Plans to start a prime bro­ker­age

The Star Early Edition - - COMPANIES -

STAN­DARD Bank Group, Africa’s largest lender by as­sets, plans to start a prime bro­ker­age next month to ben­e­fit from reg­u­la­tory changes in South Africa it ex­pects will boost the hedge fund in­dus­try. The Johannesburg-based com­pany an­tic­i­pates hav­ing five hedge fund clients by the end of the year, said Andy Hall, head of global mar­kets at Stan­dard Bank. The lender will com­pete against Pere­grine Hold­ings and units of FirstRand, Deutsche Bank, In­vestec and Bar­clays Africa Group. “There’s still a big bite to eat in the sig­nif­i­cant growth we ex­pect in hedge funds,” he said in an interview on Tues­day in Johannesburg. The lender is also be­ing en­cour­aged by guide­lines rec­om­mend­ing as­set man­agers hire more than one prime bro­ker, Hall said. The busi­ness forms a small but im­por­tant part of Stan­dard Bank’s ef­forts to im­prove cost ef­fi­cien­cies and add clients within its global mar­kets unit, ac­count­ing for about 20 per­cent of the lender’s earn­ings be­fore one-time items in 2016. Stan­dard Bank is count­ing on us­ing its es­ti­mated 60 per­cent share of the South African se­cu­ri­tieslend­ing mar­ket to bol­ster the prime bro­ker­age, even as lenders in­clud­ing Credit Suisse Group re­treat from the busi­ness glob­ally be­cause of prof­itabil­ity con­cerns. Ned­bank Group, a unit of Lon­don-based in­surer Old Mu­tual, scrapped plans to start a prime bro­ker­age in 2015. Prime bro­kers typ­i­cally con­duct eq­uity trades, cover mar­gins and lend shares used in bet­ting whether a stock price will fall or gain. – Bloomberg

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