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Deutsche Bank
Weighted
average
scores
2016
5.86
2016
2017
2018
2017
5.86
5.86
5.86
5.2
ative, cannot conceal the fact that these results mark a steep fall
2018
5.2
T
he onward and upward momentum evident at Deutsche
not just from a year ago, but fr om the prime brokerage business,
Bank a year ago has dissipated. This is not surprising.
Respondent profile
Revenues in prime services dipped last year as average client Small which
fund used regularly to top this survey. As recently as last year,
Deutsche 45%
secured second place in the league table. In 2018,
balances declined, margins were squeezed, and funding costs managers
there is not a single service area in which
rose. One respondent even notes that “we do not have any active Medium-
11% the bank even clears
43%
benchmarks.
fund/client currently using DB as
their PB. Last activity was
sized the
fund survey
Weighted
average this year, Deutsche Bank managers
in February 2017.” At the end of May
45%
announced it would be reducing scores
headcount in its global prime Large fund
11%
2016
5.86
2017
2018
managers
43%
finance business and reducing the
balance sheet
allocated to it 2016
PROFILE
OF RESPONDENTS
2017
5.86
5.86
5.86
5.2
41%
through a combination of re-pricing and collateral optimisation. Americas
2018
5.2
18%
So a survey that took place in the immediate aftermath of this Europe and
Respondent profile
Middle East
announcement was bound to be Small
challenging
for
a
prime
bro-
fund
Asia
By 41%
size
By location
45% of innovative
kerage group that positions itself managers
as the provider
financing solutions to the largest Medium-
and most sophisticated asset Weighted average
11% scores by service area
43%
managers.
sized fund
Weighted
+/- the
Americas
managers
41%
41%
The details of these scores do not
suggest that clients believe Service area average 45% global Large
Europe and
Large
fund
score
average
the German bank is losing interest in financing
their portfolios,
Medium
11%
managers
Middle East
by either cash or synthetic means,
but they do imply – entirely Capital 43%
Small
41%
5.08
-5.3%
Asia
predictably – that it is looking to Americas
widen its margins
and retain introduction
18%
Europe and
s
more of the value from client assets
and collateral.
18% Though the
Middle East
Client
5.49
-8.6%
scoring of sales and marketing indicates that managers have yet
Asia
41%
service
to feel the impact of the promised re-pricing, doubts are already Consulting
5.14
-12.2%
evident about how the bank values
client average
portfolios
calcu- area Operations
Weighted
scores and
by service
5.46
-8.4%
lates its return on them. Likewise, the weakness
in asset +/- safety
Weighted
the
Technology
4.96 scores -11.4%
Weighted average
revolves as much around the issue
of re-hypothecating
assets
41%
41%
Service
area
average
global to
2017
2018
score in custody
average be- Product 2016
raise finance as it does around the threat of assets
4.9
-10.2%
development
5.86
5.86
5.20
ing misplaced. Risk management Capital
has a similar flavour. In foreign
5.08
-5.3%
exchange prime brokerage – and introduction
Deutsche Bank
is one of
the top
Risk
18%
4.71
-15.4%
three global banks in the foreign s exchange markets – the overall management
Client
5.49
-8.6%
level of satisfaction with costs and collateralisation
is not
high.
Weighted average scores by service area
service
Asset safety
4.52
-21.2%
The exception to this pattern of Consulting
client anxiety 5.14
about costs
is
-12.2%
Service area
Weighted average +/- the global
Sales and
stock borrowing and lending, where
Deutsche 5.46
Bank top-scores,
5.55
-9.5%
Operations
-8.4%
score
average
marketing
but then the assessment of the services
in that 4.96
area is mainly
Technology
-11.4%
Trading Capital
and introductions
5.08
-5.3%
5.18
-11.5%
operational rather than financial. In client service, where every execution
Product
Client
service
5.49
-8.6%
prime broker expects to shine, there
is a disjunction
between
4.9
-10.2%
Delta 1,
development
the scores and the comments. “Excellent
client service coverage swaps Consulting
5.19
-9.2%
and
5.14
-12.2%
from DB,” writes a client. “Good one-on-one interaction with the
financing
Risk
Operations
5.46
-8.4%
4.71 to support
-15.4%
full team,” adds another respondent.
“They look
the
management
Technology
4.96
-11.4%
various arms of our business actively.” A third finds Deutsche
Asset safety
-21.2%
Bank “very attentive and responsive,”
while a 4.52
fourth maintains
Product development
4.90
-10.2%
Sales and
that “local account management and client services
staff -9.5%
(includ-
5.55
Risk
management
4.71
-15.4%
marketing
ing regional contact) are excellent.”
Trading and
Asset safety
4.52
-21.2%
5.18
But the score for client service, execution
a conspicuous
strength -11.5%
in 2017,
Sales
and
marketing
5.55
-9.5%
is now respectable rather than outstanding.
Similar disjunc-
Delta 1,
tions are evident in consulting (“very
professional,
5.19 pro-active”)
-9.2%
Trading and execution
5.18
-11.5%
swaps and
and capital introductions (“very financing
capable team”). True, there is
Delta 1, swaps and financing
5.19
-9.2%
nothing much wrong with the scores in OTC clearing, listed
Stock borrowing and lending
5.87
-1.7%
derivatives and even fixed income – a field of endeavour only
Foreign
exchange
prime
brokerage
5.25
-7.5%
the boldest prime broker could evince much enthusiasm about
servicing – either. Deutsche Bank can plausibly argue that the
Fixed income
5.47
-5.2%
voice of its largest and happiest clients is not being heard this
OTC clearing
5.52
-5.7%
year. But the same is true of other prime brokers in this survey,
Listed derivatives
5.69
-3.4%
and it is their collective results that set the benchmarks. Accen-
tuating the positive, or declaring the respondents unrepresent-
Total
5.20
-10.3%
82
Global Custodian
The Hedge Fund Annual 2018