UK - Deutsche Bank watchers have welcomed this morning’s announcement that virtually all of Deutsche Asset Management in the UK will be sold to rival Aberdeen, noting that the move gives Deutsche an elegant exit from the business.

“The price (up to £265m or €384.8m) is not too high, but I still see it as a positive step,” said Georg Kanders, bank analyst at WestLB. “Despite the business’ disastrous performance, Deutsche was able to get some money for it and can put an end to the constant negative press it was getting in the UK.”

Kanders added that the sale was a boost for the UK business itself, “as it will no longer be burdened with a poor track record”.

Kanders’ remarks followed the announcement this morning that instead of fixing DeAM in the UK, it had decided to sell almost all of it to Aberdeen, a UK institutional fund provider that specialises in equity mandates.

Last December, Deutsche put DeAM in the UK under review after the unit lost tens of billions of euros in mandates due mostly to a poor performance in equities. The unit’s troubles were compounded by an exodus of executives.

Under the terms of today’s sale, Aberdeen is taking over the fixed income, global equity, multi-asset and institutional equity parts of DeAM in the UK. Aberdeen is also getting Deutsche’s passive fixed income business in Philadelphia.

Deutsche will retain the hedge fund and real estate businesses of DeAM in the UK as well as the active fixed income business in Philadelphia.

According to Kanders, Deutsche’s decision to sell part of its US fixed income business was no surprise, “as the bank has said time and again that it wants to get out of passive investing.”

As a result of the deal, Aberdeen’s assets under management will almost triple to €105.6bn.

Aberdeen said it would seek to run the businesses – which had a pre-tax loss of €112.2m in 2004 – “from a much reduced cost base.”

Added Martin Gilbert, Aberdeen’s chief executive: “We are acquiring some world-class businesses that will substantially increase our scale and diversify our revenue streams. We are also well placed to improve the performance of these businesses…Applying our efficient operating model should result in the acquisition being materially earnings enhancing.”

Kevin Parker, global head of asset management at Deutsche, said: “The goal of the deal is to make DeAM a more powerful and focussed business, to provide our clients and shareholders with added value.”

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