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Credit Suisse to expand Asia prime services

By Parvathy Ullatil

HONG KONG (Reuters) - Credit Suisse <CSGN.VX> will increase the headcount in its prime brokerage team in Asia by 15 percent to 20 percent in 2010 as it aims to win business from the increasing number of global hedge funds eager to set up base in the region, a senior official at the Swiss bank said.

The bank has hired former Goldman Sachs <GS.N> executive Deborah Lee as a director in its capital services team, Matt Pecot, the head of Credit Suisse's prime services for Asia-Pacific, told Reuters. Lee left the U.S. bank a year ago.

Lee, who has worked in the hedge fund and prime broking business for 10 years, will report to Benjamin Happ, head of capital services Asia Pacific, Pecot said.

Credit Suisse plans to add headcount in capital introduction and consultancy services amongst other areas, he added.

"We are being selective about the kind of and number of funds we sign up and building a multi-asset prime brokerage which does not just offer long/short," Pecot said.

Pecot himself is a fairly recent addition to the bank's prime brokerage team, moving from UBS -- where he was the head of prime brokerage services for Americas -- in June 2009. Happ joined Credit Suisse from Hong Kong-based hedge fund Abax Global Capital in mid-2009.

'INTERNATIONALISATION'

"2010 is going to be very much like 2005-2006, in terms of the internationalization of the hedge fund community out here," said Pecot.

Well known hedge funds and investors are moving or eyeing setting up shop in Asia to capitalize on the potential of the fastest growing region in the world.

Soros Fund Management, billionaire investor George Soros' flagship investment company, is looking to set up an Asia presence in Hong Kong, a source familiar with the matter told Reuters.

Asia still makes up a relatively small part of the portfolios of large global hedge fund firms.

"People see that the macro story out here in Asia is quite differentiated from what is happening in the US and Europe and they are trying to take advantage of that by putting talent on the ground here," said Pecot.

Credit Suisse expects a "large portion of the uplift in 2010" will come from international business moving eastwards.

BIG BANKS FIGHT BACK

In the darkest months of the financial crisis, the relatively unencumbered European banks such as Credit Suisse and Deutsche Bank <DBKGn.DE> challenged the long-standing duopoly of Goldman Sachs and Morgan Stanley <MS.N> in the prime-broking business in Asia.

Prime brokers provide services such as clearing trades and lending money to hedge funds.

But backed by implicit government guarantees, Wall Street giants have won back some market share in the latter part of 2009.

In December, Morgan Stanley said account balances in its prime-broking business in Asia is back at 75 percent of its pre-crisis levels. The balances were estimated to be cut by half over the fourth quarter of 2008 and the first quarter of 2009.

"The wind is still definitely behind us," said Pecot.

Pecot said a factor helping Credit Suisse in Asia was the move by hedge funds to partner with more than one prime broker. According to industry estimates, the focus on a multi-prime broker model in the aftermath of Lehman Brothers' collapse has helped Credit Suisse and Deutsche Bank more than double their market share in a year.

The battle for market share in the prime-brokerage business has intensified in the past six months as hedge funds in the region have emerged as one of the best-performing investment classes during the period.

Hedge fund managers across Asia, excluding Japan, have achieved average gains of 38 percent in 2009, according to data from Eurekahedge.

(Editing by Muralikumar Anantharaman)

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