So when this week brought two new org charts to comprehend, GlobalCapital’s heart sank.
First up, Barclays. Last week, Jim Glascott went upstairs to a chairman job, leaving Mark Lewellen, Travis Barnes and Jill Scwartz co-heading global DCM and risk solutions.
The team lost no time is rolling out the next layer, with a package of new “senior leadership” roles, split by client type (FIG, corporates, public sector), product type (derivatives, structured bonds and hybrids, loans), and “regional heads”. Because Barclays is a UK firm, increasingly so under the new regime, there is a UK regional head for FIG and a UK regional head for corporates.
So an exercise for the reader: how many bankers are involved in pitching a UK bank for a sub debt deal in dollars plus a tender for some old capital?
Aside from that, the main moves have been Simon Ollerenshaw’s switch from head of CEEMEA to head of corporates, and Susan Barron’s move from SSAs to CEEMEA. Everyone else is more or less in the same seat, though if you squint there might be a tighter tie-up between the cash guys and solutions.
Ollerenshaw’s background is in converts, though he has focused mainly on CEEMEA in 2013. As for Barron’s move, Barclays is having a stonking year in SSAs, top of the league table with a 9.31% market share, but the team is one of the largest on the Street, according to one headhunter.
In other Barclays news, GlobalCapital did hear a little something about one Tom King planning to retire from the bank next year.
The project, beloved of some financial rags, of tallying up the senior investment bankers at Barclays and using it to divine the firm’s commitment to investment banking, has always seemed misguided to us. The firm is enormous, complex, and retooling the bank is like trying to turn a bus around in an alleyway.
One therefore doubts how much damage a few grumpy remarks from Jenkins, King, or anyone else could do to the turnaround planned at the firm, or the avowed goal of being “origination-led”.
The main question is surely about succession — internal or external? New Barclays chief executive Jes Staley has already recruited a chief operating officer and chief risk officer from his old shop JP Morgan, so it would seem foolish to bet against a JP Morgan hire. But equally, Staley could take direct control. The Barclays board may feel, with some justification, that cultivating the investment bank as a separate power base is not a winning ploy.
Le matrix, c'est nous
The other new grid to ponder is BNP Paribas’s bunch of sector teams; groups of coverage bankers supposed to “deliver the firm” to an industry sector without favouring a given product team.
All fine, except that the groups all reported to product heads. Sectors deemed to rely most on financing reported into the head of financing, Bruno Tassart; sectors where M&A was the best selling point reported into the head of corporate finance, Sophie Javary, and the rest into the head of coverage.
The whole edifice has been under Thomas Mennicken since he took over corporate clients financing and advisory following Yann Gérardin’s promotion to run the investment bank. But he reports not to Gérardin, but to his chairman, Thierry Varène.
The new structure unpicks this problematic approach, but it’s still brain-bleedingly complicated. David Rothnie’s Southpaw has the best discussion, but surely the question still comes down to who shows up to pitch and who takes the revenue credit?
The rest of the market is still waiting for banks to pay, kick-starting the hiring season, but there’s been a spate of interesting activity, especially for public sector bankers.
BMO Capital Markets, for example, hired another ex-Credit Suisse banker, Massimo Antonelli, to join Ed Mizuhara on SSAs. Credit Suisse cut Antonelli in November, as part of a radical restructuring of the bank’s European cash rates business, but he’s bounced back fast.
BMO is most certainly a niche player in Europe — climbing from 25th in 2014 to 19th in 2015 — but perhaps it is hoping the replicate the public sector successes of its larger Canadian peers RBC and TD Securities, both thriving European SSA shops.
Then on Monday, Credit Suisse waved goodbye to SSA boss Greg Arkus after 15 years. You have to wonder if there's a spare desk at BMO for Greg to sit at with his old chums.
In other surprising bank hiring, Royal Bank of Scotland has prised Sean Malone, head of loan syndication, back from BTMU. Having a chunky Japanese bank balance sheet to throw around must have been fun, but it is perhaps questionable how much of the risk needed to be distributed and how much lending just went to feed the beast.
RBS does appear to have a plan for its loans business, centred around using the corporate and private banking division, which will be inside the ring-fence, to house its corporate and leveraged loans, while fees and distribution stay with capital markets in CIB.
While BMO and RBS are hiring, Daiwa seems to be heading the other way. The Japanese bank, whose business in Europe is heavily concentrated on SSAs and those banks bold enough to brave a Samurai issue, has cut two bankers, one in syndicate and one in DCM, both long-standing Daiwa hands.
Tres complique
This week brought a bit of a breather on bank results, with only Crédit Agricole reporting.
Understanding investment bank staff charts is peanuts compared to comprehending the group corporate structure of Crédit Agricole, but now, at least, things are a little simpler.
It will sell back the holding company's 25% stake in the 39 regional banks that themselves own a 56.7% stake in the holding company. Oh yeah, and it is repaying a €5bn deposit on the guarantee to the regional banks. And lending the same banks €11bn to buy the stake. J'espère que c'est clair?
GlobalCapital recommends “explain the Crédit Agricole corporate structure” as a FIG interview question for the candidate that seems to have it all. Somehow, this piece of financial wizardry adds 170bp to the bank’s CET1 ratio, allows it to pay a cash dividend, and draws down €13bn of liquidity.
Regulatory news has been a little thin on the ground this week – the ECB has published a guide book to the Single Supervisor, throwing around a few figures on major risks it sees, capital requirements across banks, and how the ECB does its supervision.
But it still refuses to adopt a more transparent approach, comparable to the Federal Reserve’s CCAR assessments, where it names and shames (or praises) individual banks.
In fact, the ECB is resistant to even publishing its extra capital requirements, though it has dropped its opposition to banks deciding to publish themselves.
The reason for the central bank’s reticence is that it has a variety of policy levers in Pillar 2, not just extra capital, so a bald figure would be a misleading picture. But why not just publish the other measures too?
When the bank fails the CCAR, the Fed won’t go into too much detail, but it will say, for example, that it lacks confidence in a bank’s risk management, its IT, or its practices. Banks must hang their heads, and investors get more insight.
On derivatives regulation, US authorities are steaming ahead with resolution stay plans, which would force counterparties to opt-in to agreements not to terminate if the dealer they were facing went into resolution. The UK and Netherlands already have such rules, and it can’t have been a surprise that these were coming.
But it creates further potential contagion in the financial system — even if derivatives are exempt from bail-in, if counterparties are substantially in the money and forced to suspend termination, that’s still a big stalled exposure and a lot of uncertainty.
It could also strengthen the hand of non-bank financial intermediaries, or institutions which come in below the level of resolution.