Deutsche Bank Said to Revive Trading of Credit Options in Europeby and
Deutsche Bank AG is dipping back into an area of the credit derivatives market in Europe that it all-but pulled out of in 2014.
Germany’s largest lender has resumed trading options on credit-default swap indexes for the first time in more than 18 months, according to two people familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.
Deutsche Bank stopped buying and selling most credit-default swaps on individual companies in late 2014, when it cut as many as 10 credit traders in London, including index and options traders. Chief Executive Officer John Cryan signaled on Wednesday he may have to deepen cost cuts after second-quarter profit was almost wiped out by a slump in trading and restructuring costs.
Charlie Olivier, a spokesman for Deutsche Bank in London, declined to comment on the bank’s trading activity in credit index options.
Cryan has been cutting risky assets, freezing dividend payments and eliminating staff to boost capital levels and profitability. The bank’s debt trading revenue fell 19 percent in the second quarter from a year earlier, even as the five biggest U.S. securities firms saw their combined revenue from that business rise 22 percent.
The global credit derivatives market contracted to cover a gross $12 trillion of debt on July 22 from $14 trillion a year earlier, according to the Depository Trust & Clearing Corp. Outstanding options contracts, which give investors the right but not the obligation to buy or sell at a fixed price, fell to a net $92 billion from $114 billion in the same period, the data show.