The private banking units of several firms, includingMerrill Lynch, Deutsche Bank andHSBC , are hiring derivative and corporate finance professionals to staff new divisions targeting high-net-worth clients looking to monetize single stock holdings. The banks are looking to meet growing demand as restrictive stock packages become more common and because high-net-worth clients are unwilling to sell outright single stock holdings because of the stock market downturn.
Merrill Lynch International, which manages more than USD1.6 trillion in assets, plans to hire several derivative and corporate finance professionals for a concentrated stock strategies division in London within the next six months, according to a company official.
Also looking to ramp up expertise within its private banking operation is Bankers Trust Private Banking Americas Lending--part of the Deutsche Bank Group. Leigh Hoagland, New York-based head of the private banking unit, says the firm has hired and is looking to add more derivative and corporate finance professionals.
Similarly, Adrian Kyriazi, managing director of corporate finance advisory services at HSBC Republic in London, says the firm has hired six corporate finance professionals for a new debt division targeting high-net-worth clients and is looking to expand into Europe and South America over the next 12 months.
"The stock market bull run during the nineties and the development of restrictive stock option programs means a lot of individual wealth is tied up in concentrated stock positions," says Doris Meister, head of wealth management services at Merrill Lynch and ceo of Merrill Lynch Trust Co. in New York. "We have to build expertise if we are to properly understand the credit issues related to single stock holdings and the various ways to unlock wealth from single stock holdings."
But the trend isn't restricted to concentrated stocks, bankers say. Derivatives professionals are being hired to also help structure solutions that enable wealthy individuals to access liquidity using a range of assets, from cross border holdings to art collections.
One example might include arranging a life insurance policy for a wealthy Japanese client who wants to use a London property as collateral, says George Blauvelt, executive director of banking and investment finance at Citigroup in New York. "To mitigate the currency risk between a Japanese yen-denominated life insurance policy and a sterling denominated property, we have to arrange a series of currency swap transactions over the life of the policy for our client," he says.
