FRANKFURT: Deutsche Bank has sold $50 billion in unwanted assets to Goldman Sachs as part of its restructuring, three people with knowledge of the matter said on Wednesday.

The assets, related to emerging-market debt, were part of Deutsche’s unit to wind down unwanted securities, the people said, confirming a development first reported by Bloomberg.

As part of a broad overhaul, Deutsche has hived off billions in assets into a so-called capital release unit, also called a bad bank. The sale to Goldman marks the latest in a series of disposals of such assets.

The unit contained 177bn ($195bn) in leverage exposure at the end of the third quarter. The bank aims to reduce that to 119bn by the end of this year.

It is unclear how much the sale to Goldman chips away at that goal because the nominal $50bn is not comparable to leverage exposure, a measure of risk.

Goldman purchased the debt at a deep discount and believes it can make a modest profit on the deal, according to a fourth person familiar with the matter. The book likely includes derivatives, as well as emerging-market debt, the person added.

Deutsche has said it sold packets of equity derivatives in three auctions. It is now trying to sell more complex equity derivatives, a process that will take a couple of years.

Deutsche has also struck a deal to transfer its prime brokerage business to BNP Paribas. Deutsche Bank and Goldman Sachs declined to comment.

Published in Dawn, November 28th, 2019