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Wells Fargo
All of the strengths of Wells Fargo as a prime broker can be found here, but some are more visible than others. The excellence, and especially the stability, of the client service is obvious.“ Client service is staffed with very capable, knowledgeable, responsive and friendly people with regular back-ups in the event anyone is out,” writes a client. A second adds that he has“ experienced very low turnover – in the 10 years that we have been clients, we have only had two main contacts.” The efficiency of the operations – which, tellingly, share the same floor as the client-facing staff – is equally manifest.“ We have had the same quality staff members on our team for years, and the longevity in the industry, and with Wells Fargo, clearly sets them apart from less-qualified or junior professionals,” explains one respondent. The third conspicuous centre of excellence is the well-populated stock borrowing desk, where Wells Fargo has invested in people with established networks, who also have access to a great source of internal supply in the retail brokerage arm of the bank.“ Firm clearly works hard to get and keep short borrow,” as a client puts it. Where the performance of Wells Fargo is harder to discern is on the financing side. The fact that clients appreciate the prime brokerage group is less capital-constrained than the investment banks – it is a small business in the context of a $ 2 trillion balance sheet – is found in sales and marketing rather than Delta 1, swaps and financing.“ The best access to balance sheet” writes a client. That balance sheet means Wells Fargo can also be more flexible on the types of portfolio it on-boards and, by extension, the types of collateral it can take.“ The bank will finance our hardtofinance securities at very fair pricing” is how one client experiences it. The apparent vulnerability on swaps and futures reflects genuine shortcomings. The bank does not have a non-dollar synthetic platform, and the swaps business it does have is part of the wider equities division rather than prime brokerage. Wells Fargo needs to do better at cross-margining too. But hidden in the details is an excellent score for non-synthetic financing.“ Our sales contact understands our needs and knows how to navigate the bank and help with our financing needs,” is how one client explains the context. Likewise, the less impressive scores in swap and futures clearing( run by the FCM) and foreign exchange prime brokerage( the banks executes currency trades but not on behalf of managers trading currencies as an asset class or for hedging purposes) should not be allowed to obscure the clear message of these results: The core prime brokerage franchise is in great shape. This is as true of trading and execution(“ We find algorithmic trading capability to be excellent. When necessary, high-touch trading is the best we receive from any relationship”), product development(“ There is a flow of product enhancement that is generally helpful”), technology(“ Cutting-edge technology provided by Wells Fargo Prime Services is one of the main reasons we use them as a prime broker”), capital introductions(“ One of best CI teams around. Very helpful and resourceful”) and consulting(“ A credit to Well’ s prime offering and an insightful thought leader”). To some extent these are benefits that accrue to latecomers, especially if they pick people and technologies well. The price they exact is raising expectations. Clients of Wells Fargo want more.“ Need to expand into more international markets,” says a client.“ This should be a high priority.”
25 %
By size
7 %
68 %
Weighted average scores
PROFILE OF RESPONDENTS
Large Medium Small
Weighted average scores by service area Service area
By location
100 %
2016 2017 2018 6.05 6.12 6.00
Weighted average score
Capital introductions 5.48 2.1 % Client service 6.44 7.1 % Consulting 5.53-5.6 % Operations 6.55 9.8 % Technology 5.96 6.3 % Product development 5.86 7.5 % Risk management 5.83 4.7 % Asset safety 5.95 3.8 % Sales and marketing 6.58 7.3 % Trading and execution 5.98 2.1 % Delta 1, swaps and financing 5.52-3.4 % Stock borrowing and lending 6.26 4.8 % Foreign exchange prime brokerage 5.03-11.2 % Fixed income 5.53-4.2 % OTC clearing 5.54-5.3 % Listed derivatives 5.39-8.4 % Total 6.00 3.4 %
Americas Europe and Middle East Asia
+/- the global average
92 Global Custodian The Hedge Fund Annual 2018