Wells Fargo is established in the securities lending space but relatively new to the prime brokerage sector. What growth potential do you see in this area?
The prime broker operating model is undergoing significant change brought about by the implementation of Basel III’s risk framework. This is causing many providers to reassess their business models to adapt to the new capital, liquidity and leverage rules which have had a fundamental change on the value proposition that prime brokers have brought to the firm’s revenue stream.
Many alternative asset managers have prudently begun to look at new liquidity providers that have capacity to provide these financial resources in order to ensure they can deploy their strategies. With the mounting regulatory requirements and the corresponding increased cost for prime brokerage services, Wells Fargo Prime Services, our prime brokerage business, is positioned to offer a value proposition based on our breadth of supply, capital base, strong credit rating and commitment to growing this franchise.
Wells Fargo has been on a significant hiring spree over the past year. Is this likely to continue?
Already known as a leading introducing broker, we ventured in 2014 to launch our self-clearing prime brokerage business. That naturally meant augmenting our existing staff of experienced professionals with those who could bring additional expertise with institutional clients to help us execute on our strategic vision.
We focused on adding to teams across sales, capital introduction, securities lending, client services, new business management, product development and risk functions. Many of the new hires have had long standing careers in prime brokerage and securities lending and have brought significant product expertise and client relationships to our franchise. We will continue to augment our hiring plans as our platform evolves and our client needs warrants.
The prime brokerage market already has some big names dominating the space. How is Wells Fargo looking to carve out its own market share?
Wells Fargo is committed to building a premier prime broker business. Our goal is to partner with our customers and work with them to help define our offering, while leveraging the breadth of financial products, solutions and expertise that exists across the Bank.
We partner closely with our sales and trading businesses including equities, fixed income, credit and asset-backed finance to leverage their product strengths and further institutionalise our alternative asset client relationships. In addition, we have market leading wealth management, private bank and retail businesses.
What are Wells Fargo’s primary strengths that it can offer its clients?
Wells Fargo Prime Services is a relationship-oriented business, and we have brought a world-class team together that is very focused on deepening relationships with clients. Clients appreciate the strength of brand and reputation, capital base as well as the commitment to growing our franchise.
Is Wells Fargo looking to expand into any new markets in the near future?
At Wells Fargo Prime Service, we are continuously evaluating our strategy, evolving to meet the needs of our clients, market environment and business.