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Deutsche Bank looks set to take stake in Craigs Investment Partners

Tuesday 9th February 2010

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New Zealand’s wholesale and retail investment banking scene looks set for another shakeup with German lender Deutsche Bank expected to purchase a stake in local share broking firm Craigs Investment Partners.

Deutsche Bank may take a 20-to-30% stake in Craigs, allowing it to expand its presence beyond investment banking, asset management and private advice services.

Deutsche’s top Asia executive Robert Rankin recently told the Financial Times that the bank intends to aggressively expand its equity capital markets and merger advisory services in Asia in order to increase regional revenues above four billion euros by 2011.

The Frankfurt-headquartered bank last week reported a 2009 net profit of five billion euros, reversing a 3.9 billion euro loss in 2008. Fourth-quarter profit alone was 1.3 billion euros.

Craigs’ employees took 100% ownership of their firm formerly known at ABN Amro Craigs, buying a 50% stake from Royal Bank of Scotland at a huge discount as the British parent exited its New Zealand operations last April. Now RBS is mostly owned by the British Government following a 2008 bailout.

Craigs is already New Zealand’s largest retail broking operation, and the Deutsche investment could result in up to a dozen investment banking jobs, as well as potentially numerous back office and IT roles. An agreement on the German parent’s shareholding would see Craigs’ investment bank unit shut down, with Deutsche’s own investment bank team continuing on. Any deal should not affect the money that Craigs holds for its 60,000 clients.

It is believed that the Craigs private client, retail and institutional equities divisions will remain, with increased support from Deutsche Bank’s Australian arm.

Deutsche’s New Zealand chief executive Brett Shepherd declined to comment and Frank Aldridge, managing director of Craigs, didn’t immediately return calls. Last Friday relevant Craigs staff were briefed on a potential transaction and the ramifications should it go ahead, NBR reported. Kiwi Income Property Trust has also been instructed to sub lease part of Craigs’ office space, according to the report.

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