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Investment Banking

Prime Managed Lending

Securities Lending has become an integral component of the investment management process, with investors continually challenged to define new and innovative strategies to enhance portfolio performance under risk-controlled environments. Credit Suisse is one of the largest and most-experienced non-custodial securities lending managers in the world. Over the past years we have worked with numerous top tier clients around the world in securities lending relationships. At the moment approximately 40% of the assets in our lending pool are not custodied at Credit Suisse. We have been active in Securities Lending for over 30 years and rank among the top providers, with a combined global fixed income and equity asset pool in excess of $500bn.

Scope of Activity

Credit Suisse has well-established credentials as a leading Third Party securities lender: we represent the assets of over 500 institutional and more than 50,000 private clients and provide them with the ability to lend securities in over 40 markets. Credit Suisse globally has over 100 securities lending staff with many years of relevant industry experience in two global locations responsible for the front-to-end processes of the whole lending business. Securities lending traders at Credit Suisse cover specific market segments so that they are familiar with the peculiarities of each market. A dedicated securities lending middle office is responsible for all operational aspects of the business including settlement, collateral management, client services and billing.

Product Overview

A securities loan is a contractual agreement between two parties – the lender and the borrower – whereby the lender agrees to lend securities in exchange for a fee and collateral. In Europe, securities are the more common collateral type, and the borrower pays an explicit fee. In the U.S., cash, which is subsequently re-invested, is the usual collateral type; the “fee” is the difference between the rebate charged for the cash and the yield achieved on the reinvested cash. In both cases, the main reason for lending securities is to generate additional yield and improve portfolio performance in a low-risk environment whilst offsetting service costs.

Since lenders retain the right to recall securities, a Securities Lending program does not affect the portfolio manager’s trading strategy. Standard industry agreements are executed between Credit Suisse and the client and the beneficial owner retains all economic benefits of ownership, e.g. dividend entitlement and coupon income.

Our clients represent the following market segments: Private Clients, Central Banks, Supranational Institutions, Commercial and Private Banks, Investment Funds, Pension Plans, Corporations and Insurance Companies.

Managed Lending Program

Under the Managed Lending Program, clients employ Credit Suisse to manage all aspects of their securities lending activities. As the ongoing discretionary lender, Credit Suisse undertakes a variety of roles including credit analysis on the borrowers, monitoring collateral exposure, tracking income received, and reinvesting cash collateral (in the U.S.). Credit Suisse can act as either principal or agent. When acting as principal, the client lends assets solely to Credit Suisse, but on an agency basis, the client lends the assets to multiple counterparts, including potentially Credit Suisse’s own entities. Both agent and principal arrangements feature a revenue-sharing agreement that allows the income earned from each transaction to be distributed to the client, with Credit Suisse retaining a portion of the revenues as its management fee.

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