HSBC is to launch HSBC Prime Services, a new joint venture between Global Markets and HSBC Securities Services (HSS).
According to an internal memo: HSBC Prime Services will bring together and leverage the HSS ‘Custody Plus’ proposition and Global Markets products and distribution platform to offer clients custody, financing, execution, collateral management, clearing and reporting needs.
The project will be headed by Cian Burke, currently CFO and Global Business Manager for Global Markets.
According to a spokesperson at the bank, leverage to clients will be modest, and clients will retain their rights over assets. Funds will also be segregated, avoiding the problems of rehypothecation that plagued the industry after the collapse of Lehman Brothers.
The launch of a Prime Services unit comes at a revolutionary time for the prime brokerage industry. The Global Custodian Prime Brokerage Survey 2009 highlighted that the old duopoly of Goldman Sachs and Morgan Stanley has ended after worries regarding counterparty risk forced hedge fund clients to move to safer banks.
Credit Suisse and Deutsche Bank were ranked as the best prime brokerages of 2008
2008 also saw the prime brokerage units of the now defunct Bear Stearns and Lehman Brothers merged into J.P, Morgan and Barclays PLC respectively. The Bank of America also merged with Merrill Lynch, another major prime broker.
Giles TurnerNews Editor