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Deutsche Completes Auction of Equity Derivatives Portfolio

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Moving ahead with its major overhaul plans, Deutsche Bank AG (DB - Free Report) has auctioned portfolios of equity derivatives after dividing the same into three groups — European, Asian and U.S. books. The news was reported by Bloomberg.

This auction is first among many more to be completed. It basically involved flow equity derivatives. Per the article, the second auction is likely to involve exotic derivatives, the sale of which is expected to be quite complex.  

European assets were acquired by Barclays Plc (BCS - Free Report) , while Goldman Sachs (GS - Free Report) placed the winning bid for Asian equity assets. Further, Morgan Stanley (MS - Free Report) purchased the U.S. trades.

Per restructuring plans announced in July, the bank is making progress in exiting equities-trading business, with a view to counter rising costs and falling bottom line. Notably, a major part of assets held previously in the stocks trading division is now placed in a capital release unit, which will ensure their smooth winding down.

Though Deutsche Bank’s restructuring efforts like cost-saving measures look encouraging, it is really difficult to determine how much the bank will gain, considering the lingering headwinds.

Recently, the bank came under scrutiny of U.S. regulators regarding its dealings with Russian oligarchs. It was alleged that the staff reported concerns about new and existing Russian clients and transactions, but it was not addressed by the seniors.

However, the sources said that the probe is in early stage and it is not confirmed whether any action will be taken against the bank.

Shares of Deutsche Bank have lost 8.1% on the NYSE in the past six months compared with the industry’s decline of 7.8%.

The stock currently carries a Zacks Rank #4 (Sell).

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