Global Finance talked with Reyer Kooy, head of institutional liquidity management, Europe, EMEA and Asia, for Deutsche Asset & Wealth Management—the top bank in GF’s ranking—about the shift in how companies invest.
Global Finance: Why have companies been increasingly moving money to outside managers?
Reyer Kooy: This is a story of expertise as well as scale and resources. Fundamentally, what these companies are looking for is help with risk management and help in diversification of their holding base… We, as a provider, have the scale to ensure the broadest risk management. Companies can’t really internally compete with that. They [want] a global perspective.
GF: Are you seeing trends among corporates—by sector or geography?
Kooy: I think, generally speaking, all companies are famously wealthy at the current time. Companies across all sectors and all geographies are holding on to more cash.
GF: Just how big is the business?
Kooy: In general terms, for the large liquidity management businesses like ours, corporates are certainly the largest client. It’s a subset of overall asset and wealth management. [Overall] about $100 billion of that is liquidity management—my business—and I would say the majority of that is coming from corporates. It’s been growing steadily. [Corporate] Assets under management have been a growing story over the last 10 to 15 years from almost a standing start—in the industry as a whole and at Deutsche Bank.
GF: How adventurous are companies getting?
Kooy: In general, companies are not in the business of being adventurous. They are focused on capital preservation. I’d say they are being more creative in the context of very low yields in some currencies—even negative [in some, such as] euros. Not all corporates need all of their cash instantly available all the time. They’re looking at a broader fund universe, at separately managed accounts… We provide a full range of [offerings] that serves their needs.
GF: What else is driving corporates, besides their stockpiles of cash?
Kooy: Diversification, globalization and technology, as well. I think, on the trading side, the reliability of messaging is vital. The flow of messaging and money, the integrity and security of information must be reliable. Corporates also really expect to see a high degree of transparency in their portfolios—to see weekly updates with detailed analytics to make sense of long portfolio list. We create weekly lists of our pool products.
GF: How does your scale help?
Kooy: Both Deutsche Bank and Deutsche Asset & Wealth Management have extensive scale and reach, and it’s lucky that the philosophy of the firm is to be solution- and client-centric. That has allowed my business to touch on many of the organization’s clients. Our asset wealth management products and solutions are a strong fit with other solutions offered by the bank.