Securities lending might have been one of the few businesses to prosper amid the market turmoil of last year, but the industry has woken up with a serious headache.

Global custodians generated record revenues from their lending programmes last year, on the back of soaring demand and dislocations in the credit markets. The financial crisis sparked a flight to quality, with investors seeking safety in government bonds. Lenders with large amounts of US treasuries benefited from record fees as a result of the demand for these securities.