Deutsche Bank has named Rob Ebert head of equities for Asia, Japan and Australia, at a time when Germany’s flagship lender is looking to invest in the franchise.
Ebert replaces Dixit Joshi who is moving to London to be the bank’s global head of prime finance. Both will report to Garth Ritchie who runs equities globally.
Deutsche Bank said on April 27 it plans to invest in equities as part of its five-year plan and redeploy capital away from other parts of the business such as repos and long-dated derivatives.
In Asia the bank’s executives are betting that China’s plans to open up its capital markets via schemes such as the Shanghai-Hong Kong Stock Connect will boost trading by mainland investors outside of China and pave the way for global investors to easily access A-shares.
Often when brokers enter a new market they have to offer discounts to build a client base but in the case of China most players are just starting out.
So far this year, the Hang Seng Index has climbed 19%, while the Shanghai Stock Exchange Composite Index is up 37% year-to-date. The MSCI Asia Pacific Index meanwhile is up 12%.
Indeed, Hong Kong’s exchange briefly saw the largest turnover in the world totalling $32.26 billion on April 8 and $37.62 billion on April 9, according to Bloomberg analytics. (This excludes A-share markets, which are not open to global investors.) Greater liquidity in Asian markets is likely to lesson concerns of global investors who have in the past struggled to exit positions held in the region.
The opening up of a new market comes as a boon to equities traders in the region who have seen margins contract sharply in recent years to the point that some brokers have capitulated. CLSA laid off about 25 equity traders earlier this year while Standard Chartered shuttered its loss-making equities franchise in January and CIMB cut 40 jobs around the region mostly in equities in February. More cuts are expected.
Deutsche Bank executives hope that its relative scale and the fact that it has managed to bolster the labor-intensive low-margin cash equities business with more profitable and harder to replicate product lines such as ECM, derivatives and financing will make it a winner in the shake out.
To be sure Deutsche Bank did shrink headcount in its equities franchise in Asia between 2010 and 2014 but managed to stem the decline to revenues by becoming more efficient. It now plans to expand headcount for its China equities business across all core product including research, advisory sales, execution services, financing and derivatives as clients gradually ramp up their China exposure.
Deutsche also plans to bolster its equity capital markets franchise in China hand-in-hand with its cash equities business. Hong Kong was the leading exchange nationality by volume of sell-downs in April with $3.6 billion sold across 16 deals, the highest monthly total on record for Hong Kong listed deals, according to data provider Dealogic.
Deutsche Bank was the number one investment bank in the Asia Pacific region in 2014; ranked top in FICC and four to six in equities, according to data provider Coalition.
Deutsche has an underwriting securities joint venture on the mainland called Zhong De Securities.
Other markets in Asia are also booming. Japan’s benchmark Nikkei 225 index is back trading around 20,000 points.
Ebert began his career in the financial sector at Daiwa Securities in 1985, where he was a trader on the Japanese warrant desk. He has seen the Nikkei 225 climb past 38,900 in 1989 and tumble to 7,054.98 on March 10, 2009.
Background in sales
Ebert will also continue to be co-global head of equity sales. He has two co-heads, one in Europe the other in the US.
Ebert plans to announce a new head of Asia Pacific sales in the coming weeks.
His role encompasses all facets of equities including derivatives, prime finance and cash.
Ebert has been in distribution for around the past twenty years. He was made head of the institutional client group for equity across Asia ex-Japan in 2010 and transferred to Hong Kong from New York. He was previously head of sales for equities, North America and prior to that ran European execution services sales.
He has also been head of the program trading sales desk, which he joined in 2000 after returning from a four-year stint in Tokyo where he was head of equity execution sales.
Ebert joined Deutsche Bank as global head of Asia Pacific sales trading in 1996 after a nine-year career at Morgan Stanley, where he ran Japanese Warrant Trading in Tokyo and Asian sales trading in London.
As Joshi heads to London to start his global role he can draw on experience working in the US, Asia and Europe. Joshi was head of equities for Asia Pacific, based in Hong Kong since 2011.
Joshi joined Deutsche Bank in October 2010 from Barclays Capital to head the EMEA Equities business across sales, trading, research and structuring.
At Barclays Capital, he was responsible for the EMEA equity business, had overseen the Asian equities business, was the head of equity-linked products and led the growth of the equity derivatives business.
Before joining Barclays Capital in November 2003, Joshi spent eight years at Credit Suisse First Boston. He held various roles including chief risk officer for CSFB’s equity derivatives and convertibles unit, based in New York.