SWIFT backs Blockchain Ledger

SWIFT is adding a blockchain ledger to its infrastructure stack. 

It is developing this ledger with 30 financial institutions from 16 countries, including Absa, Banco Santander, Bank of America, BBVA, Citi, Deutsche Bank, BNP Paribas, Emirates NBD, Societe Generale-FORGE, Wells Fargo and Royal Bank of Canada, taking part.

SWIFT CEO Javier Pérez-Tasso (CEO since 2019) remarked: "We...are moving at a rapid pace... to create the infrastructure stack of the future".

Deutsche Bank Sold $4bn Holdings Quick to Escape Big Hit from Archegos

The sale was triggered after Archegos defaulted on margin loans. The bank also navigated the Wirecard AG accounting scandal well (one of Germany's largest accounting scandals) by hedging their exposure,

Big Block Trades Signal Sell-Off Linked to Family Office Archegos run by Bill Hwang

An approximate $30bn of block trades executed through GS, MS and Deutsche Bank is believed to be linked to family office of Bill Hwang. Tencent, Baidu and GSX (Chinese EdTech) were among the names sold. Bill previously founded and managed Tiger Asia Management in 2001 converting his fund into a family office in 2013, following insider trading charges in 2012.

Christian Sewing Presses "Restart" for Deutsche Bank, Casting off Equities, Capital Crunching Fixed Income and Shoving 7.4bn RWA into "Capital Release" Unit

Deutsche CEO Christian Sewing has stated "We are doing what is necessary to unleash our true potential...We are building on our strengths. This is a restart for Deutsche Bank".

Sewing replaced outgoing German-speaking British Chief Executive John Cryan on 8 April 2018. One year into the CEO role Sewing has unleashed a radical restructure of the Deutsche Bank.

New Board members effective 1 August 2019 will be ex-McKinsey consultant Christiana Riley, Bernd Leukert who is a member of the Supervisory Board of Bertelsmann SE and held various executive roles at SAP and Stefan Simon, a lawyer, bringing experience in corporate law, corporate governance and compensation oversight (he is also an honorary professor at the University of Cologne).

A major part of the restructuring will be exiting the Equities Sales and Trading business and reducing capital consumed by the other businesses especially Rates. A preliminary agreement has been struck with BNP Paribas to provide continuity of service for electronic equities clients with a view to moving technology and staff across in due time. Deutsche's electronic equities and prime brokerage is mainly US-based. Several hedge funds have pulled out of Deutsche's prime business following a series of fines.

As part of the "restart", 74 billion euros of risk-weighted assets will be moved into a Capital Release Unit (CRU) for wind-down. A new CET1 target ratio of 12.5% has been targeted along with a fully loaded leverage ratio of 5% from 2022. There will also be a reduction in headcount by 18,000 full time employees. 13 billion will be invested in technology in the next three years.

Standard Chartered in New Commodities Trading Push

Oil options are hot again as Standard Chartered looks to move into the US market following years of cutbacks in the sector. Matthew Hastings, a former PetroChina trader, is set to head the London desk. Tougher regulations under Dodd-Frank in 2010 has impacted profits of all banks leading to pull-outs.

2010 - RBS Sempra exits Commodities
2013 - Deutsche Pulls global commodities trading
2013 - UBS restructures focusing on precious metals and index
2014 - Barclays exits Commodities, rolls precious into FX

In 2015 Standard Chartered had to lay on extra provisions due to losses on commodities loans.

GAM buys $4bn AuM Cantab Capital Partners for $290m and starts Systematic Unit

Zurich-based GAM (listed on the Swiss stock exchange and which manages around $120 billion) is acquiring Cantab Capital Partners (CCP), a systematic asset management firm.

This acquisition will form the basis of GAM Systematic - a new offering from GAM covering "traditional" long-only investments as well as alternative investing.

In GAM's investor presentation, a Deutsche Bank 2016 Alternative Investment survey was referenced which mentioned a growing allocation to systematic strategies by institutional investors (the presentation also heralds equity market neutral strategies as offering promising performance in 2016). Coupled with GAM's distribution network, there is certainly scope for GAM to ramp up allocations to its systematic funds.

GAM is also planning UCITS versions of CCP's strategies, UCITS being a form of European-regulated fund first introduced in 1985

The question though is whether performance can be maintained and what capacity constraints exist on the strategies pursued by the funds - according to GAM, the funds are scalable and the capacity constraints are low. This is supported by the proportion of Cantab's employees who are involved in strategy research (high), multiple models and multiple traded markets. Cantab has $4bn AuM as of 31 May 2015.

Deutsche Bank CDS Spike brings Excitement Back to Credit Markets

Deutsche's 5 year subordinated CDS rose to 540 basis points while one year subordinated CDS increased to 552 basis points. This means the Deutsche subordinated CDS curve is decreasing (a pattern of reversion which started appearing in the summer of 2007 during the credit crisis).

Should you wish to trade CDS speculatively there are some electronic trading options. MarketAxess (MKTX) provides a platform for trading single name CDS, CDS indices and index options. For single name CDS, they support streaming prices and a click-and-trade model as well as RFQ model.

Banks stocks sold off and people put money into gold and yen, which is trading at 113 to the dollar, down from a high of 121 yen on the 1st February 2016. The path of gold was slightly skewed as 1st February 2016 was a day of rising gold prices with a peak of $1258 per troy ounce. So whilst gold rose in response to the bank sell-off it was nothing like the peak earlier in the month, which coincided with a sell-off in the S&P.

Shell BG Merger will create World's Largest Producer of LNG - Banks Pile into Bridge Financing

Shell shareholders have approved a merger with their smaller, Reading, Berkshire-based rival BG to create the largest producer of LNG in the world. The merger will take place on Feb 15, 2016. Van Beurden has promised £2.5bn in cost savings.

Barclays Bank is the facility agent for the bridge financing of the deal. Bridge financing is a way to close the gap in order to raise finance to close a deal - at least until such time that the borrower can arrange long-term financing.

Bankers involved with Barclays in financing the deal include:

Alastair Macdonald, Deutsche Bank
John-Paul Way HSBC
Michael Atherton RBC Capital Markets, part of Royal Bank of Canada
Thierry Muschs, Sumitomo Mitsui Banking Corporation

Deutsche Bank Hails Offshore RMB Market

Deutsche Bank has hailed the three markets for Chinese currency: onshore CNY (restricted for foreigners), offshore CNH which is fully deliverable (H=helpful for offshore traders), and the USD-denominated NDF market. Offshore daily trading volumes in CNH are now equivalent to USD 2bn. Hong Kong's CNH deposit base stands at 576bn as of January 2012 (HKMA, established 1993).