Alles ist vorbei
Deutsche Bank‘s traders can start looking for boxes or plastic bags. Rumor has it all proprietary trading will be halted at the German bank. All credit trading is shut down. There have been consistent rumors in the market all other proptrading will be ended as well. Deutsche Bank’s European trading desk is based in London and staffed with a lot of French traders with lousy accents.
There hasn’t been much action from Deutsche’s option traders in the last months. DB used to be one of the bigger fish in Europe with large positions. Departure of major banks from the option markets will deteriorate liquidity and increase risk for the remaining traders. Don’t expect any official announcement soon from Frankfurt on their proptrading as unwinding of positions continue. Stock keeps falling, implied option volatility rising to 125. Schade.
Update: Deutsche Bank shares plunge an additional 6,5% – but option volatility levels remain steady. Interesting article in Der Spiegel on toxic assets in German banking sector.
Update 2: According to the Süddeutsche Zeitung two of DB’s hedge funds, CQ Capital and DB Distressed Opportunities, will post heavy losses exceeding 40%.
Deutsche Bank AG’s U.S.-based hedge funds CQ Capital and Distressed Opportunities will report a full-year loss of more than 40 percent for 2008, Sueddeutsche Zeitung reported, citing documents in an e-mailed preview of an article to be published omorrow. CQ Capital saw the value of its investments fall 47.2 percent during the year, while Deutsche Bank Distressed Opportunities dropped 42.4 percent, the newspaper reported, adding that the HFRX Global hedge funds index declined by 23.3 percent during the same period. Mayura Hooper, a New York-based spokeswoman for Deutsche Bank, declined to comment when contacted by Bloomberg News today.
At least Deutsche Bank didn’t invest its capital in their own hedge funds, according to an update by Bloomberg. The word opportunity sounds very positive, but distressed seems to have the upper hand.