The news that Deutsche Asset Management (DeAM) was shaking up and axing some of its senior executives, as it bids to make the unit more profitable, was not unexpected. Any firm which loses $31bn in assets from client defections in just nine months is going to do something drastic to stem the tide. And many, unfortunately, now expect DeAM to do something very drastic indeed.
First up, DeAM is shifting the centre of gravity of its business to Frankfurt - the so-called 'natural home' of asset management. Commentators point out, however, that over 2.5 times more in assets are managed from the UK than in Germany ($2,991bn compared to $1,174bn). And The Times quotes one unnamed 'City figure', who said: 'Frankfurt! I suspect Edinburgh is more important. This is more about internal politics at Deutsche than the respective merits of London versus Frankfurt'.
Now DeAM's new CEO, Kevin Parker, is undertaking a strategic review of the asset management business. This is due to be completed in the first quarter of 2005. There has been much speculation that up to 1,000 jobs, or 20% of the unit's global total, are likely to be axed. And London is now seen to be more vulnerable as Frankfurt once again has the upper hand.