The implementation of a sophisticated technology platform this year coupled with significant expansion of its prime services team has propelled Credit Suisse into the top tier of prime brokerage.

Credit Suisse Securities (Europe) is now among the world’s top prime services providers. The bank has shot up several rankings and now claims to be top prime broker in Europe, ahead of Goldman Sachs, JPMorgan and Merrill Lynch.

Even if some of the surveys may be based on questionable statistics, it is clear the bank has now established itself as a major player in the prime services arena. How it got to this position, according to Roy Martins, a managing director of Credit Suisse in the investment banking division based in London, is a combination of the bank’s own forward planning and major upheavals in the prime services industry.

Martins, who is also head of prime services for Credit Suisse in Europe and is responsible for global financing products, says the bank believed the single-prime model was unsustainable and began planning how it would be able to take advantage of a multi-prime environment a few years ago.

The timetable on this was speeded up by the demise of Lehman Brothers and the sale of Merrill Lynch to Bank of America in 2008. Although the virtual stampede of hedge funds out of the top brokers like Goldman Sachs and Morgan Stanley may now have stopped and begun to reverse, funds and their investors are demanding a multi-prime approach. This is what Credit Suisse has been able to capitalise on, as more funds are seeking second and third prime brokers. In addition, the technology and trading platforms offered as part of the prime services package by some of the top primes was based on a single-prime model. This means those platforms are ill equipped to cope with a multi-prime environment.

Credit Suisse, in what could now be seen as an inspired move, began a close working relationship with Paladyne Systems a few years ago and has now built a platform that reflects the changed environment.

According to Arun Neelamkavil, vice president of prime services at Credit Suisse Securities (Europe), the Advance Prime product offered by Paladyne has helped Credit Suisse’s prime service clients not only weather the recent market storms but also replace some of the functions and services they would have normally expected from a single prime. The scalable operations and technology platform is capable of handling complex multi-strategy, multi-asset classes and, noted Neelamkavil, is particularly helpful for start-up funds that need to launch with “industrial strength” operational solutions in order to fulfil investor expectations on the risk management front. As an ASP the Paladyne system can support the move by funds into new investment structures, too, such as managed accounts, multi-strategies and multiple global sites.

Neelamkavil and Paladyne Systems CEO Sameer Shalaby said the technology platform offers a way for smaller funds and those who need to move to a multi-prime environment a way of processing complex transactions through more than one prime.

Martins agreed the technology is important but also stressed Credit Suisse’s commitment to supporting a wide range of funds. While the bank has no lower limit on fund size, Martins did stress that Credit Suisse will only be looking to add new funds it believes have a future and the middle to top tier or established funds that have already proven their worth.

According to Martins, Credit Suisse is not in the game to just add numbers. It wants to have a deep and lasting relationship with its funds and ensure it is able to support them properly. He admitted the bank has turned down at least half of the funds that have come to Credit Suisse for prime services.

The significant investment the bank has already made in Advanced Prime as well as its commitment to expand its own internal resources to service funds is, Martins said, proof of Credit Suisse’s commitment to hedge funds and the alternative asset industry. The prime services team has increased substantially over the last 12-18 months.

Martins said the bank was taking a “strategic view” and believed hedge funds were going to continue to be an important source of business for the bank in future.

While leverage will be an issue in the short term, Martins did say the bank is offering this service to funds. However, leverage will be offered on a selective basis and risk will be carefully assessed.

He said Credit Suisse’s strong balance sheet and financial strength coupled with its commitment in the prime services area, will help it maintain its current position and should bring it increased market share.

Announcing its second quarter results the bank revealed an underlying net income of Sfr 2.5 billion ($2.34 billion) and a return on equity of 27.4%. It has a strong capital base with a tier 1 ratio of 15.5%. The investment bank also reported good results with an underlying pre-tax income of Sfr 2.4 billion ($2.25 billion), a 46% return on capital and a 37% pre-tax margin.