What is Prime Services, and where does it fit into the overall structure of the bank?
Prime Services sits within the equities division of the investment banking arm of Credit Suisse. We look after the bank's hedge fund clients and provide them with a range of specialised trading, lending and advisory services. The hedge fund industry has grown dramatically over the past ten years and Prime Services, the newest area within equities, has grown to meet the needs of our clients. We communicate extensively with teams across the bank in order to ensure consistency of strategy with our colleagues.
What is a hedge fund?
Hedge funds are professionally managed portfolios of investments. They are private funds that are only open to a suitably qualified investors and use sometimes innovative investment strategies with the goal of providing strong returns.
Why do hedge funds require a specialised service?
Hedge funds need dedicated services for several reasons. First, unlike many other funds, hedge funds can short sell a stock, which requires specialised assistance from the Prime Services trading desk. Like traditional investment funds, hedge funds sometimes buy shares in the anticipation that their value will increase and thereby generate a profit for them, which is known as going long”. But hedge funds can also go short”, which is an investment technique that involves borrowing shares that the fund manager expects to fall in value, selling them while the price is still high, and then re-purchasing them to return to the lender once the price has dropped, so making a profit.
Second, the financing requirements of hedge funds are greater than those of regular funds. To achieve their investment objectives, hedge funds need financing from investment banks to enable them to hold the positions they want to hold in the market. Consequently, they need access to a range of customised financial products and instruments, which a prime broker can provide.
Third, hedge funds also require tailored advisory services to help them set up their funds, introduce fund managers to potential investors and run the fund throughout its lifecycle.
Can you give an example of how Prime Services might work with a client?
In the first instance, a fund manager would approach us and state their intention to launch a hedge fund. We'd listen to the manager's strategy and objectives, giving guidance on how to raise the necessary capital. Then, we'd help the manager to structure the fund and ensure that it meets certain legal requirements, introduce them to suitable investors, and provide advice on launching the fund. Credit Suisse operates across the world, so by working closely with our colleagues in Asia and the US we can help our clients to find investors in different regions and trade globally.
How does Prime Services generate revenue for the bank?
Of the services we provide, some are value-add, such as assisting in the start-up phase or providing guidance on capital. This is because once a relationship is established between the bank and the hedge fund, many other areas of the bank may benefit from the relationship for a significant period of time. Our core revenue focus is through trading services.
What issues are currently facing the Prime Services industry?
We operate in an environment of thorough and increasing regulation. Hedge funds are monitored by various regulatory bodies in each region and we ensure that our clients comply with the rules, operate transparently, and responsibly manage risk. Regulation of the industry is important and we have a strong relationship with the regulatory bodies in each country.
The theme of consolidation is also evident in our industry, with a number of our competitors downsizing. However this theme further creates opportunities: Credit Suisse is an established and stable institution, with a strong capital, funding and liquidity profile, so we're in a strong position to capitalise on them.
Can you tell us about your career history to date?
I studied law at university and accidentally moved into financial services. After qualifying as a barrister, I moved from Ireland to the Caribbean with a hedge fund company and I stayed there for a number of years servicing the US hedge fund market. I then moved to Hong Kong, where I joined Credit Suisse and ran the Asia-Pacific sales team. Several years ago, I transferred to London where I now run the hedge fund coverage and sales group in Prime Services - so I've enjoyed a very varied and interesting career so far!
What opportunities are there for graduates within Prime Services?
Prime Services is a strong supporter of the analyst programme at Credit Suisse. We take on a number of graduates every year and they'll be exposed to every aspect of our work with hedge funds as soon as they've completed the initial ten-week equities training programme. Analysts will spend time learning about the financial products we use and how to trade them, but it's in our interest that they take on a client-facing role as soon as possible. We give our graduates lots of support to make sure they're able to work directly with clients very quickly.
What do you look for in graduates?
To work in prime services it's not necessary to have a background in finance and we recruit graduates from a range of degree disciplines. The traits we look for in our people are an innate curiosity about finance, a global outlook and the ability to keep up with a fast-moving industry. Prime Services is a client-facing business, so it's also important that analysts can think on their feet and confidently articulate complex information to experienced clients.