UBS has made two senior appointments in its Asia-Pacific prime brokerage business.
First, it has transferred Ashley Jarvis from London to Hong Kong to serve as head of prime brokerage sales for Asia-Pacific. He is also to serve as global head of business consultancy.
Second, Alastair Sclater in Singapore has been promoted to head the entire prime broking business in that office.
David Gray, Hong Kong-based regional head of prime services, says the firm has been keen to fill these slots for as long as six months. Although January and February were grim months, activity began to pick up thereafter, and has recovered very quickly. On a year-to-date comparison, Gray says profitability in prime broking has nearly reached 2008 levels.
That is because large, global hedge funds are either repopulating Asian offices they vacated in late 2008, or are looking to expand here; and because Asian equity long/short funds are once again enjoying decent performance, and demand among global allocators for these has returned -- particularly in Greater China.
Ashley Jarvis previously ran prime broking business consultancy services for Europe, the Middle East and Africa. He has experience not only serving hedge funds in Europe but has also worked at the Financial Services Authority in Britain, so he has both hedgie and regulatory experience.
Business consultancy is regarded within prime broking as a cost centre, so the fact that UBS is transferring a senior person with such a background shows how it hopes to expand its business in Asia, and that such expensive services are once again deemed vital.
Jarvis started work in Hong Kong last week, and reports regionally to Gray and functionally to Martina Slowey, global head of prime brokerage sales in London. He replaces Anna Sils, who had held the same title but from Tokyo, a position she left early this year in order to switch gears for family reasons.
Meanwhile, the Singapore business has done well thanks to the resumption of start-up activity there. Although UBS maintains a number of PB-related functions in Singapore, these have always reported elsewhere along functional lines.
Now Alastair Sclater has been promoted to head the entire office, having led the UBS sales effort there for several years (as well as been a salesman in Hong Kong).
David Gray says the promotion reflects the maturation of PB in Singapore and the need to coordinate client service with other activities, improve service and keep abreast of the hedge fund community.
Gray says the credit crunch continues to shape the business. UBS is more careful about the types of investment strategies it finances. On the other hand, it is marketing itself as a more stable provider of finance. Part of Jarvis's role is to better explain to clients the processing of their assets, provide more transparency regarding their accounts, and make clear issues such as rehypothecation. The idea is to ensure liquidity is there when required.
"Our risk methodology is to provide financing in good times and in bad times," Gray says. "The game has changed from one of scale of assets to one of quality of assets."
Leverage is creeping up, and is now on average 3x in Asia -- perhaps double from the start of the year, but nowhere near the double-digit levels of 2007.
UBS has spent recent weeks building back its inventory of stock from markets such as Korea and Taiwan, where demand is strong and where stock borrow has become more accessible. Although some big global macro players are active in Asia, Gray says the equity long/short strategy continues to dominate the region.