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Citi
Understandably , Citi has spent much of the recent past looking inward rather than outwards , as it shed businesses that were eating capital and other resources without delivering a commensurate return . One legacy of that process is a discipline about where to invest . And the prime brokerage group at Citi is pursuing a strategy of building services that can generate attractive returns and offering them to alternative asset managers of sufficient variety , size and sophistication to make a reality of that return through the cycle . Quantitative strategies that can use Delta 1 and synthetic financing services are a natural target , and the robustness of the scoring in those areas indicate Citi is making good progress with its investment in the people and technology necessary to deliver products to that type of client . However , one unhappy by-product of the focus on larger clients may be a dent in wider perceptions of client service , especially among smaller clients , though the detailed scoring suggests the issue is not dictated by size . The client service teams have their advocates – “ Excellent client service , best on-boarding process in the industry ,” says a client who appointed Citi recently – but the score will be seen as disappointing by a bank that is investing heavily to impress its target managers . The outcome in sales and marketing is much happier and reflects the quality of the people the bank has recruited in the last few years in every region and the willingness of the senior management to liberate them to talk to clients for long periods without reward and to address client needs rather than push product . The detailed scores demonstrate it is working , in the sense that clients are willing to believe Citi will price its services and its balance sheet attractively . In other areas , Citi does relatively well as much by accident as design . Trading and execution and asset safety are cases in point – though much of the benefit seen by clients in asset safety is the openness of the bank to using third-party custodians , if not to placing restrictions on re-use . But Citi collects its best score in foreign exchange prime brokerage . This is a gratifying outcome in a business in which the bank has become more selective ( indeed , it is not strictly speaking part of the prime brokerage offering at all ). “ Extremely satisfied ,” writes a user of the service . “ The only PB who can estimate margin calls on an electronic basis .” One area that is definitely part of the prime brokerage offering , and where Citi has chosen to invest , is capital introductions . Often regarded as a fringe activity , Citi sees capital introduction as crucial to attracting and retaining and growing its hedge fund client base , and the bank is recruiting well-connected people in both Asia and North America . However , the team is small and expected to focus on the dozen or so clients the bank can help in each region rather than the clients who would like to be helped by the bank . Citi is applying a similar approach to fixed income , where it is one of the few prime brokers to have stayed in the business at all . It is selective about which clients to take on and predictably averse to any looking for indiscriminate financing . While Citi provides operational support , fixed income clients are encouraged to find repo counterparties elsewhere . “ The fixed income PB platform is outdated [ and ] the customer service is below average ,” grumbles a client . The average score is nevertheless respectable . The same is true of the score for operations , where Citi would normally expect to do exceptionally well .
42 %
By size
12 %
46 %
Weighted average scores
PROFILE OF RESPONDENTS
Large Medium Small
Weighted average scores by service area Service area
32 %
By location
18 %
2016 2017 2018 5.23 5.78 5.61
Weighted average score
Capital introductions 5.45 1.6 % Client service 5.60 -6.9 %
50 %
Consulting N / A N / A Operations 5.46 -8.4 % Technology 5.48 -2.2 % Product development 5.06 -7.3 % Risk management 5.72 2.7 % Asset safety 5.91 3.0 % Sales and marketing 5.90 -3.8 % Trading and execution 5.44 -7.0 % Delta 1 , swaps and financing 5.49 -4.0 % Stock borrowing and lending 5.71 -4.3 % Foreign exchange prime brokerage 6.00 5.8 % Fixed income 5.39 -6.6 % OTC clearing 5.54 -5.3 % Listed derivatives 5.43 -7.8 % Total 5.61 -3.2 %
Americas Europe and Middle East Asia
+/ - the global average
The Hedge Fund Annual 2018 globalcustodian . com 79