Deutsche Bank
Deutsche Bank is a dominant player in each area of risk management that has kept corporate treasurers, hedge fund traders and more traditional investors on their toes in the past 12 months. Whether in interest-rate products, foreign exchange or commodities, Deutsche is a top-tier player, and no other firm can lay claim to the breadth of relationships and scale of business globally in all three.
It was a top-two ranked player in several foreign exchange derivatives categories in Euromoney?s FX poll in May, as well as being the top FX bank for hedge funds. For its corporate clients in foreign exchange the bank has developed a range of structured tailor-made solutions to allow clients to reduce their cost of buying protection from currency movements, many using knock-in forwards, range bonus forwards, chooser options, ladder swap concepts, or even a combination of them. And it can do so in size. Deutsche Bank executed a $15 billion hedge for just one client earlier in the year.
Interest-rate risk has kept corporates busy as well, and Deutsche has been an active structurer and adviser for companies faced with tough capital structure choices in an environment where both steep yield curves and low interest rates pertained as they did in 2003. Deutsche developed curve-efficient swap strategies that have helped solve these issues, and that comply with recently issued accounting guidelines for both extending and reducing duration on liabilities.
Its credit derivatives franchise is a top three player, and the firm continues to generate capital structure arbitrage deals off that desk both for its own account and for traders.
Deutsche regards credit derivatives as central to its franchise: ?Many firms view credit derivatives as just another product,? says Rajeev Misra, global head of credit trading for Deutsche Bank. ?We see them as the key to creating a neural network encompassing all types of credit exposure in the financial system. Once you understand that concept, you begin to see that there is virtually no aspect of credit exposure that cannot be identified, isolated and risk managed in line with your broader business objectives.?
What makes Deutsche stand out from many of its peers, says Tim Dowling, Deutsche Bank?s co-head of debt capital markets, is that it doesn?t just focus on the liquid products that others might. ?We look for illiquid or unusually structured risk that we can segment and repackage, and take the risk, including the basis risk, away from the client,? he says.
