At least two Deutsche Bank AG debt traders left for hedge funds after the bank closed a proprietary-trading group last month to cut costs and prepare for post-crisis regulations.
John Roach, a mortgage-debt trader, will join BlueCrest Capital Management LLP, while Michael Boyle, who traded commercial mortgage securities, started at Tilden Park Capital Management LP this month, said two people familiar with the moves. The lender closed the proprietary unit, which took market positions with the bank’s money, as it faces rules curbing risk-taking, said three people familiar with the matter. The people asked not to be identified because the moves aren’t public.
More than four years after the depths of the credit crisis, an exodus of veteran debt traders from the biggest banks is accelerating. Deutsche Bank has lost at least five credit traders and salesmen this year to money managers as it overhauls compensation, cuts almost 2,000 jobs and boosts capital reserves. That follows the departures of at least 10 from its New York credit group since the start of 2011.
“At every single bank in the world, if you’re a trader and you get a decent bid from the buy-side, you take it,” said Michael Maloney, president of New York-based recruitment firm Maloney Inc. “Traders that are making markets to customers might lose that also because of Dodd-Frank, the government and new rules and regulations.”
Banks are also curtailing the amount of money they use to facilitate bond trades. In 2010, the 27-country Basel Committee on Banking Supervision raised minimum capital requirements and U.S. Congress passed the Dodd-Frank Act, which seeks to limit the risks banks can take with their own money.
While the corporate-bond market has grown by 57 percent since October 2007, to $8.8 trillion, the 21 primary dealers that do business with the Federal Reserve reduced their holdings of the debt by 77 percent during the period, to $55.1 billion, according to Bloomberg and Bank of America Merrill Lynch index data.
Matt Siravo, a distressed-debt analyst who was previously a loans trader, left Deutsche Bank earlier this month for BlueCrest, the $35 billion hedge fund manager run by Michael Platt, according to the people familiar with the matter, who asked not to be identified because the moves aren’t public. Siravo and Roach will join Deutsche Bank alumni Stefano Galiani, a credit trader who started at the hedge fund last year, and John Silvetz, who came on in 2011.
Other Deutsche Bank defections this year include Masaya Okoshi, former head of investment-grade debt trading for the Americas, who went to Wellington Management Co., and Casey Talbot, who was co-head of the firm’s credit sales for the Americas and left for UBS AG’s hedge-fund division.
Deutsche Bank was ranked as having the biggest share of the U.S. fixed-income market last year, according to consulting firm Greenwich Associates.
The Frankfurt-based lender’s revenue from fixed-income, currency and commodities trading has dropped 14 percent since 2009 to $11.8 billion in 2012, according to Bloomberg Industries.
BlueCrest, which has increased its assets by $6.4 billion since the start of 2012, was founded in 2000 by former JPMorgan Chase & Co. proprietary traders Platt and William Reeves, according to the firm’s website.
Tilden Park, the fixed income-focused asset manager in New York that oversees $1.5 billion, is led by Josh Birnbaum, former co-manager of trading in Goldman Sachs Group Inc.’s structured products group, according to the firm’s website.
Ed Orlebar, a spokesman for BlueCrest, declined to comment on the hires, as did Catherine Jones, a spokeswoman for Tilden Park.