FRANKFURT (Reuters) – Deutsche Bank (DE:DBKGn) is ongoing to scale back how big its derivatives book, which isn’t as dangerous as investors may believe, Chief Risk Officer Stuart Lewis told German weekly paper Welt am Sonntag.
“The potential risks within our derivatives book are massively overestimated,” Lewis told the paper. He stated 46 trillion euros in derivatives exposure at Deutsche made an appearance large but reflected just the notional worth of the contracts, as the bank’s internet contact with derivatives was cheaper, around 41 billion euros.
“The 46 billion euros figure sounds gigantic, but it’s completely misleading. The actual risk is way lower,” Lewis stated, adding that the amount of risk on Deutsche Bank’s books was consistent with that seen at other investment banking peers.
“We are attempting to make our business less complex and therefore are paring back our derivatives book. Areas of it were transferred right into a non-core unit some time ago.”
New banking rules enforced within the wake from the 2009 economic crisis discourage large bets on dangerous assets, and also have forced Deutsche Bank to drastically reduce the size of their derivatives exposure.
Derivatives are financial contracts that draw their value in the performance of the underlying asset, index or rate of interest. They may be used to hedge risks.