Deutsche Bank plans to make a push into the U.S. equity derivatives structured products market in the coming months. The European derivatives giant does not currently have a structured products desk in the U.S., but has offered some of these products from other areas, such as the prime brokerage desk. The firm has hired former Bankers Trust equity derivatives marketer Michael Chun to spearhead the operation. Karen Fang, v.p. in the structured products division in London, is also moving across the pond to work in the division, according to Johan Groothaert, managing director and head of equity structured products and alternative investments in London.
The move follows Deutsche Bank's takeover of U.S. based asset manager Zurich Scudder Investments earlier this year, which gives the European firm distribution to private clients in the U.S., said Groothaert. Deutsche Bank will also have had a New York Stock Exchange listing for a year in October, which makes it easier to issue structured products. A rival structurer said Deutsche Bank's relationship with Scudder will be a major help, as the largest players in the field--Merrill Lynch, Morgan Stanley and Citigroup--all have large distribution networks.
At the moment the equity structured products market in the U.S. is small in comparison to Europe as most investors buy cash equities, said Groothaert. But, "This is a good way to get skeptical clients back," he said referring to guaranteed products. Because the U.S. has one set of regulations, even if demand grows to one tenth the size of that in the fragmented European market it will be a success because of the economies of scale involved with dealing with one set of rules, explained Groothaert.
