C.Suisse, BofA gain prime broking market share in Asia-survey

Tue May 22, 2012 2:39am EDT

* CS, BofA increase number of hedge fund clients, assets

* CS narrows gap with No. 2 prime broker Morgan Stanley

* Industry AUM falls to $137 bln from $150 bln a year ago

By Nishant Kumar

HONG KONG, May 22 (Reuters) - The Asian prime brokerage units of Credit Suisse and Bank of America Corp gained market share in the last one year when Goldman Sachs and Morgan Stanley, the top-two industry players, lost hedge fund clients and assets, a survey showed.

Before the 2008 financial crisis, the combined market share of Goldman Sachs and Morgan Stanley stood at about 60 percent of the Asia-Pacific prime broking market, which now services $137 billion of assets.

That share of the two U.S. investment banks has since halved, the annual survey released this month by industry tracker AsiaHedge showed, with Credit Suisse, Deutsche Bank and UBS grabbing more than 10 percent each.

Prime brokers provide services such as clearing trades and lending money to hedge funds. Click for their rank and assets under management in Asia:

The survey found Credit Suisse, with $19.2 billion in hedge fund assets in the region, narrowing the gap on No. 2 prime broker Morgan Stanley to just about $420 million, down from $4.8 billion a year earlier.

Bank of America Corp edged past Citigroup to take the No. 6 rank in the industry, increasing assets by more than a third to about $6 billion. The firm, along with Credit Suisse, also added new clients in the last one year, the survey shows.

All others with $5 billion or more lost clients and market share in a tough year for the industry that saw assets under management falling to about $137 billion from $150 billion as more than 80 hedge funds shut down.

ROUGH GUIDE

Any survey on the industry is only a rough guide to the market share as most of the hedge funds do not disclose a break-up of business between prime brokers.

In Hong Kong, the biggest Asia-Pacific hedge fund market, Deutsche Bank toppled Morgan Stanley to grab No. 1 position. The bank also replaced UBS as No. 1 prime broker in Australia.

The German bank, which has won prime brokerage mandate from Azentus Capital in Hong Kong, the biggest launch in Asia last year, had $15.8 billion under management, about 10 percent less than a year ago period, the survey showed.

UBS retained its rank as No. 5 prime broker but saw assets shrink by about a fifth to $13.7 billion.

Credit Suisse and Citigroup declined to comment. All other banks mentioned in the story could not be reached for immediate comments.

The top-five players in the industry together control 65 percent market share in the Asia-Pacific industry, the survey from AsiaHedge showed.

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