The banks are all trying to get their house in order when it comes to hedge funds. Morgan Stanley last week revealed shopaholic tendencies towards the sector. Now Dresdner Kleinwort has recruited a hedgie, or rather tempted a former banker back into the fold, to front its refreshed efforts to cater to the industry.
Martin Newson will join DK as head of a newly created Hedge Fund Solutions group. Mr Newson was previously a partner at Nator – now Remus Capital – a European long/short hedge fund. Before joining Nator in 2004, he headed up US equities at Deutsche Bank in New York and spent six years at Credit Suisse in global equities.
The importance of hedge funds as clients to the international investment banks continues to grow. Banks provide a range of services to the funds under the auspices of prime brokerage – and this, with the hedge funds industry’s dizzying deal flow and complex transactions, is a lucrative income stream for the banks.
But for DK, it seems, Mr Newson’s appointment is an attempt to move beyond that particular type of hedge fund business. It is understood that he will initially be focused on DK’s structure internally, ensuring that hedge funds dealing with DK can access all the bank’s services, across trading, advisory, and different products and markets, through a single point of contact.
Mr Newson’s department will sit between DK’s capital markets and corporate finance operations. All those within the bank who do significant business with hedge funds will now report through his department as well as through their usual business lines.
The new department will also seek to find those within the bank with senior level contacts with hedge funds and build the bank’s business with them around that person.
The banks now want to extract more from the hedge fund industry than prime brokerage will allow and are reorientating themselves accordingly.