Wells Fargo Eyes Rise in Asia Fund-Services ClientsBei Hu
Wells Fargo & Co., the world’s most valuable bank, plans to expand the number of fund services clients in Asia by as much as 20 percent a year, said Christopher Kundro, co-head of the bank’s global fund services division.
The administrator of $30 billion of assets globally has 20 clients receiving its fund services in the region, New York-based Kundro said in a telephone interview. The majority of them are single-manager hedge funds, in addition to traditional, private-equity and hybrid funds, he said.
Wells Fargo is trying to gain business in a region whose economic growth and potential opportunities for investment have attracted boutique shops to compete for fund clients with the likes of HSBC Holdings Plc and State Street Corp. The region represents about 15 percent of its global fund services revenue at the moment, according to Kundro.
“In terms of geographical expansion, we’re looking more toward funds in Hong Kong,” he said. Increasing high-yield issuance in the region will play to the advantage of the bank, which has traditional expertise in complex funds such as those that focus on credit and emerging markets, he added.
Asia-Pacific region issuers raised $1.8 trillion from bond sales since the beginning of 2012, exploiting low interest rates and narrow credit spreads, according to data compiled by Bloomberg. That was 18 percent more than the two full years before.
Wells Fargo’s fund services business traces its roots to Cargill Inc.’s Black River Asset Management LLC hedge-fund unit. Its global fund-services division has operated out of a Singapore office since January 2007, according to Kundro.
In December, it announced the opening of a Hong Kong office and the hiring of Johnson Har as a vice president of business development and client relationships to help gain customers in the city.
Unlike some competitors that support clients with staff based out of the region, its 40-people-strong staff in Asia is able to provide traditional administration and outsourced middle-and-back-office operations, Kundro added.
Those include calculating daily profits and losses, reconciling trades with prime brokers, clearing transactions that don’t go through prime brokers, and managing cash and collaterals for over-the-counter derivative trades.
“Given the size of some of the funds in Asia, they effectively have a lot of benefits outsourcing that function,” he said, referring to smaller hedge funds farming out such tasks to service providers, instead of maintaining a large in-house operational team.
The number of Asian clients of Wells Fargo’s fund services division has increased about 10 percent to 15 percent a year, Kundro said.
“We’re not trying to be a hundred-billion-dollar administrator,” he said, adding that they’re looking for long-term clients which are profitable.