Awards for Excellence 2002
Deutsche Bank
Deutsche Bank wins the risk management award again this year for the skill with which it has brought structured solutions to corporate and investing customers around the world, such as the $40 billion package of swaps, options and other instruments with which it restructured FleetBoston’s interest rate hedging portfolio in 2001. This was one of Euromoney’s deals of the year, profiled in the February 2002 edition.
“One of the key factors that differentiates us from the competition is the strength and vigour of our structuring franchises,” says Anshu Jain, head of global markets at Deutsche Bank. “We have 200 people at managing director level in a function that is neither sales, trading, nor research but an amalgam of all three. These are organized in interest rate, forex and credit structuring groups that also incorporate tax, accounting and industry skills.”
Such skills are much in demand at a time of unprecedented uncertainty and volatility in financial markets. “Our entire derivative business is based on risk avoidance techniques for corporate and investing clients,” says Jain. “If spot markets eventually move in line with implied forwards then the need to hedge declines. But if you look back six months to what forward markets were telling us, they were saying that Libor was going to rise by 100bp, that credit spreads would tighten and the emerging-market crisis would go away. None of these has happened. The world has been behaving in a fat-tail fashion. Our customers are faced with a global crisis a week.”
Jain contends that this has left many institutions with highly sensitive risk-management problems that they would rather speak about to one of his structuring teams than to a generalist corporate coverage officer at another firm who might then have to pull together various of its businesses to understand them. “So if a senior officer at a bank or insurance company comes to us because of worries about Basle II, he can speak to someone who understands the asset/liability management issues, credit risk and the bank capital market.”
Deutsche has set up a number of new teams and desks to look at links across traditional asset classes: credit and interest rates is one obvious one. “We have a lot of BBB-rated and A-rated corporates with risk management problems for which we are executing interest rate transactions that are predicated on credit,” says Jain.
The firm has also increasingly become known for its equity derivatives and risk management skills. Its strategic equity transaction group concentrates on five key areas: employee share option programmes, balance sheet management, M&A related hedging, structured equity-linked transactions and monetizations.
It has concluded several keynote deals including a monetization for Carrefour of its stake in non-listed GMB and a recycling of Novartis shares through a dual tranche Deutsche Bank/Novartis exchangeable bond.
Peter Lee
