Deutsche Bank’s Lok Yim was appointed head of wealth management APAC at a difficult juncture for the lender. Deutsche’s share price was reaching new lows, a DoJ fine hung overhead and the bank’s wealth management business in Asia had lost some key personnel to rival UBS. Yim sits with Asian Private Banker to touch upon his first seven months at the helm, the state of the business today and his growth strategy going forward.
Lok, just how much damage has the Deutsche Bank Wealth Management brand incurred in Asia?
As of 1Q17, we were up to EUR 48 billion from EUR 45 billion in AUM. The favourable number reflects client trust with Deutsche Bank Wealth Management. From client interaction perspective, Q1  was one of the best quarters we’ve had in recent memory, in terms of double-digit revenue growth and asset growth. 2016 was challenging but the uncertainty has gone, which has been reflected by the numbers – it has proven our resilience and the strength of our client relationships.
We recovered more than 90% deposit growth…
How much of that asset growth should be attributed to positive market effects?
In the context of the EUR 45-48 billion growth, the gross increase was attributable to a recovery of assets and also market movement. We recovered more than 90% deposit growth while globally, Deutsche Bank Wealth Management was going through the first phase, “Protect”, i.e. de-risking by exiting some markets and improving KYC. [Deutsche Bank WM’s decision to exit from Japan and Australia contributed to outflows].
How about the bottom line?
Our C/I ratio has always been fairly decent and that has been maintained. We’ve always managed our costs tightly, so increases in revenue went into the bottom line. There is, of course, always room for further reductions in complexity and there’s always room to increase productivity. Having said that, our current focus is on investing more rather than saving. We have started the second phase, “Transform”, i.e. enhancing product management and have begun technology investments. Now, we are in the third phase, “Grow”.
So from your standpoint, what does the Deutsche Bank Wealth Management brand stand for now in Asia?
What we’ve been good at is something we will continue to be good at. Deutsche Bank is German, European and global. Deutsche Bank Wealth Management has the full support of a stable top-tier global bank behind us, a unique client proposition and a decisive new investment in the platform. We offer bespoke and innovative solutions. We are not a distributor. Therefore, we’ll naturally be able to offer client services that are particularly relevant to ultra and core HNW client levels. We identify ways to engage our wealth management clients by delivering innovative content and high-performing products and solutions.
[T]he capability never went away – the core parts of the business … remain strong, and remain relevant to our clients in the ultra and HNW space.
What effect has restructuring in the IBD had on your ability to deliver bespoke/non-flow solutions etc. to clients in Asia?
As for the success story of the delivery of “One Bank Solution”, we’ve had some very big transactions in the last few months, both with our Strategic Equity Transactions Group (SETG) and Global Credit Trading platform (GCT). In fact, the capability never went away – the core parts of the business – GCT, SETG and Corporate Finance – remain strong, and remain relevant to our clients in the ultra and HNW space.
My initial days as Asia head of Deutsche Bank Wealth Management coincided with the challenging time of the bank and were, to be fair, a bit of a rollercoaster ride.
Take us through your first seven months in charge and, specifically, how your role has evolved.
My initial days as Asia head of Deutsche Bank Wealth Management coincided with the challenging time of the bank and were, to be fair, a bit of a rollercoaster ride. The thing my management team and I had to do was to lift morale. Whilst we clearly had some attrition, it was never at the scale that was speculated. I spent those first two months doing a significant amount of travelling to see our people in every location and having as much one-on-one time with them and, where needed, their clients. This was not just at the banker level. We are very proud that this is an ecosystem that includes operations, investments, legal and compliance, etc. For me, it was really important that I spent my time with colleagues regardless of their grade and position. Once the uncertainties had gone and Deutsche Bank had set a clear strategic direction, once the situation had been stabilised, it was time for us to grow.
We’ve turned the corner. Deutsche Bank Wealth Management managed to have one of the best quarters we have had in revenue and asset growth.
Is there a sense now that you have turned the corner?
We’ve turned the corner. Deutsche Bank Wealth Management managed to have one the best quarters we have had in revenue and asset growth. I’m just very proud that the team came together naturally, to help each other across locations. If you think about it, within seven months, we’ve gone from talking about stock prices and exits to hiring people and announcing to the market our intention to continue to hire in a multi-year investment.
How much of the EUR 8 billion capital raise will be deployed to the Asia wealth management business?
We are capital light from a wealth management perspective. Clearly it means that the appetite we have on lending has increased, which plays well into the ultra space. But it is not so much about capital being deployed to Asia as it is investment dollars. We are already seeing a significant amount of investment dollars coming our way, not just at the client-facing level but at the tech/digital, operations and products levels. We have to invest in all of these aspects at the same time. The bank is building on its strong home market with sizeable global presence. Wealth Management brings stable, high quality earnings, deposits and clients. The most important thing is execution and staying agile. For myself and for Deutsche Bank, we just need to work harder, move quicker and make decisions faster.
[F]or me to tell you I’m going to hire 150-200 bankers a year is simply not a feasible strategy, but for us to bring on 20-30 is very achievable.
Given the stiffness in competition in the ultra space, how do you expect to be able to differentiate your offering sufficiently?
It means that we need to work harder and spend more time actually being involved with interviewing candidates in order to get the right talents. The key is it’s not what you say or publish. It comes down to your candidates understanding the culture and trusting those around them. In other words, we differentiate by talent and by what we are, and by giving talent the time to understand us as an organisation. At the same time, for me to tell you I’m going to hire 150-200 bankers a year is simply not a feasible strategy, but for us to bring on 20-30 is very achievable. [Earlier this month, Deutsche Bank WM announced that it will hire 100 client managers this year across high-growth markets, with half of those hires occurring in APAC]
What kinds of concerns are you having to address in these interviews?
In October and November last year, there was clearly still a concern over the legacy litigation. But those liquidity, capital and legal issues have dissipated. The most common questions I face now now are: “Can you [Deutsche Bank Wealth Management] truly grow?” and “What is my role in that growth?”. What I say is that we want people to be part of this journey, so if you want to move the needle, Deutsche Bank Wealth Management is an organisation that can do so.
In a recent press release, the bank detailed an investment in client-focused digital technology. What can we expect to see in Asia?
A lot of our focus in the past seven months has been on relationship managers’ experience. Again, if we are to be a bespoke and innovative bank, we first need to make sure that everything is easy for our relationship managers. We’re not going to start the other way round and invite the clients to trade themselves [via a digital platform]. Everything we are doing at the moment is about empowering our relationship managers with information so that they can make better decisions on behalf of Deutsche Bank Wealth Management and its clients. We are also focusing on statements and consolidation, account opening and renewals. Additionally, we are working on new client facing experience and will provide an update soon.
Right now it’s very crowded – everyone’s trying to do the same thing, everyone is looking for the fast lane.
How patient do think your management is with you in terms of achieving and sustaining growth momentum?
Let me answer that by using an analogy used by Christian Sewing [CEO of Germany and head of private & commercial bank; deputy CEO, Deutsche Bank] who said: “In a marathon, it’s always very crowded at the beginning, but that’s not the case at the end.” I think that’s the way we are looking at this business. Right now it’s very crowded – everyone’s trying to do the same thing, everyone is looking for the fast lane. But we see this as a marathon. I think those that have a very clear execution strategy and have a very clear C/I ratio strategy will win. We are ready to innovate with bespoke solutions like no one else, and on top of that we offer our clients access to a world-class investment bank with top-tier global markets, corporate finance and global transaction banking capabilities. We are here to create positive impact to shareholders, employees, clients and regulators.