IFR editor-at-large Keith Mullin assesses the latest rejigs of bank’s DCM management teams
INVESTMENT BANKS CONTINUE to tweak their debt org structures to gird themselves better to benefit from – or should that be survive? – opportunities in today’s abnormal debt market conditions driven by unorthodox monetary policy, the complex regulatory environment and uncertain economic growth.
This past week saw tweaks from BNP Paribas and JP Morgan. They follow Deutsche Bank’s root-and-branch DCM re-stack that started at the back end of 2015, and moves by other banks over the past two to three years – including Barclays and UBS – to better align internal resources across loan and bond origination, syndicate, sales and trading, structuring and coverage.
A key driver is bringing private and public-side teams closer together as DCM and credit trading barriers are erased and banks jump on the flow of ideas coming in from both directions to capture revenue opportunities.
Matt Cherwin and Guy America, co-heads of credit trading and syndicate, securitised products and public finance, tweaked JP Morgan’s spread markets management team this past week in pursuit of that most hardy of banking perennials: delivering to clients “the full strength of our global reach while capitalising on new opportunities and responding to evolving markets”.
As part of the evolution Ryan O’Grady, the London-based co-head of global fixed-income syndicate, was tapped to run a new Credit Product Development (CPD) unit utilising people already in the credit team. Because his new gig will be a big time-suck, O’Grady will henceforth focus his syndicate efforts on the international business.
I’m slightly stumped by this latter point. So international syndicate (by which I’m assuming non-US) is not time-consuming enough for a major global player like JPM? Or put another way, delivering clients the full strength of our global reach while capitalising on new opportunities and responding to evolving markets is not enough of a time commitment to take O’Grady away from debt syndicate? Fascinating.
At JPM, syndicate spans high-grade, high-yield, emerging markets, loans, (more recently) securitised products and, as of this past week, public finance (the latter reporting to O’Grady’s NYC-based syndicate brother-in-arms Bob LoBue). O’Grady’s direct reports will now also report to LoBue “who will assure the global cohesion of our syndicate business”.
Am I reading too much into this or does it sound like a case of global syndicate co-heads where one is more equal than the other? The bit of the memo I’ve seen doesn’t go into any detail about how CPD will work, beyond saying it was set up “to better deliver the full range of credit products to our clients and to partner more effectively with Investment Banking Coverage, Sales & Marketing as well as other lines of business”.
AT BNP PARIBAS, primary and credit markets have been combined – well sort of – into one business with Martin Egan and Benjamin Jacquard running it jointly on a global basis. I say “sort of” because it’s not actually a combination, more an alignment since Egan and Jacquard will keep their existing positions (global head of primary markets; global head of credit respectively). They report to global markets sales and trading head Olivier Osty.
Yann Gerardin has been in almost constant tweak mode since he took up his post as CIB head almost two years ago. As I pointed out at the time I found his initial re-org a little confusing (as did BNPP bankers) with its nuances and elements. Exactly how was the corporates and institutions split going to work? And what about the breadth of the transversal projects set in train? And the division of labour between global markets, global business lines, financing and advisory, and the regional franchises?
But ultimately it was about more efficient alignments and collaborative outcomes. Corporate bond origination was split from Egan’s DCM world and merged with corporate loan origination, reporting through Renaud-Franck Falce, head of the EMEA corporate debt platform. Egan, reporting now as then through global markets, gained non-corporate loan origination but with dotted-line responsibility for corporates. The origination merger was followed in short order by a bond and loan syndicate merger a la JP Morgan and other banks. Fred Zorzi was given the nod to run the single platform.
You won’t have seen the last of these kinds of adjustments
AS FOR DEUTSCHE, whether its origination and syndicate re-org was driven by pure enhancement objectives or by the sheer weight of senior departures may be a moot point. But in essence, the old Capital Markets & Treasury Solutions business, which had combined ECM, DCM and syndicated loan origination, was killed off. As was global risk syndicate.
Mark Fedorcik was appointed to run an expanded DCM unit. Former CMTS head Miles Millard was squeezed out while Vinod Vasan, global co-head of debt origination, returned to UBS. Fedorcik established a financing and solutions group (outside Asia-Pac) with a raft of accompanying personnel changes.
On the global markets side, DB formed a debt trading desk including a credit trading platform that merged structured finance and credit trading, while GM gained regional heads for the Americas, UK, Asia-Pac and Germany. What was intended to result from all of that was a better configuration between structuring, sales, debt origination and relationship managers.
UBS was early into this, making a virtue out of necessity and overhauling its FRC/DCM lines two years ago. Client solutions and structuring capabilities were put closer to DCM: public and private-side bankers were shunted together with a view to extracting synergies in a new DCM and client solutions (DCMCS) construct.
You won’t have seen the last of these kinds of adjustments. They go with the territory. Stay tuned.