Many EM bankers would be horrified at the thought of their business being wrapped into the SSA, corporate or FIG desks. This is partly because they don't want to see their empires diminished, but also because because the thought of say, arguing over half a basis point with KfW is anathema to them.
Younger EM bankers are more open to the idea. Perhaps, in no small part, because everyone having a wider repertoire would make things fairer come the rounds of redundancies when one region’s business hits a wall. Diversity helps dodge the dole. It also would help a bank retain the best possible staff, rather than simply the ones that fall into the right seat out of their grad training course.
There are operational difficulties though. While grouping a business by sector rather than region may work for a syndicate team based in London — especially with so many high grade accounts now buying EM — it doesn't make sense for a DCM banker based in, and covering, Dubai to also turn his attentions to France, for example.
There are some areas where this may work — central and eastern Europe and western Europe for example — but even then, would the banker have the right language skills, or the right demeanour to appeal to the culture of two very different regions and markets?
Some sovereigns in eastern Europe may welcome the change. Countries such as Poland and Slovakia pay negative yields and are scarcely considered emerging market credits these days. They certainly don’t seem to think of themselves as emerging markets anymore. It already makes sense for their SSA desks to run their bond issues rather than EM ones. But in EM these crossover investment grade countries are big fish in a smaller pond. They may not have the attention lavished upon them that big SSA borrowers like the EIB, the UK, Spain, Italy, or KfW command once they enter the bigger market.
The last year in EM has thrown up a need for change at some banks that want to continue in this business. The pace of change until now has been glacial, happening as bank teams evolved as the countries they covered developed. Some banks may now be thinking about how to make that change faster, but dividing an EM business up by sector EM may not be as easy a fix as some hope.