ABN AMRO's global heads of credit derivatives trading and structuring resigned from the firm two weeks ago, reportedly after an ultimatum they had issued to senior management expired unheeded. Regis Copinot, global head of credit derivatives trading, and Fabrice Haddad, global head of credit derivatives structuring, are believed to have carried out a threat to resign if senior management refused to merge credit derivatives with cash credit trading. Copinot and Haddad declined comment.
Arne Groes, global head of credit derivatives in London, said the bank's long-term plan is to merge credit derivatives flow business with credit trading, which includes bonds and loans, when the derivatives side has attracted a critical mass of business. He admitted this was taking a long time but denied it was a reason for the duo's departure. He added, "They were not asked to leave and they did not leave in a huff."
Insiders said the arrangements were agreed to in principle but the bank did not put the proposals through. Synthetic securitization and exotic products will stay in the credit derivatives department, according to Groes.
Copinot has joined Société Générale in London as European head of credit trading for corporates and will start in September. Haddad has joined Gen Re Securities as a director in structured credit trading in London (DW, 7/9).
Large houses often combine cash and credit derivatives to facilitate arbitraging the market if bonds, loans or derivatives are trading at a premium, according to one credit derivatives pro. It also removes the politics when dealing with a client who wants exposure to a credit, since the banker dealing with the client has no incentive to use cash over derivatives instruments. The trader added it prevents the bank from being arbitraged by other banks, which may, for example, attempt to buy bonds from one department at a lower price than it sells protection to another.
Credit derivatives pros at rival firms said ABN AMRO is not as large a player in the credit derivatives markets as the banks Haddad and Copinot have joined. One added ABN AMRO would need to make up its mind, "Either it goes in full or it sticks to its knitting." Groes said the bank has aggressive expansion plans to become a major player in credit derivatives (DW, 7/9).
