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Prime brokerage: Competition heats up among prime brokers

Long-dated financing set to be competitive edge; Revenues tested as hedge funds have tough year

According to a report by compensation consultancy firm Johnson Associates, released in September, prime brokerage employees are expected to have the highest salary package increases this year in banking, at between 10% and 15%. That compares with investment banking, where compensation is expected to be between 5% lower and 5% higher than last year.

Compensation is growing largely a result of increased demand for prime brokerage talent, as banks realize that it is time to rebuild after the crisis. UBS made five senior hires in Hong Kong in August for example.

The competitive landscape of prime brokerage since the financial crisis has opened up opportunities to a broader spectrum of players. In a market previously dominated by broker dealers Goldman Sachs, Morgan Stanley and Bear Stearns, the top five players are now mainly universal banks.

"The old broker dealers still struggle with locked margins for a term period, but banks can set that up"

Jon Hitchon, Deutsche Bank

Jon Hitchon, co-head of global prime finance at Deutsche Bank in New York


"There was a feeling that after the crisis clients might return to the surviving former broker dealers but instead several universal banks that made inroads have now cemented their positions," says Jon Hitchon, co-head of global prime finance at Deutsche Bank in New York.

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