UBS Looking to Expand Prime Broker Biz
With the dust beginning to settle on Wall Street, the prime brokerage business is getting a second look.
No doubt Goldman and Morgan Stanley picked up market share from the implosion in Bear Stearns. And Merrill Lynch’s operation, albeit small, has likely grown as well.
As I said two weeks ago:
....the prime brokerage landscape is due for a shakeup similar to the late 1990’s when Furman Selz began to lose market share to Montgomery Securities and the bulge brackets. Will Citadel enter the business? What about Bank of America’s sale of their unit?
It appears that UBS, who have been retrenching in several business lines, are looking to expand their prime brokerage operation.
Mark DeCambre has apparently left TheStreet.com to move to the New York Post, and has the goods:
The Zurich-based firm has been quietly attempting to build out its prime brokerage business - a lucrative unit in banks that offers a suite of services catering primarily to hedge-fund clients - The Post has learned.
UBS as recently as a month ago was in talks with various parties to purchase a prime brokerage operation, according to one banker familiar with UBS’ plans.
Alois Pirker, a senior analyst at Aite Group and a former UBS banker, said buying a prime brokerage unit for UBS might make sense because it would add scale to the bank’s existing prime brokerage unit, which was acquired from ABN Amro five years ago for approximately $250 million.
Bank of America is said to be one of the firms that UBS has had discussions with about buying its prime brokerage arm, sources said.
“UBS would be a good acquirer,” Pirker said. “BofA, at one point, clearly stated that they might want to sell [prime brokerage] off. It would be easy to merge with [UBS’] already existing business.” New York Post
Multiple bidders for Bank of America’s operation might eventually put a few extra shekels in Ken Lewis’ pockets, and the alternative community will no doubt embrace another option to Morgan Stanley and Goldman.
Still, with the brokerage firms reeling, the new reality on Wall Street is well run firms like Citadel are in a better position to call the shots. A brave new world is emerging on Wall Street; shaes of Schumpeter.
SWISS KNIVES
New York Post
Prime Broker Biz Up for Grabs
1440 Wall Street
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