’s new management decides to do with sustainable investing, it’s clear that Michael Schneider, who formerly worked on the investment banking side, will likely play a role.In-mid 2013, Schneider was named Head of ESG (environmental, social and governance) and as such has overseen the bank’s integration of those factors into the investment process.
In terms of recent business, Deutsche lost the mandate to manage the €209m Global Climate Partnership Fund (GCPF) unveiled by the KfW almost a year ago. Launched in 2011, the GCPF invests in renewable and energy efficiency projects in emerging countries.
On the other hand, Deutsche just last August won a mandate to manage €371m in pension assets from the GIZ, a state-owned company specialising in economic development in emerging markets. The GIZ mandate requires a highly ethical approach to managing the money.
Deutsche’s restructuring plans, unveiled by newly appointed Chief Executive John Cryan at a news conference in Frankfurt, call for the bank to cut 9,000 internal jobs – including 4,000 in Germany. The bank also plans to sever its ties with 6,000 external service providers and, through the sale of assets like Postbank, no longer employ another 20,000 people. But the restructuring goes much farther, including, for example, Deutsche’s exit from onshore operations in 10 countries. Among them are four in South America and three Nordic countries. With these measures, Cryan aims to save €3.8bn by 2018, bringing the bank’s cost-to-income ratio – a key measure of efficiency – down to 70%.