Deutsche Bank's (DB -1.3%) prime services, the once-lucrative unit that provides services to hedge funds, has suffered as a result of the German lender's ongoing turmoil, Bloomberg reports, citing people with knowledge of the business.
Revenue from the unit have declined for a third straight year and has declined by more than a third since 2015, they said, and has contributed to Deutsche Bank's $750M loss in its equity trading division last year. The bank says the reference to the size of the decline wasn't accurate.
Deutsche Bank built up the business of executing trades and lending securities to hedge funds in the wake of the financial crisis by capitalizing on the weakness of U.S. rivals. Now, the tables have turned, as customers either reducing their business with Deutsche or leaving out of concern about its ability to devote capital to the unit.
The bank has worked to reshape its prime business to improve returns and lower its balance sheet, a Deutsche Bank spokeswoman said in an emailed statement. "We have seen growth in our balances year-to-date, with an attractive return profile, and we expect that trend to continue.”
Previously: Deutsche Bank cuts bonus pool to less than $2.3B: Bloomberg (March 6)
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