HSBC targets hedge fund clients with new team

Date: Friday, July 24, 2009
Author: Steve Slater, Reuters

Europe's biggest bank HSBC Holdings (HSBA.L) has set up a new business targeting hedge funds and other fund managers offering prime services following the retreat by many rivals from the area.

HSBC said on Wednesday it has formed HSBC Prime Services, a joint venture between its Global Markets and HSBC Securities Services units. It is expected to have 30-50 staff initially and focus on equity and fixed income platforms.

HSBC has not offered typical prime broking, which are services offered to hedge funds, often allowing them to borrow securities and cash to leverage their assets.

But the financial crisis, including the collapse of major prime brokerages Bear Stearns and Lehman Brothers, has seen a shift in the landscape for hedge fund services.

HSBC will offer some financing, as well as custody, execution, collateral management, clearing and reporting services, according to an internal document seen by Reuters.

"In today's market environment, our ability to provide clients with full security and transparency over their assets in segregated accounts, together with the opportunity to use some of these assets as security for financing, will further enhance our product offering to leading hedge funds and fund managers," the note said.

The new unit will be headed by Cian Burke, currently finance officer and global business manager for Global Markets.