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View the article online at http://citywire.co.uk/wealth-manager/article/a696273

Deutsche to start Tilney sale talks in September

by Danielle Levy on Aug 09, 2013 at 07:53

Deutsche to start Tilney sale talks in September

Deutsche Asset & Wealth Management has set a September deadline to kick off the first round of bids for its loss-making Tilney business.

According to sources close to the situation, Deutsche has invited firms to submit bids for the bulk of the former Tilney business, including its regional network, by 2 September, marking the first crucial stage in a potential deal.

Back in June Wealth Manager broke the news that Deutsche was preparing to sell a large portion of the Tilney business it acquired back in October 2006. It has since remained a separate entity and a potential deal would likely include its network of offices in Birmingham, Edinburgh, Glasgow and Liverpool. 

Since Tilney was acquired it has been largely loss-making for Deutsche, posting a £9.5 million pre-tax loss in 2012, following a £8.9 million loss in 2011. The entity also faced a string of costs, including a £4 million suitability bill, £1.9 million to meet the retail distribution review requirements and a £620,000 provision for client redress last year.

Assets stood at £4.6 billion at the end of 2012, down year on year from £5 billion, while Tilney saw a decline in revenue after moving clients into a centralised investment service.

It is understood Deutsche paid about £300 million for Tilney, which had £6.7 billion in assets at the time, including more than £1 billion from the property fund range it bought from Cardales.

However, problems in the UK property market and the subsequent suspension of Cardales’ Glanmore Property and British Real Estate funds have weighed on the value of the business. This, plus the decline in private client assets, means Deutsche is likely to face a write-down compared with the price it paid.

Deutsche Bank’s UK wealth management business, led by Tom Slocock (pictured), is expected to retain a presence in London and the portfolios it runs for ultra-high net-worth clients, but a potential sale would see the firm withdraw from the regions.

A source close to the situation anticipates a number of well-known wealth management names will be eyeing the business and working out the price they would be willing to pay for it. ‘Value adjustments are taking place. For those looking to acquire the business they have to decide what they want to keep, and paying a consideration for that is not the easiest,’ the source added.

Deutsche Asset & Wealth Management declined to comment.

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