Boaz Weinstein's bad gambles in credit trading cost Deutsche Bank $1.8 billion in losses in 2008
Deutsche Bank, Germany's largest bank, reported Thursday that it lost $5 billion in 2008 - including $1.8 billion from trader Boaz Weinstein's group. The losses by Weinstein, an Israeli who has lived in the United States for several years, exceed the estimated $1.5 billion in profits his group generated in 2006 and 2007.
The bank's 2008 report included its first one-year loss in more than 50 years. Last month Deutsche Bank shut down Weinstein's operation and wound down many of his positions. But some positions the bank kept rebounded by about $600 million in January as credit markets eased, traders say.
Weinstein left the bank last week, with plans to start a hedge fund. Last month the bank announced that he and about 15 other employees from the credit trading division would be leaving in the second quarter in order to establish a hedge fund.
Weinstein, who joined Deutsche Bank 11 years ago, earned $40 million in annual pay.
Sources at the bank told TheMarker in December that other Israelis, besides Weinstein, worked in the bank's credit derivatives trading room. They include Elad Shraga, managing director for global principal finance and head of structured credit products at Deutsche Bank New York. Israelis working with Shraga in New York include Gad Caspi, who had previously worked with him in the bank's Tel Aviv branch.
The cerebral Weinstein used to play down the complexity of his trading, saying he used common sense and simple mathematics. He sometimes would quip, deliberately conflating two cliches: "It's not rocket surgery." But he has also boasted that people viewed him as the "best credit trader in the world." Until December his Facebook page featured a photo of himself playing poker with actor Matt Damon.
Weinstein became a chess life master at 16, a card-counting blackjack ace when he was 20 and a player in the esoteric world of credit derivatives at 24, when he joined Deutsche Bank. According to an account provided by a number of current and former Deutsche Bank traders, Mr. Weinstein surged to the top of the bank's credit trading desk using tactics involving credit-default swaps, a form of insurance against bond defaults.
In 2005 Weinstein won a Maserati in a poker tournament sponsored by a unit of Warren Buffett's Berkshire Hathaway Inc. And a few times a year, Mr. Weinstein joined several Deutsche Bank traders - members of a secretive blackjack team who'd attended Massachusetts Institute of Technology - to hit the blackjack tables in Las Vegas.