Forbes – LONDON (Thomson Financial)- Investment banks are responding to rising credit concerns by imposing tougher lending terms on hedge funds, the Financial Times reported.
Prime brokerage departments at several investment banks have raised their margin requirements for certain hedge fund clients as they seek to insure themselves against the possibility of new hedge fund collapses as a result of the recent market turmoil, the newspaper added.
‘Financing terms for hedge funds are being tightened and this is forcing a further deleveraging of risk across global markets,’ it quoted Gerald Lucas, senior investment adviser at Deutsche Bank (nyse: DB – news – people ), as saying.
‘Recently we have broadened our stricter standards to funds beyond those with exposure to US mortgage market. I’d say this is now a pretty broad-based retreat from leverage,’ it quoted an unnamed prime broker as saying.
