WINNERS: EUROPE

Best Commodity Derivatives Provider
Morgan Stanley
Despite attempts by competitors to nibble at its market share when commodities prices were soaring in 2009, Morgan Stanley has maintained its dominant position in commodities derivatives in Europe thanks to the diversity of its business model. Enjoying an unusual advantage over most banks, Morgan Stanley has physical control over many of the commodities it trades—chartering its own tanker fleet and owning electricity generating facilities in Europe, for example. That buttressed the bottom line against a sharp drop in demand for jet fuel hedging among airlines, which make up a substantial share of the firm's revenue from commodities derivatives in Europe. Airlines that were 50%–75% hedged are now about 25% hedged. "As long as the market is range-bound, people tend to hedge less," says Boris Shrayer, global head of marketing of commodities at Morgan Stanley in New York. "The impact of the financial crisis was that many clients needed help in financing and were willing to use commodities for funding. Right now what you are seeing is more strategic deals getting done."

Best Credit Derivatives Provider
Deutsche Bank
Deutsche Bank parlayed Europe's sovereign debt crisis this year into record revenues for its credit derivatives business thanks to a surge in market share, trading more than €2 billion ($2.8 billion) in euro sovereign credit default swaps per day in the first quarter of this year. Unlike many of its competitors, Deutsche Bank's structured credit desk stayed open during the crisis and focused on bespoke, or custom-made, solutions, such as a €169 million collateralized loan obligation that was linked to a portfolio of leveraged loans. The bank continued to innovate despite the crisis. In December 2009, Deutsche started a new credit-linked note and credit repackaging platform for small corporates, high-net-worth individuals and retail investors to gain access to CDS-based investment products. Since then, more than 50 transactions with a notional value above €1.5 billion have been issued. In the first quarter of this year, Deutsche Bank launched "short" exchange-traded funds for investors to express a bearish view on credit and for investors seeking a low-cost hedge. In April this year Deutsche Bank launched a new multi-asset clearing platform, dbClear.

Best Equity Derivatives Provider
Credit Suisse
Over the past five years, Credit Suisse has grown its equity derivatives business in Europe from a client base that was split between individual investors and corporate clients that used such derivatives for buyback programs, employee stock options and hedging. But since the stock markets crashed two years ago, even stronger demand has come from hedge funds, pension funds and insurance companies that have become increasingly active in hedging their portfolios. The firm has been judiciously deploying capital and keeping prices low for its customers while many other banks have been retrenching. "This was a deliberate client strategy that we successfully implemented on the back of the financial crisis," says Eric Van Laer, head of structured equity derivative sales in Europe at Credit Suisse in London. That strategy helped Credit Suisse build a dominant market share in equity derivatives among institutional investors. More to its advantage, the bank kept its commissions low, earning itself top marks in a survey of more than 100 institutional investors in Europe by Greenwich Associates this year.

Best FX Derivatives Provider
Deutsche Bank
Deutsche Bank's FX derivatives business in Europe is part of a global foreign exchange operation that is backed by one of the biggest balance sheets on the continent. Deutsche saw Europe's sovereign debt crisis as an opportunity to grow its FX business among clients who were looking to hedge positions in the embattled euro. Earlier this year the FX desk found itself rushing to meet demand for bespoke FX solutions for institutional investors at a time when exchange rates became so unpredictable that hedging only with forwards was risky and expensive. In response to requests from clients for a solution to the common problem of banks canceling transactions even after they are agreed to on a screen, Deutsche Bank launched an innovative electronic FX options trading service in September called Automated Tool for Orders Management, or ATOM, with a new pledge that every transaction is a "Deal Done." And demand continues to grow for notes, swaps and funds linked to proprietary trading indexes designed by Deutsche Bank, which currently has €14 billion invested in its own FX-linked indexes.


Best Interest Rate Derivatives Provider
Deutsche Bank
Deutsche Bank's research teams were early to predict the sovereign crisis, warning in reports as early as August 2009 that Greece would suffer this year and that European sovereign debt concerns would reshape the markets. In response, Deutsche Bank invested in interest rate derivative franchises, where it correctly anticipated growth, particularly in inflation derivatives and longevity products that pension funds use to hedge the risk of beneficiaries' living longer than expected. The bank has executed landmark longevity transactions, including a £3 billion ($4.8 billion) longevity trade for BMW's pension fund, while the hedge fund derivatives business has launched new products for a low-rate environment. Deutsche Bank's exotics business also launched an ambitious roster of new exchange-traded funds, certificates and proprietary trading strategy indexes this year. In July the bank was appointed as hedge/duration manager of the UK's £6 billion, 40-year inflation-linked bond, which attracted £10 billion of orders with £1.8 billion coming from Deutsche Bank's clients alone.

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