Deutsche Bank Ag · XETR:DBK
Deutsche Bank — JP Morgan Investor Conference 2010
22 slides from Deutsche Bank's conference presentation, Mar 17, 2010
Slide 1: Outlook for Equity Derivatives
Outlook for Equity Derivatives R Roger N Naylor l Head of Global Equity Derivatives JP Morgan Investor Conference C f London, 17 March 2010
Slide 2: Agenda
Agenda 1 Deutsche Bank overview 2 Growth opportunities 3 Challenges and mitigants 4 2010 outlook Investor Relations 03/10 · 2
Slide 3: Scope of Global Equity Derivatives (GED) at DB
Scope of Global Equity Derivatives (GED) at DB Definition can vary between investment banks GED products at DB Associated products (not in scope) db-X db X Equity Swaps Listed F&O Execution ETFs Flow Derivatives Index Arbitrage Exotic Derivatives Corporate & Strategic Transactions
Slide 4: Equity Derivatives at Deutsche Bank – key facts
Equity Derivatives at Deutsche Bank – key facts Trading locations Continued strength in EMEA London Frankfurt Seoul Istanbul Tokyo New York No. 1 Flow Equity Derivatives Quality Hong Kong N 1E No. Equity it D Derivatives i ti R Research h No. 1 Important Firm for Flow Equity Derivatives Greenwich As
Slide 5: Agenda
Agenda 1 Deutsche Bank overview 2 Growth opportunities 3 Challenges and mitigants 4 2010 outlook Investor Relations 03/10 · 5
Slide 6: 2010 – 2012: Our business is primed for significant growth
2010 – 2012: 2012 OOur b business i iis primed i d for f significant i ifi t growth th Client trends point to increasing use of derivative products We identified gaps in our business which we will close in 2010 Rapid p resurgence g in exotic p products Investor Relations 03/10 · 6
Slide 7: Client trends: Structural growth in use of derivatives and increased emphasis on counterparty risk
Client trends: Structural growth in use of derivatives and increased emphasis on counterparty risk Why use equity derivatives? Relative importance of service((1)) More clients are systematically Macro risk hedging macro risk using equity index derivatives Increases the need for Lower volatility port
Slide 8: Closing gaps: More stability in the market gives us confidence to expand
Closing gaps: More stability in the market gives us confidence to expand into the areas we identified in 2009 Lower implied volatility Areas of expansion Our core scenario is that equity implied volatility, as proxied by short-dated S&P 500 levels, will 1. Flow derivative trading in trade between
Slide 9: Closing gaps: 1. Flow Derivatives in North America
Closing gaps: 1. Flow Derivatives in North America The domestic US Hired 6 senior traders in the last 6 market still presents months of 2009 the greatest opportunity for DB Dedicated technology team developing to grow a state-of-the-art trading system DB targeting Custody & Clearing for SEC &
Slide 10: Closing gaps: 2. Regional expansion of Strategic Transactions (ST)
Closing gaps: 2. Regional expansion of Strategic Transactions (ST) Established in 1998, the ST business delivers innovative solutions to corporates, hedge funds, private equity, sovereign wealth and high net-worth clients Unique q approach pp to managing g g derivative, fiscal, legal g and accou
Slide 11: Closing gaps: 3. Rapid growth of db-x
Closing gaps: 3. Rapid growth of credentials Future expansion Origination, structuring, distribution and Korea Trading commences in March 2010 marketing of structured trading and investment Call and put options on major shares products (certificates, warrants, notes) and the KOSPI 200 Index
Slide 12: Exotics: The exotics business spans a wide range of products and customers
Exotics: The exotics business spans a wide range of products and customers Hedging & Overwriting Active Management Alternative Risks & Hidden Assets Proprietary Indicies ke Structure (CROCI, X-Alpha omplexity Liquid Lpha) Palladium & Single High co Alb t Albatross Non-Recourse N R Bespok Stock/Index
Slide 13: Exotics: In 2008 clients turned away from complexity and counterparty risk
Exotics: In 2008 clients turned away from complexity and counterparty risk Hedging & Overwriting Active Management Alternative Risks & Hidden Assets Proprietary Indicies ke Structure (CROCI, X-Alpha omplexity Liquid Lpha) Palladium & Single High co Alb t Albatross Non-Recourse N R Bespok Stock/Index
Slide 14: Exotics: We experienced a rapid recovery in 2009
Exotics: We experienced a rapid recovery in 2009 with several noteable changes Hedging & Overwriting Active Management Alternative Risks & Hidden Assets Proprietary Indicies ke Structure (CROCI, X-Alpha omplexity Liquid Lpha) Palladium & Single High co Alb t Albatross Non-Recourse N R Bespok Stock/I
Slide 15: Agenda
Agenda 1 Deutsche Bank overview 2 Growth opportunities 3 Challenges and mitigants 4 2010 outlook Investor Relations 03/10 · 15
Slide 16: Challenges and mitigants: Margin compression
Challenges and mitigants: Margin compression Mitigant: Increased volumes and Challenge: Lower bid-offer spreads increased market share V2X (rhs) 70 Listed option volumes continue to g grow in North America Average Spread (lhs) 60 (23.3% CAGR since 1973) 50 We can anticipate a similar trend in Eu
Slide 17: Challenges and mitigants: OTC regulatory reform
Challenges and mitigants: OTC regulatory reform Challenge: Significant change in market structure Mitigant: Continued discussions Regulators have stated a clear desire to Only 1% of the $ 592 trillion OTC market is standardise OTC derivative contracts and linked to equity clear through a central
Slide 18: Challenges and mitigants: Macroeconomic risks
Challenges and mitigants: Macroeconomic risks Challenge: Macroeconomic environment Mitigant: Derisked platform Whilst not our core view we cannot 60% reduction in balance sheet (non- ignore the possibility of another market derivative trading assets) from peak downturn levels in August 2008 Ho
Slide 19: Agenda
Agenda 1 Deutsche Bank overview 2 Growth opportunities 3 Challenges and mitigants 4 2010 outlook Investor Relations 03/10 · 19
Slide 20: Looking forward: A diverse business that can adapt in changing environments
Looking forward: A diverse business that can adapt in changing environments Global Equity q y Derivatives revenues, 2010e Product diversification Regional diversification Investor Relations 03/10 · 20
Slide 21: Looking forward: 2010 growth prospects
Looking forward: 2010 growth prospects Global Equity Derivatives revenues, 2010e 1Q2009 losses will not repeat in 2010 Majority of impact will be 2011 - 2012 Tighter spreads in flow and exotics Increased use of derivatives for hedging Focus on franchise growth in flow F&O Execution, US Flow, Structu
Slide 22: Cautionary statements
Cautionary statements This presentation contains forward forward-looking looking statements. Forward Forward-looking looking statements are statements that are not historical facts; they include statements about our beliefs and expectations and the assumptions underlying them. These statements are b