Fixed income has been a traditional strength of Deutsche Bank’s investment banking activities
Deutsche Bank AG fixed-income head Ram Nayak assured staff they will keep their jobs at his business even as the lender cuts 18,000 positions in a sweeping overhaul, according to people familiar with the matter.
The bank’s move to “resize” debt trading operations won’t lead to dismissals, Nayak told colleagues on a conference call on Monday, the people said, asking not to be identified as the matter isn’t public. A day earlier, Deutsche Bank had announced plans to exit equity sales and trading as part of a far-reaching overhaul.
Fixed income has been a traditional strength of Deutsche Bank’s investment banking activities. The lender has earmarked more than 20% of its balance sheet to be wound down or sold to free up capital to invest in more profitable businesses. While the equities unit accounts for the majority of holdings to be moved to the new capital release unit, the lender is also hiving off long-dated assets in its interest rates business as well as securitized bonds.
Deutsche Bank doesn’t disclose how many people work for its equity and fixed income businesses. The wider corporate and investment bank division employed 38,305 people at the end of March, of which 17,117 were in front-office positions such as traders and salespeople.
In a sign of Deutsche Bank’s commitment to the business is paying off, it has climbed to second place in a Euromoney global ranking of currency traders. The bank ranked eighth last year.
Deutsche Bank generated 5.36 billion euros ($6.01 billion) of revenue from dealing in bonds and currencies last year, making the business its second-largest source of earnings. Stock trading supplied less than half that amount.
Deutsche Bank shares were up 2.6% as of 2:11 p.m. in Frankfurt. The stock closed down both Monday and Tuesday after the overhaul was announced on Sunday.
Nayak himself is a survivor, having seen senior colleagues come and go in his decade at the bank. His taking over of the fixed income and currencies business also marks something of a comeback: he was replaced by John Pipilis last year as head of fixed-income trading. Pipilis is set to leave.
Nayak previously worked at Credit Suisse Group AG before joining Deutsche Bank in 2009 as head of global markets structuring. He joined the executive committee of its global markets business, the first time a banker acceded to that group immediately upon hiring. He reported to Anshu Jain, who went on to become co-CEO of the bank three years later.
In a sign of fixed income’s importance, Nayak reports directly to Chief Executive Officer Christian Sewing even though his business is located in the investment bank, run by Mark Fedorcik.
Deutsche Bank says it has a top five market position in 75% of the investment banking businesses that it’s keeping. The bank will “refocus on clients where we have a competitive edge” and invest to stabilize its business and then grow, according to slides it published on its website on Monday.
“We will continue to be a leader in the debt financing markets across investment grade, leveraged finance, asset-backed securities and commercial real estate,” Sewing said on a call with reporters on Monday. “We will continue to have one of the top FX businesses in the world and continue to be a trusted adviser to our corporate and financial sponsor clients.”
First Published: Fri, July 12 2019. 00:25 IST