Friday, 24 February 2017
Last updated 9 min ago
Apr 26 2013 | 10:18am ET
Hedge funds are poised to be the big beneficiaries of the fallout from the financial crisis and the economic recovery—at the expense of banks—a top Deutsche Bank executive said.
CFO Stefan Krause told a Berlin conference yesterday that hedge funds are both luring banks' best talent with promises of better pay and will probably do best, performance-wise, during the recovery. Krause blamed new regulations for the brain-drain to hedge funds, including stricter capital requirements and other rules forcing banks to quit some business, and new bonus limits that apply to banks.
Krause said most bankers who leave his firm go to hedge funds.
"Our business is people-contingent and you'll never be able to pay competitively," he said. "What you can do is structure your pay differently so it's longer-term oriented."
Those bankers who do defect to hedge funds are likely to enjoy the fruits of their new labors, Krause added.
"There are businesses, based on our capital regulation, we'll not be able to do," he said. "Hedge funds will be able to. If I had to bet who is going to benefit the most post-crisis from the asset appreciation you have coming, then certainly hedge funds."