Deutsche Bank Moves Top CDS Trader Amid $1.1 Trillion Exitby
Aditya Singhal moves to emerging markets trading role
Tijen Gumusdis to run flow trading for CEEMEA region
Deutsche Bank AG moved the trader who was leading the wind-down of a $1.1 trillion credit-default swaps portfolio to a role in emerging-market bonds, according to an internal memorandum obtained by Bloomberg.
Aditya Singhal, described as “one of the most profitable traders” at Deutsche Bank’s European credit business, will become head of local markets trading for central and eastern Europe, the Middle East and Africa, according to the memo. Tijen Gumusdis, co-head of CEEMEA local markets, will become head of flow trading for the region. Charlie Olivier, a spokesman for the Frankfurt-based lender, confirmed the memo’s contents.
Deutsche Bank Chief Executive Officer John Cryan has dumped unprofitable clients, exited countries and pulled back from some trading businesses in an attempt to cut expenses and meet tougher capital rules. This includes selling off a portfolio of complex credit-default swaps to rivals including Citigroup Inc. and JPMorgan Chase & Co., a process which Singhal helped oversee.
“In late 2014, he took responsibility for the wind-down of the EU/US CDS books and subsequently delivered substantial and cost-effective” reductions in the size of the portfolio, head of emerging-market debt trading Sean Bates wrote in the memo. “Aditya Singhal joined Deutsche Bank as a graduate trainee in 2005 and went on to become one of the most profitable traders in the firm’s Western European credit flow franchise.”
Credit-default swaps are insurance contracts that pay out if a borrower defaults on a debt. Investors use them to speculate on the borrower’s ability to repay debt or to guard against losses on the debt. The instruments helped to fuel the 2008 credit crunch and regulators have been trying to make them safer and less opaque.
Deutsche Bank was in talks with JPMorgan, Citigroup and Goldman Sachs Group Inc. to sell the last batches of about 1 trillion euros ($1.1 trillion) in credit-default swaps, Bloomberg reported in March. The swaps are uncleared, meaning they will require more collateral under new rules enacted since the crisis.
Gumusdis’s previous roles included head of trading for Turkey. In her latest role, she helped the business “overcome numerous challenges arising from” the bank’s decision to pull out of some countries and conduct more trading from central locations, according to the memo.
Deutsche Bank’s total fixed-income trading revenue slid 15 percent to about 6 billion euros for the nine months through September, one of the worst performances among global lenders. Sales in emerging markets were “significantly lower” this year as Cryan pulled the lender out of countries and clients pulled off fewer trades amid “macro uncertainty” and a “weak market environment,” quarterly statements show.