Norway’s biggest bank is beefing up its asset management division after disgruntled institutional clients sent its national rankings to the lowest since 2013.
DNB ASA is hiring more equity analysts to cover Norwegian companies and healthcare, sharpening reporting to its biggest customers and employing more sales people. The measures are among a host of improvements to reverse the downward spiral, according to Torkild Varran, chief executive officer of DNB Asset Management.
“We dropped to five and we aren’t satisfied, but we have made some steps to get back,” Varran said in a phone interview. “We are building up a good team in healthcare; we have recruited people doing more quant-factor asset management; and we recruited on the team doing Norwegian equities.”
Institutional clients, whose assets make up as much as 70% of what DNB oversees, last ranked the Oslo-based lender the best provider of external asset management in Norway in 2013. Since then, DNB has slipped almost every year.
In the most recent survey by TNS Sifo Prospera it fell below Nordea Bank AB, Alfred Berg Kapitalforvaltning AS, Storebrand ASA and Danske Bank. The survey looks at an asset manager’s marketing standing, the performance of the sales staff, the quality of the reporting they provide on how investments are progressing, and fee structures.
The unit has been beset by a few challenges, Varran said. They include employee departures, a focus on the private wealth division that took up resources, and steps by competitors to improve their reporting back to clients.
“Most of our portfolios outperformed their benchmarks, but there was turnover in the organisation,” Varran said. “When it comes to reporting, we aren’t top anymore. We had been on top on reporting for a long, long time, but our competitors have improved a lot.” The rankings are important as banks increasingly turn to asset management as a capital-light way to generate income growth instead of lending. Regulators have been warning repeatedly of unsustainable mortgage debt while loan demand is weak among businesses. Meanwhile, households are accumulating more wealth.
DNB is also facing a class action suit being brought by the Norwegian Consumer Council. The suit alleges that the bank charged customers fees for actively managing funds, while in reality the funds were more index based.