Street.Com – Battered hedge funds may still be the best-looking clients out there for banks, which face a dearth of opportunities to do deals in the dead M&A and IPO markets.

The business of providing an array of services to hedge funds, known as prime brokerage, went up for grabs in 2008. It is highly specialized, expensive, and difficult to run, but potentially very lucrative. It typically accounts for about 6% of Goldman Sachs’ revenues, though that does not include ancillary benefits, like trading commissions.

In the fourth quarter, Goldman’s first money-losing effort as a public company, prime brokerage helped offset some of the damage. The $799 million the business accounted for some 15% of total revenues.  

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