BMO CEO to Keep ‘Tight’ Risk Profile in U.S. Prime Brokerage
(Bloomberg) -- Bank of Montreal Chief Executive Officer Darryl White vowed to maintain a “tight” risk profile on its new U.S. prime-brokerage business and will keep the unit at a reasonable size relative to the rest of the bank.
BMO Capital Markets last week announced the hiring of Thomas Guagliardo and Robert Luzzo from BNP Paribas SA to start a U.S. prime-brokerage unit, extending a business that it had operated in Canada for more than a decade. The prime-brokerage business, which entails lending securities or cash to hedge funds and large investors, drew attention last year after the collapse of Bill Hwang’s Archegos Capital Management caused billions of dollars of losses for Credit Suisse Group AG.
“We’re going to keep the risk profile of that business really tight, and we’re keeping a really close eye on it,” White said Monday at the RBC Capital Markets Canadian Bank CEO Conference. The bank will also keep the unit’s size “in the right ZIP code,” he said.
Prime brokerage is an important extension of BMO Capital Markets’ equities franchise, he said, and necessary for accessing certain segments of customers.
“The clients that we deal with really like us to be in the business,” White said. “They value us as partners for the prime product. Really importantly, a lot of them will tell you there’s only so much I can do with you on other products if you’re not able to help me with the prime product.”
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