Deutsche Bank's Wrong-Way U.S. Inflation Wager Hurts Trading
- Soured trade contributes to 12% drop in FICC, its biggest unit
- Head of U.S. inflation Bourne has since left Deutsche Bank
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Deutsche Bank AG, struggling with U.S. competitors, legal and technology costs and clients pulling back, had a further problem in the second quarter: its own traders.
Revenue from fixed-income trading, the Frankfurt-based lender’s biggest business, fell 12 percent to 1.1 billion euros ($1.3 billion) in the three months through June, more than double the decline predicted by analysts at HSBC Holdings Plc. The slump was impacted by a bad bet that traders made on U.S. inflation, which could cost Deutsche Bank as much as $60 million, according to a person familiar with the matter.