UBS, for example, chose this week to announce they’d hired Nestor Paz Galindo from JP Morgan as head of exclusive sell-side and sponsors M&A. It seems late in the year to be buying out an MD from JP Morgan, but it’s hard to fault the logic – Severin Brizay, UBS’s M&A head, came over from JP last year, and would naturally look to his old firm to tool up.
Standard Chartered also got in on the late hiring, naming a new investment bank boss this week, Simon Cooper from arch-rival HSBC. Cooper had been chief executive of commercial banking, but has some investment banking on his CV too, with a stint as Singapore-based head of CIB for HSBC.
Group chief executive Bill Winters, of course, is not short on investment banking experience himself, but Cooper’s appointment could signal further scaling back of Stan Chart’s IB ambitions – or simply a prudent acknowledgement that it was never a pure play IB proposition.
Morgan Stanley, too, against a backdrop of brutal cuts in the fixed income business, rehired Olga Basirov (after a 10 year absence) as a senior salesperson. Basirov is already in the building, so negotiations will have come much earlier, and she came from the buyside, but still: banks are weakening their ties to the bonus cycle.
Japanese banks play by their own rules, which is why Mitsubishi UFJ became the second Japanese bank in recent weeks to mull entering the European FIG business. It has hired liability management and hybrid capital director Cyril Chatelain from Crédit Agricole. Chatelain is one of several FIG bankers to quit Cred Ag recently, but more interesting is the competition he’ll face in his new role.
He’ll be butting heads with AJ Davidson and Giles Parker, newly installed as Mizuho’s FIG origination team. Both Japanese banks have balance sheets of epic vastness, but in Europe’s bank capital market, reciprocity counts for more.
Banks are also working on positioning for next year, and hope, of course, springs eternal for those in the origination business. It’s not always easy to call the market, however.
In 2014, banks hired expensively in leveraged finance, high yield and capital structuring, on the back of the biggest ever European high yield deal, ever lower yields, and a TLAC market that could go to the moon. They were sorely disappointed, with levfin falling flat in H2, the market puking for much of the year, and simple statutory fixes that wiped billions off the bank recap total.
So this year, expect equally duff calls. That said, European M&A is the big hope for 2016 (erm, like it might have been in 2015). The US was the star of the show this year, with everything seeming super-sized — the brands, the mergers, the loans, and the bond take-outs — but perhaps Europe can catch up.
US banks have been riding high on this deal flow, which, coupled with the highest fees in the world, has given them all five of the top five spots for investment banking revenue in 2015. Europe’s chaotic, overbanked and fragmented capital markets are not going to match the US performance in 2016, and Europe’s bond markets won’t be doing €20bn deals any time soon, but there’s still potential for things to look up.
For a particularly contrarian call, perhaps it will be the FICC business that comes roaring back.
News that 24 of the biggest buyside firms in the market would start voluntarily clearing single name CDS could be the tonic credit traders need.
Other clients, too, will surely follow the likes of Apollo, BlueMountain, BlackRock, Eaton Vance and Pimco into single name clearing, and after resisting for years, and fighting tooth and nail to water down the regulatory incentives to clear, banks might finally come to terms with a derivatives market that’s mostly cleared most of the time. A better single names market means more index arb trading, more basis trades, and happier credit traders.