Deutsche Bank AG.’s co-head of investment banking, Anshu Jain sees ’some normalisation’ but does not consider the global financial crisis to be over yet.
‘Is the crisis behind us? Market indicators point to different conclusions,’ he said according to a presentation at an investors’ conference.
Jain estimates U.S. house prices will decline by a further 13 percent and pointed to investment banks exposure to so-called alt-a mortgages as a risk factor. The top 9 investment banks have disclosed residential mortgage backed securities in the near prime alt-a segment of about 50 billion euros, according to his presentation.
On the positive side, Jain pointed to declining volatility and improved spreads for credit default swaps.
He sees expanded opportunities for investment banks to provide profitable liquidity and a ‘huge scope to capture market share’ in the aftermath of the crisis.
Lower leverage and reduced ‘investor adventurism’ could, however, prove challenging, he said.
Jain considers Deutsche Bank (nyse: DB - news - people ) well positioned to take market share in the fields of equities, commodities and emerging markets in the aftermath of the crisis.
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