If they know the firm, as Matthew Westerman, co-head of global banking at HSBC since May, did, then they’ll have big ideas for overall changes. At HSBC, that shift seemed to be the end of the capital financing unit, which used to house the investment banking product groups.
But a new boss also means a review of who did what and where, and a redeployment of individuals. Westerman is apparently going through the senior staff in HSBC’s banking businesses, rethinking titles and responsibilities. So Russell Schofield-Bezer, who had been running European capital financing since Oliver Duff’s departure at the end of last year, is looking for a job elsewhere in the bank. He’s a derivative solutions banker by background, having come up through that route to run EMEA DCM, so don’t bet against that.
Adil Kurt-Elli, head of CEE and sub-Saharan Africa DCM, has been switched over to a newly created post in the infrastructure group — a move in the opposite direction to Matthew Wallace, who formerly headed the big sector coverage group looking after resources and energy, but now has geographic responsibilities heading banking for the Middle East and coverage in sub-Saharan Africa. The bank has also been cutting selectively, with Bilgitay Saybasili, who covered Turkish DCM, set to leave the firm.
Expect more changes to come, as the new boss keeps working through the bank line-by-line. HSBC doesn’t have the same reputation for cut-throat internal competition that, say, Deutsche Bank did, but it’s still a hulking great organisation which cannot help but develop silos. The question is, can some Goldman seasoned pixie dust break them down?
Things are also afoot at Mizuho. The bank has had FIG ambitions since at least last year, when it hired two bankers to set up a FIG DCM effort. One was AJ Davidson, an ex-RBS capital solutions banker who’d been out of the market, and the other was Giles Parker, joining from Morgan Stanley. Davidson didn’t last long, however, leaving the bank again after just a couple of months, and giving the bank a managing director-shaped hole in its plan.
It hasn’t exactly filled it, though, with Daniel Ang, a Standard Chartered FIG banker who is joining to cover insurance firms and capital solutions — from the CEEMEA team.
Perhaps that means Mizuho has refined its strategy somewhat — rather than start a subscale effort trying to sneak into the huge bookrunner groups for western European AT1 trades, focus on some underserved EM institutions. Or perhaps it’s just admin convenience. Either way, there has to be more change coming in the nascent FIG operation.
Oh yes, and a few banks reported last week as well. It’s fair to say things haven’t been a total triumph this quarter — for every bright spot, such as HSBC’s success in finally getting some capital out of its US subsidiary, or the strong rates and FX flow around the UK referendum, there’s a tale of woe to go with it.
Negative rates are hurting Commerzbank, and, really, every other institution with a big book of safe-ish assets and a big deposit base.
Asian volatility and a turbulent Chinese stock market has hit banks with big Asia businesses in general, whether these focus more on IPOs, on structured products, on brokerage and wealth management, or on everything. There isn’t the same sense of China panic that characterised last summer, but it’s certainly underdelivering, even if, long term, the China bulls probably have it right.
For other firms, it’s the extraordinarily long tail of legacy costs. RBS managed yet another loss in the first half, taking a bigger than expected provision for PPI and for litigation over the 2008 rescue rights issue (which immediately preceded the bank’s actual rescue by the British state and left the shareholders deeply and understandably miffed). Even if the bank simply paid a team to hand out £50 notes, it would struggle to lose money at the current rate.
Actually, Notebook's preferred view is that PPI is a perfect piece of stealth helicopter money. The Bank of England’s QE programme and other extraordinary liquidity provision schemes did help asset owners and banks boost their profits, but, as other jurisdictions are finding out, really didn’t hit the real economy unless you forced them too.
However, paying out PPI compensation cheques hits households immediately. Virtually anyone who’s taken a loan out in the last 15 years can give it a try, and the money is spent immediately!
Even stealth helicopter money though needs a banking system with a basic bill of health, and there’s understandable scepticism about whether Italy is there yet. Clearly Monte dei Paschi is a hot mess (we looked at some of its messiest trades in the last 15 years) but there’s been plenty of attention to reporting from UniCredit this week, as its investors face up to a possible €5bn-€9bn rights issue. Intesa, though, seems to have sailed through it all — yes, there are NPLs, but the bank seems the very model of prudence, and a reminder that you can’t tar all Italian institutions with the same brush.