Deutsche Bank targets top five slot in wealth management

Deutsche Bank aims to become one of the world's top five wealth managers, it said in a memo to staff on Tuesday, after losing ground to rivals over the last couple of years. 

PHOTO: REUTERS

JAN 13, 20167:57 AM

[FRANKFURT] Deutsche Bank aims to become one of the world's top five wealth managers, it said in a memo to staff on Tuesday, after losing ground to rivals over the last couple of years.

It did not detail how it would do achieve this, but Fabrizio Campelli, global head of Wealth Management, said in the note that Deutsche Bank's priorities were investing to minimise risks in a "challenging regulatory and control environment", investing in a modern and resilient operating model and building the business around the needs of its clients.

Deutsche Bank previously set out the goal of becoming a top five wealth manager in 2012, but its ranking dropped to 12th from 8th between 2012 and 2014, according to Scorpio Partnership, a market research and strategy consultancy.

Scorpio's latest rankings, for 2014, have UBS, Morgan Stanley, Bank of America, Credit Suisse and Royal Bank of Canada occupying the top five global positions.

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John Cryan, who took charge as co-CEO of Germany's biggest bank in July, is under pressure to overhaul Deutsche, which is struggling to end costly litigation from past scandals and adapt to tighter banking rules.

Deutsche Bank has been restructuring its business, not only splitting its investment bank in two, but also dividing its wealth management business into one arm looking after its super rich clients and another focusing solely on institutional clients and funds.

Deutsche Bank has transferred some 340 billion euros (US$369 billion) in assets under management held by private banking clients as of September 2015, which had been part of the asset and wealth management arm, into its retail banking unit.

REUTERS

    
 

EU to propose binding multinational tax rules: official

The European Commission will propose a new set of binding rules by the end of January to curb corporate tax avoidance, in another move to counter unfair or illegal tax practices of multinationals, EU officials said.

PHOTO: REUTERS

JAN 13, 20167:25 AM

[BRUSSELS] The European Commission will propose a new set of binding rules by the end of January to curb corporate tax avoidance, in another move to counter unfair or illegal tax practices of multinationals, EU officials said.

Multinational corporations have long been in the sights of European Union authorities because of the way they can reduce their tax bills by basing themselves in low-tax centres or negotiating special deals with governments.

The EU executive will propose new measures on Jan 27, EU commissioner Pierre Moscovici told European lawmakers on Monday.

Some of the new proposals will oblige EU countries to accept as binding a set of voluntary guidelines, known as BEPS, which aim to close gaps in existing international tax rules, an EU official said on Tuesday.

The official said the Commission would propose that the 28 EU states turn some of the BEPS guidelines - which were backed by leaders of the G20 group of the world's largest economies - into binding legislation.

Interest deductions applied by multinationals are among the areas where the Commission plans to go beyond BEPS. The guidelines already recommend corporations link deductions to the economic activities of each group entity, rather than shifting debt among national branches, officials said.

Moscovici told EU lawmakers on Monday he plans to propose stricter rules on taxes applicable to controlled foreign companies and on hybrid financial products which may avoid taxation because of their complexity.

The Commission proposals will follow a crackdown on deals some multinationals have made with individual EU states, which are seen as damaging competition.

On Monday, the EU Executive ordered Belgium to recover 700 million euros (US$763 million) from 35 large companies in taxes not paid because of a model that gave multinationals a more preferential treatment than smaller firms.

In October, the Commission ruled that Starbucks Corp.

and Fiat Chrysler Automobiles benefited from illegal tax deals with the Dutch and Luxembourg authorities and ordered each country to recover 20-30 million euros in back taxes. Brussels is also investigating the tax arrangements of Amazon in Luxembourg and Apple in Ireland.

To avoid such deals in the future, European Union finance ministers agreed in October to automatically exchange information on agreements struck with multinational companies from 2017.

The package to be proposed on Jan 27 will also include measures to make company tax declarations more transparent and may go as far as obliging them to make their tax bills public.

REUTERS

    
 

MetLife plans to split off US retail business; shares rise

MetLife Inc, the largest US life insurer, plans to separate a substantial portion of its US retail business from the core company, saying on Tuesday that the "regulatory environment" helped drive its decision.

PHOTO: BLOOMBERG

JAN 13, 20168:15 AM

[WASHINGTON] MetLife Inc, the largest US life insurer, plans to separate a substantial portion of its US retail business from the core company, saying on Tuesday that the "regulatory environment" helped drive its decision.

MetLife is considering various approaches for splitting off the retail business, including an initial public offering, a spinoff or a sale. The business sells life insurance and other financial products across the United States, generating at least one fifth of MetLife earnings.

The company's shares rose 8 per cent to US$45.06 in after-market trading on Tuesday following the announcement.

MetLife is currently in a legal tangle over federal regulators designating it a "systemically important financial institution," or SIFI, in 2014.

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That label, created after the massive financial crisis that started in 2007, means regulators deem the company too big to fail and triggers a requirement for MetLife to hold higher levels of capital.

Last January, the insurer asked a US District Court to throw out the designation.

MetLife's Chief Executive Steven Kandarian said in a statement on Tuesday the lagging retail section "risks higher capital requirements that could put it at a significant competitive disadvantage." "Even though we are appealing our SIFI designation in court and do not believe any part of MetLife is systemic, this risk of increased capital requirements contributed to our decision," he added. "An independent company would benefit from greater focus, more flexibility in products and operations, and a reduced capital and compliance burden." Billionaire investor Carl Icahn is currently pressuring American International Group Plc., another insurer designated systemically important, to break itself up for many of the same reasons.

MetLife said that if made an initial public offering for the separate company, it would file a registration statement in approximately six months.

The new company, to be led by executive vice president Eric Steigerwalt, will not house certain parts of the US retail segment, including the life insurance closed block and property-casualty units.

It would represent about 20 per cent of Metlife's operating earnings and have approximately US$240 billion in total assets, based on September data, the company said.

Growth in MetLife's US retail business has been slowing, with the unit reporting an operating income of US$523 million in the third quarter, down 33 per cent from a year earlier. In the second quarter, retail's operating earnings growth slowed to 2 per cent from 12 per cent a year earlier.

The company's shares fell about 11 per cent in 2015.

REUTERS

    
 

China's president says anti-graft drive gaining ground: Xinhua

China's president Xi Jinping said on Tuesday that China's more than two year anti-corruption drive was showing good results and the Communist Party Central Committee remains determined to fight graft, the state news agency Xinhua reported Tuesday. 

PHOTO: REUTERS

JAN 13, 20168:38 AM

[SHANGHAI] China's president Xi Jinping said on Tuesday that China's more than two year anti-corruption drive was showing good results and the Communist Party Central Committee remains determined to fight graft, the state news agency Xinhua reported Tuesday. "Party members should maintain confidence in the Communist Party of China Central Committee's anti-corruption volition," Mr Xi said at a meeting of China's anti-graft watchdog, the Central Commission for Discipline Inspection, according to Xinhua late on Tuesday.

The president added that anti-corruption efforts should not be relaxed in 2016.

Scores of top officials in the ruling Communist Party, the government, the military and state-owned companies have been brought down in a sweeping anti-graft campaign in the past three years since President Xi Jinping came to power.

Nonetheless some analysts have raised concerns that the ongoing anti-graft drive is contributing to already meager investment growth in China over the past year, as some officials are afraid to approve projects for fear of corruption accusations.

REUTERS

    
 

US dollar steadies vs euro as equities rebound

JAN 13, 20166:53 AM

[NEW YORK] The US dollar steadied against the euro on Tuesday as global equity markets rebounded from days of China-driven turmoil despite worries about plummeting oil prices.

The euro traded at US$1.0858 around 2200, unchanged from the same time on Monday.

The yen edged a bit higher, rising to 117.66 per dollar compared with 117.77. The euro dipped to 127.76 from 127.87.

"A better market mood leaves the euro vulnerable as it tends to entice traders to sell the cheap euro for higher-yielding, riskier bets," said Joe Manimbo at Western Union Business Solutions.

But, he said, "with global risks dominating trade and casting fundamentals to the side, scope for euro weakness could prove limited." Kathy Lien at BK Asset Management said that a suicide-bomber attack in Istanbul that killed 10 people may have dented sentiment on the euro.

"The attacks in Turkey this morning have raised concerns that Europe may be hit again over the next few months and I think that is kind of scaring investors from holding euros," Ms Lien said.

Traders will be looking ahead to the Federal Reserve's Beige Book report, to be published Wednesday, for clues about how fast the central bank intends to raise interest rates.

The collection of anecdotal information about the health of the US economy helps to inform monetary policy decisions.

Since raising its benchmark federal funds rate from near zero to 0.25-0.50 per cent in mid-December, the Fed has signaled it sees four quarter-point hikes this year.

But investors are anticipating only two increases in 2016, and the recent bout of market volatility spurred by concerns about China's slowing economy has led some to predict there would be only one.

AFP

    
 

Council of Europe sees French state of emergency risks

France's decision to install a state of emergency following the deadly November 13 attacks in Paris could constitute a "threat" to democracy, a European Council human rights observer said Tuesday. 

PHOTO: AFP

JAN 13, 20166:27 AM

[STRASBOURG, France] France's decision to install a state of emergency following the deadly November 13 attacks in Paris could constitute a "threat" to democracy, a European Council human rights observer said Tuesday.

"We are looking very closely at what is happening" in France, Council human rights commissioner Nils Muiznieks said.

"There is a risk that these measures could sap the system of democratic control," if for instance police armed with executive rather than judicial orders carry out searches, Muiznieks told France Culture radio.

"We are seeing a certain drift," he added, citing concerns over ethnic profiling of suspects facing police searches and the "forces of repression." France has extended the state of emergency through to the end of February as President Francois Hollande agreed to give greater powers to security services to act without requiring judicial oversight or search warrants.

Since the measures came into force after the attacks by radical Islamists in November which left 130 dead and 350 injured, authorities have carried out thousands of searches but "only a few of them have led to procedures linked to terrorist acts," according to Muiznieks.

The Latvian human rights observer questioned "the need for these measures" and lamented that the security crackdown was spreading to other countries.

"We react very quickly and cast off human rights guarantees as we consider they are not useful in the fight against terrorism," said Muiznieks, who following the Charlie Hebdo killings of a year ago similarly questioned the French response of beefing up surveillance.

And he warned that heightened surveillance could lead to the "stigmatisation of certain communities".

AFP