Deutsche Bank’s path to higher returns in its trading business probably won’t be through dealing German bunds.
Bloomberg News reports that new rules on leverage mean the bank must embrace complex products and derivatives in order to earn sufficient returns on equity, co-CEO John Cryan said Tuesday at an investor conference in New York. While spreads for such securities have 'repriced nicely' as fewer competitors are active, they require improvements to back-office functions and controls, he said.
'We’ve offered an ability to enter into complex trades, illiquid trades as a source of competitive advantage', Cryan said. 'There’s nothing wrong with that, if you have the ability to control it efficiently'.
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