RBS Capital Market's push into the structured credit market was given a major push last week when it snared Merrill Lynch's top dog, Vincent Dahinden, European head of structured credit in London. Dahinden confirmed he will join the bank as global head of structured credit products in March, but declined further comment.
Rival CDO pros said RBS has been making a push into credit derivatives for over a year and Dahinden will provide the heavyweight name it needs in order to be treated on an equal footing with the more established players. Its structured credit operation had been treading water since David Littlewood and David Henriques, global co-heads of structured credit products, quit the firm in July, noted one client. A spokesman declined comment.
In addition, the business that the two David's ran was small and focused on arbitrage CDOs. RBS watchers say the bank has recruited Dahinden to broaden the department to overlap with other areas of its business. He is also likely to change the product focus to large repeatable deals.
Rivals said RBS' main strength will be its distribution channels. It has excellent relationships with the Edinburgh fund management community and, through its purchase of National Westminster Bank, equally good contacts at U.K. thrifts. One CDO originator said although the Scottish fund management community includes some of the largest fund managers in the U.K., they do not traditionally invest in structured products and most of their assets are in equities or government bonds. He said that over the next five years these are likely to move into credit products, but he added, "We're investment bankers, we don't care what happens in five years."
Dahinden has been in charge of Merrill's CDO business since Hermann Watzinger, managing director and head of debt markets securitization and portfolio credit derivatives, left to join ABN AMRO in July 2002 (DW, 7/22/02). In that reshuffle, he also took over Henry Schmeltzer's role covering heavily structured corporate debt repackagings, whole business securitizations and corporate asset-backed deals. Away from the CDO community, Dahinden is also a restaurateur with a stake in London's chichi Club Gascon.
At RBS, he will report to Symon Drake-Brockman, head of capital markets in London. It was unclear who would replace Dahinden at Merrill.
