Global Custodian Hedge Fund Annual 2018 | Page 81

[ S U R V E Y Credit Suisse H | P R I M E B R O K E R A G E ] Weighted average scores 2016 5.32 2016 2017 2018 5.6 and product development, 5.32 5.6 exhibit 5.39 also symptoms igh profile departures and conspicuous restructuring have 2017 as consulting 2018 of a withering-away. 5.39 Unsurprisingly, respondents are cautious made for a difficult year at Credit Suisse, though uncertain- profile for now about giving more business to Credit Suisse or urging ty over the future of the business has clouded client perceptions Respondent fund to 42% do so. for years. Roles were first moved to Dublin as long ago as 2015, Small others and the allocation of balance sheet to prime services has been managers 9% Medium- under pressure since 2014. The Weighted limited number of responses and 48% sized fund the relatively disappointing scores reflect the challenge of man- managers average 42% scores aging clients and staff through prolonged uncertainty. “Strong Large fund 9% 5.32 2016 2017 2018 people in NY office compensate 2016 for weaker coverage elsewhere,” managers 48% PROFILE OF RESPONDENTS 2017 5.6 5.32 5.6 5.39 is how one client describes his operational interactions with Americas 50% Credit Suisse. There is no doubt 2018 that the bank 5.39 remains commit- Europe and 18% Respondent profile ted to the prime services business, albeit with a reduced list of Middle East By size By location Small fund 32% target clients and in closer alignment with its 42% equities franchise. Asia managers But the drive to lift the profitability of the business is bound to 9% Medium- Weighted average scores by service area affect the quality of relationships with 48% that remain. sized fund the clients 32% Americas Large “Credit Suisse is outsourcing their operations and client rela- managers Weighted 42% +/- the Europe and 50% tionship to India,” notes one. “This Large will fund help bring down their Service area average global Medium 9% Middle East bottom-line. However, with the managers new and inexperienced team, Small 48% score average Asia Americas 50% the quality of service is affected.” The score for client service is Capital 18% and by engaging with us,” introduction 4.15 -22.8% not high. “The PB reps can do a Europe lot more 18% Middle East writes one client. Though the score for sales and marketing is s Asia Suisse, the 32% the highest of any earned by Credit detail shows that Client 5.3 -11.9% clients appreciate steadiness and transparency in pricing more service Weighted average scores by service area Consulting 5.86 0.0% than the level of commitment to them as favoured and profitable 32% Weighted average Operations 5.44 scores -8.9% clients. Though the score for risk management is robust, Weighted +/- one the cli- Technology 5.01 -10.6% 2016 2017 2018 50% ent does note of the margin rates he sees “good commercial Service area that average global 5.60 5.39 risk staff are hamstrung by platform/tech weaknesses.” score average Product 5.32 4.85 -11.2% development 18% Where the firm does continue Capital to shine is in its derivatives fran- 4.15 listed -22.8% introduction chise, collecting high scores in OTC clearing and deriva- s tives in particular, though the pressure on the bank to increase Risk Weighted average 5.62 scores by 0.9% service area Client the detailed scoring of its management its profitability is evident throughout 5.3 -11.9% Service area Weighted average +/- the global service Asset safety 5.24 -8.8% swaps and clearing services. The scoring of the foreign ex- score average Consulting 5.86 0.0% Sales and change prime brokerage business, which came under managerial 6.06 -1.2% Operations 5.44 -8.9% Capital introductions 4.15 -22.8% pressure to perform three years ago, provides further evidence marketing Technology 5.01 -10.6% and service 5.30 -11.9% that managers have noticed Credit Suisse needs wider margins. Trading Client 5.55 -5.2% execution Product Likewise, at first sight the low score for asset 4.85 safety is puzzling. Consulting 5.86 0.0% -11.2% development has remained the Since the financial crisis, creditworthiness Operations 5.44 -8.9% principal reason for appointing Credit Suisse as prime broker, Risk Technology 5.01 -10.6% and especially as a back-up prime broker. But 5.62 the details 0.9% show management that the concern of clients is not so much that assets will be at Product development 4.85 -11.2% safety to finance. 5.24 -8.8% risk; it is that they will be more Asset expensive Risk management 5.62 0.9% Sales and The equally counter-intuitive score for capital 6.06 introductions -1.2% Asset safety 5.24 -8.8% marketing is easier to explain. Given the size and strength of the private Trading and Sales and marketing 6.06 -1.2% 5.55 -5.2% the banking and wealth management businesses at Credit Suisse, execution bank ought to be impressing even its more selective client list Trading and execution 5.55 -5.2% with its capital-raising capabilities. But capital introductions is Delta 1, swaps and financing 5.13 -10.3% one sphere manifestly affected by staff turnover. “There is often Stock borrowing and lending 5.68 -4.8% change of people in the Credit Suisse capital introduction team,” Foreign exchange prime brokerage 5.41 -4.6% is what one client has noticed. As always, however, clients that raised money are more than pleased. One respondent name- Fixed income 5.72 -0.9% checks a member of the capital introductions team at Credit OTC clearing 5.83 -0.4% Suisse for a “fantastic job … She has made many introductions, Listed derivatives 6.13 4.1% done diligence on potential allocators and is on top of the de- tails.” Other services that make it harder to stay profitable, such Total 5.39 -7.1% The Hedge Fund Annual 2018 globalcustodian.com 81