Fitch: German Banks Could Drop Hedge Funds

Feb 13 2013 | 12:48pm ET

German plans to enforce a strict separation of retail banking and investment operations, including hedge funds, could lead German banks to simply abandon the latter.

Germany's proposed new bank rules would require that both secured and unsecured investment activities be ring-fenced from customer assets. By contrast, France, which is working with Germany on the new rules, plans only to force the separation of unsecured activities from customer assets.

The full impact of the German bill remains unclear, including which activities precisely will be prohibited. But whatever form they take, banks may simply choose to forego proprietary trading, high-frequency trading and hedge funds entirely, Fitch Ratings suggests.

"Only a few banks would end up putting trading activities into separate subsidiaries," Fitch's Michael Dawson-Kropf told Bloomberg News. The rest would simply give up "restricted activities rather than incur the costs of separation, as the affected businesses make relatively small contributions to earnings."

The draft bill, approved by the cabinet last week, would affect between 10 and 12 banks, most notably Deutsche Bank.


In Depth

Q&A: Quad Advisors’ Borish Is Looking For Real Traders, Not Index Huggers

Aug 20 2014 | 1:43pm ET

Peter Borish, who served as founding partner and director of research at Tudor Investment...

Lifestyle

Viking Manager In Rent Dispute

Aug 11 2014 | 4:14am ET

A hedge fund manager is demanding most of his money back from his former landlord...

Guest Contributor

Majority Of Inflows Go To Brand Name Hedge Funds

Aug 12 2014 | 9:00am ET

Since the market correction of 2008, a vast majority of hedge fund net asset flows...

 

Editor's Note

 

Futures Magazine

PREVIEW July/August 2014 Cover

Inside Futures' 500th Issue

The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.

The Alpha Pages

TAP July/August 2014 Cover

Real talk on alternative investments, business & finance

The Alpha Pages Editor's Note