All material subject to strictly enforced copyright laws. © 2022 Euromoney Institutional Investor PLC group

RBS linked to John Walsh at start of US credit push

EuroWeek understands that John Walsh, one of the most successful bankers in international bonds over the last 20 years, is close to joining Royal Bank of Scotland to build a US credit platform.

Senior bankers in London and New York told EuroWeek yesterday that they believed RBS and Walsh were on the verge of completing negotiations and that a contract would be signed over the next couple of days, with the possibility of him starting work in mid-March.

It is said that Walsh, who left Credit Suisse First Boston last year after 14 years at the firm, will work for RBS Greenwich Capital in Greenwich, Connecticut, and that he is likely to be charged with setting up a fully operational US credit business.

Up to 60 bankers could be hired to work across sales and trading, bond origination and syndication and derivatives. Naturally there has been intense speculation that Walsh will want to hire some of his former CSFB colleagues ? if indeed he does join RBS.

Walsh was unavailable for comment; senior RBS officials in London said they were unaware of any hirings in the US; and RBS Greenwich Capital's co-CEO Ben Carpenter did not return calls.

But rumours of a return by Walsh have been constant ever since he quit CSFB in May last year and have steadily increased over the past two weeks.

As one of the bond market's most popular and respected figures, Walsh has attracted more than his fair share of attention and speculation since leaving CSFB.

At one stage last year, it was thought Walsh had been talking to several houses, including BNP Paribas, with a view to starting work again after the summer of 2003.

Soon after he left CSFB, former colleagues indicated that Walsh wanted to join a firm that did not have a large US operation, so that he could have the opportunity to build a new capital markets business from scratch.

While RBS does have US operations ? indeed, the Greenwich Capital arm has highly respected treasury and mortgage backed security businesses and RBS has capital markets and corporate lending services in New York ? rivals do not consider it to have a premier US credit markets business.

However, Walsh's hire will serve notice to RBS's rivals that it intends to be a major league player in the North American capital markets. Commentators have suggested RBS is likely to consider buying a US bank in the next year.

Certainly, it has impressed recently in the UK and western Europe ? the bank, which is the world's fifth largest by market capitalisation, revealed stunning 2003 results in mid-February, posting a record pre-tax profit of £6.16bn.

Geographically, it has been successful in expanding in continental Europe over the past two years as well as maintaining its traditional strength in the UK.

In terms of product, the bank has successfully ventured beyond the sterling bond market into euros and dollars and continues to win continental European syndicated loan and leveraged finance mandates, partly as a result of its powerful balance sheet.

RBS's securitisation business is a leader in the corporate sector.

The US, it would seem, is the next most logical place for it to expand and replicate its European banking model.

Invaluable experience

If he signs ? and senior bond bankers believe he will do so by early next week ? Walsh will bring invaluable credit market experience to RBS in the US.

At CSFB (after spells at Bank of America and Prudential-Bache Securities), he worked under Euromarket luminaries such as Hans-Jörg Rudloff, Joan Beck and Ossie Grübel.

Walsh was put in charge of syndicate at the age of 25 and represented the bank in the Group of Seven ? an unofficial club that met every two to four weeks to discuss developments in the bond market.

In 1994 Walsh added European debt capital markets to his syndicate responsibilities, taking the title of co-head, along with Simon Meadows. In 1998 he moved over to the US as global head of debt capital markets to work with Jack DiMaio.

The reasons for Walsh's departure from CSFB last year can be charted back to May 2000 when his boss, Allen Wheat, appointed Stephen Hester, the bank's chief financial officer, head of fixed income. This was widely seen as an unpopular appointment and it was not long before rival firms began to notice.

Bob Diamond was one who spotted the unrest and offered to take Walsh and around 40 other CSFB bankers over to Barclays Capital. The "naughty 40" resigned en masse.

But Wheat countered, promising to get rid of Hester and beat Barclays' offer. Walsh and his gang decided to stay on. It was rumoured that five of the group were offered three year contracts of between $20m and $30m.

But in July 2001 Allen Wheat was ousted and Morgan Stanley's John Mack was brought in by chief executive officer Lukas Mühlemann.

The contract guarantees Wheat had given were seen as one of the main management problems Mack had to deal with after joining the firm.

Unsurprisingly, there was constant speculation as to how long Walsh would stay at CSFB. In fact, he stayed until April last year, when Mack appointed Jim Healy and Jerry Woods co-heads of fixed income and DiMaio moved over to become CEO of alternative investments. n

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree