Deutsche Bank has created a $50bn business to house its hedge fund, risk premia and retail structured products within a new global investment solutions (GIS) division. "The reorganisation is designed to bring together all the different businesses which produce customised products, because returns on traditional investments are not that good," said the spokesperson.

The new unit will be headed by Tarun Nagpal (pictured), formerly head of alternatives and fund solutions at the German bank, according to a London-based spokesperson for the German bank. Nagpal will report to Thomas Patrick, global head of equities.

The new arm of the bank will include risk premia, the managed account platform and X markets (which includes certificates, notes and warrants), but not exchange-traded funds (ETFs) which fall under the bank's X Trackers business, according to the spokesperson.

The equity structuring group (ESG), which is led by Tom Leake, is now part of GIS, which consolidates all manufacturing functions for customised products. The bank's wealth investment solutions, as it is a sales function, will not be part of GIS.

This latest move by John Cryan, chief executive officer of Deutsche seeks to revamp the bank's operations in the face of a US$14bn (€12.6bn) fine imposed by the US Department of Justice (DoJ) to punish Germany's biggest lender for mis-selling subprime mortgage products in the run up to the financial crisis of 2008. Deutsche has deleveraged by a €425bn over the past year, but Cryan's efforts to dispose of assets and raise capital may be thwarted by illiquid credit markets and the decline of the investment banking market.

Deutsche, the second largest investment bank in the world by assets (the bank states its worth at €2trn), has a €55trn exposure on the global derivatives market, and remains a tier one issuer in the global retail structured products market. This year, the bank has been the third most active issuer globally in structured products, including non-retail, leverage and flow (136,121 products/€4.3bn), while, in 2015, it sold €7.5bn across more than 219,000 products.

In its 2016 half-year results, the Frankfurt-based lender reported a significant decrease in equity derivatives revenues driven by 'lower client activity' and 'challenging market conditions'. In wealth management, revenues also declined, by 12%, to €490m, reflecting lower performance and transaction fees driven by the more difficult market environment, including very low levels of equity capital markets activity in the US. In asset management, revenues were €706m, down 8% on the year.

Deutsche made a number of changes to its global equity derivatives sales and structuring divisions at the end of 2015 as part of an overhaul of equities that began with the appointment of Jonny Potter, previously co-head of equity sales along with Derek Capanna, who was named global head of equities following Capanna's departure in July to join UBS as global head of equities distribution in New York.

The bank is also concentrating on Deutsche Asset Management (Deutsche AM) X-Trackers in the US and has made several senior hires to strengthen its portfolio management division and streamline its wealth management focus after the sale of its US Private Client Services (PCS) business in September. With €719bn of assets under management (as of June 30, 2016), Deutsche AM is also one of the world's leading investment management companies.

Deutsche is in the process of cutting 9,000 job roles worldwide to make the Group more competitive as part of its 'Strategy 2020'.

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