Bloomberg News

Deutsche Bank Credit Trader Silvetz Joins Hedge Fund BlueCrest

September 15, 2011

Sept. 15 (Bloomberg) -- John Silvetz, a managing director at Deutsche Bank AG who traded some of the most distressed bonds and derivatives in debt markets, has joined hedge fund BlueCrest Capital Management LLP.

Silvetz, 36, started this week as a credit trader in New York for the $27 billion hedge fund founded by Michael Platt. Ed Orlebar, a spokesman for BlueCrest in London, confirmed the hire. Silvetz worked at Deutsche Bank for 10 years, most recently specializing in bonds and credit-default swaps linked to companies including bond insurer MBIA Inc. and power producer Energy Future Holdings Corp.

Traders at the investment-banking units of the world’s biggest lenders are joining hedge funds, or starting new investment firms, amid a crackdown on pay practices and legislation created by U.S. Congress designed to restrict how much banks can risk their own money trading securities, derivatives and other assets.

Firms are hiring as the amount invested in the hedge-fund industry globally exceeded $2 trillion this year for the first time, according to Chicago-based Hedge Fund Research Inc. Funds added $127 billion of assets to $2.04 trillion in the first six months of 2011 after dropping to as low as $1.33 trillion in the first quarter of 2009.

Renee Calabro, a spokeswoman for Deutsche Bank, declined to comment. Silvetz didn’t immediately respond to an e-mail.

Silvetz follows Thomas Curran and Prakash Narayanan, also among Deutsche Bank’s most profitable credit traders, in departing the Frankfurt-based lender this year for hedge funds as banks worldwide curb or defer payouts amid regulatory pressure to avoid quick rewards generated by employees who take risks with a banks’ own money.

Actively Traded

Silvetz handled some of the most actively traded credit- default swaps and below investment-grade bonds at the bank, the top U.S. fixed-income dealer in 2010 in a Greenwich Associates ranking. The gap between where Wall Street traders have bought and sold credit swaps on MBIA Insurance Corp. has averaged 1.2 percentage points the past six months, according to prices from swaps data provider CMA in London. That compares to an average so-called bid-ask spread of 0.06 percentage point for the 15 most-traded contracts on companies with investment-grade ratings, CMA data show.

Curran, who traded distressed financial debt at the bank, left to join Rose Grove Capital Management LLC, whose president is Hope Pascucci, previously Deutsche Bank’s global head of debt capital markets.

Narayanan joined Saba Capital Management LP, the $4.2 billion investment firm founded by Boaz Weinstein, Deutsche Bank’s former co-head of global credit trading. Curran and Narayanan together had earned as much as $800 million for the lender in the two years before they left, people with direct knowledge of the situation said in April.

Deutsche Bank said that month it hired two credit traders from London-based Barclays Plc. Dennis Lu is a managing director focused on investment-grade corporate bonds and Peter Ragosa trades credit swaps tied to the debt, Deutsche Bank said in a statement.

--Editors: Pierre Paulden, Alan Goldstein

To contact the reporters on this story: Shannon D. Harrington in New York at sharrington6@bloomberg.net;

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net;


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