Citi has launched a new Collateral Management Services unit, led by Rajen Shah, previously global head of custody at J.P. Morgan. Pierre Mengal also joins from Standard Chartered Bank as Asia regional head.
Collateral management remains a key focus for investors. As a result of the collapse of Bear Stearns and Lehman Brothers, $600 trillion in OTC and listed derivative trades remain outstanding, all requiring varying degrees of collateral management.
The introduction of Citi’s collateral management unit taps into the demand highlighted by a recent Finadium report on collateral management, stating the trend that hedge funds and pension plans are arriving at the conclusion that collateral management is too complex to manage without technology and services. The central clearing of derivatives is also expanding the collateral management marketplace.
The new service from Citi will offer clients the full breadth of collateral services including: exposure monitoring, margin calling, collateral optimization and rehypothecation.
Increasingly, in todays marketplace, clients are looking to third parties to service their collateral management needs,” said Neeraj Sahai, global head of Securities and Fund Services, Citi.
Rajen M. Shah was replaced as global head of custody at J.P. Morgan at the end of 2009 by Nick Rudenstine, global securities lending product head. According to a J.P. Morgan spokesperson at the time, Shah will be seeking other opportunities within the bank.
Mengal joins Citi from Standard Chartered Bank Singapore where he was global product head for Broker Services & Collateral Management. Mengal will be located in Singapore.