Hans-Jörg Rudloff: ‘visionary’ who modernised the bond market

Hans-Jörg Rudloff was a leading banker in the international bond market at a time when a single individual could still shape its course. He was one of those who did, speeding its development towards the vast and efficient international source of financing it is today.

Rudloff, who died in December aged 85, never led a listed bank. But his influence was much greater than many who did, both through his actions and his example, which helped to define the ideal of an investment banker for many who encountered him.

“He was an eminence grise,” said Bob Diamond, former chief executive of Barclays, who worked with Rudloff for many years. “A very smart man with great character, incredible relationships and a great adviser and mentor.”

In the top echelons at Kidder Peabody, Credit Suisse and Barclays, Rudloff nimbly trod the tightrope of propriety over the markets’ sometimes headlong and perilous course.

While many other rivals had brains, determination and energy, Rudloff’s panache, enthusiasm and personal charm set him apart.

A bond banker who was in his 20s when Rudloff joined Barclays Capital as chairman in 1998 said: “Even though he was a multimillionaire, he just wanted to impart all his knowledge and wisdom. He was talking to me as if I was a CEO. That’s why I think he was amazing — no airs and graces. He was a very popular figure for that reason.”

Born in Cologne in 1940, Rudloff studied economics at Berne and joined Credit Suisse in 1965, just two years after the Autostrade bond issue, generally seen as having inaugurated the Eurobond market.

It was a historic opportunity. The Kennedy administration’s imposition of an interest equalisation tax on US investors buying foreign bonds deterred European issuers from tapping the US market, just as savings were beginning to accumulate in Europe that offered an alternative pool of demand.

Private wealth was a big component and that put Switzerland — refuge of family money from France, Germany, Italy and the Middle East — front and centre.

Credit Suisse became one of the foremost Eurobond houses, partnering with Boston investment bank White, Weld & Co from 1970 and then, when Merrill Lynch bought White Weld in 1978, forming a joint venture with First Boston Corp.

But Rudloff left Credit Suisse only two years after joining, and made his name at another Boston firm, Kidder Peabody.

By 1968 he was a managing director at Kidder Peabody International, and 10 years later, at the age of 38, its chairman.

This gave Rudloff the experience of working on both sides of the Atlantic that was a crucial advantage in the Eurobond market. Then, even more than now, the market had two poles — the US and Europe. Success was about finding ways to exploit the complex landscape this created.

The scandals that were to engulf Kidder Peabody in the 1980s lay in the future and the firm became known for financial research.

In 1980 Rudloff returned to Credit Suisse, joining its Credit Suisse First Boston joint venture as an MD and, from 1983, vice-chairman.

For much of the 1980s and 1990s, CSFB exemplified the new, aggressive, US-influenced tendency among investment banks.

A Swiss firm that felt American — even after Credit Suisse took full ownership in 1988 — it moved fast into the many new products springing up, like derivatives, mortgage and asset-backed securities, leveraged finance and emerging market bonds.

“When I first moved to London with Morgan Stanley in 1988 there was no stronger presence than CSFB,” said Diamond. “[Rudloff] had dominated the Euromarkets and FRNs.”

Diamond remembers pitching for a Bank of England bond in the European Currency Unit which preceded the euro. “We were competing with every bank for the first sovereign issue in the single currency and our fear was ‘how can we possibly wrestle this away from Hans-Jörg Rudloff and Credit Suisse?’”

When Diamond joined Credit Suisse to run its Asian business in 1993, the firm’s “most experienced and best business,” he said, “was CSFB in Europe, which had been built by Hans-Jörg.”

A special ingredient was Credit Suisse Financial Products, the most famous of the derivative product companies formed by investment banks to act as highly rated counterparties. It had been set up by Allen Wheat and the team he brought from Bankers Trust in 1988.

Rudloff was a versatile, senior operator, contributing in many fields rather than being yoked to any single cart.

He is better known as a bond originator than trader but Diamond said “in the days he was building CSFB there was much more of a blurring of the distinction between sales and trading and origination. That was the origin of the capital markets desk, which is slightly different than running a trading business. He was responsible for capital markets, which did require serious risk management, because not every transaction was fully subscribed.”

Rudloff has been credited with increasing investment banks’ willingness to take risk by underwriting bonds.

Asked about this, Diamond said it was a function of how the European market had developed.

When Morgan Stanley, Goldman Sachs and First Boston were private partnerships, “they were referred to as the white shoe advisory firms and they would only take mandates that were fully distributed,” said Diamond. “In Europe the business was more sovereign and less corporate and with sovereigns one would be much more willing to take risk.”

While in the US, trading Treasuries was a risk business but separate from corporate bonds, “In Europe because of the different European sovereigns [the Eurobond market] was a hybrid between a government bond market and a corporate bond market. Hans-Jörg pushed that a bit — the underwriting. It was OK to take risk, acceptable — and for good reason: it was primarily sovereign issuers.”

In the 1990s Rudloff leapt eagerly into a new bond market — the former Communist countries of eastern Europe. Rudloff’s strengths of daring, tolerance for risk and charismatic authority were an ideal combination to win business there.

But although CSFB became one of the most prominent firms, Rudloff had moved on before that market really flourished in the second half of the decade.

Though CSFB made a lot of money, it could be a turbulent place. Rudloff joined the Credit Suisse executive board in 1986 and was made CEO and chairman of CSFB in 1989, then a director of the parent a year later.

But in 1993 he was ousted from leadership of CSFB and called back to Credit Suisse headquarters in Zurich. The following year he left, “to pursue personal and family interests”.

This also meant he had left Credit Suisse well before most of the financial and regulatory scrapes that dogged its last 30 years.

Rudloff teamed up with Peter Ogden, co-founder of Computacenter and a former Morgan Stanley swaps banker, to launch MC Securities, which was particularly active in Russia.

In a year it employed 220 people, but after 18 months in mid-1996 the founders had sold a controlling stake to Banque Bruxelles Lambert. It was later sold to investment bank Robert Fleming.

Rudloff did not hang around. Bob Diamond had joined Barclays de Zoete Wedd as head of global markets in 1996 but BZW was soon restructured, with the equities and corporate finance businesses sold to CSFB.

Diamond was put in charge of a slimmed down, fixed income-heavy Barclays Capital. “I was taking what was the rump of BZW [which] was frankly a failed investment bank,” said Diamond. “[Rudloff] had stepped down and was retired. I called him in our first year and asked him would he be chairman of our investment bank.”

Diamond was building a new team, including Jerry Del Missier from Bankers Trust as head of derivatives and Tom Kalaris from JP Morgan.

“We had a vision, we had a work ethic, we had an incredibly powerful, triple-A balance sheet and brand in Barclays behind us and he joined,” said Diamond.

Calling him “an unbelievably strong adviser to me and the chief executive team”, Diamond said “he was wonderful to work with as a mentor for young people.”

Very soon, no one called him Mr Rudloff or Hans-Jörg, Diamond said. “He became known as the chairman, and a comment made with great reverence was ‘did you check with the chairman?’”

Cyrus Ardalan, whom Rudloff hired as vice-chairman in 2000, said: “He had a very good perspective on markets, at the micro level and also at the macro level, which you don’t often find. He liked to trade the market, but also had the ability to look way beyond the daily movements in the market at the way global affairs were shaping markets.”

Rudloff “was aware you needed a client-facing business but also an integrated one,” said Ardalan. Compared with the product siloes at Paribas, where he had worked before, he found that at Barcap “you had bankers responsible for all products — you were agnostic about what the product was. That was what really attracted me to Barcap and made it a great fixed income house.”

One banker recalls “a little fellow, knee high to a grasshopper, with rounded features, and I remember him smiling. He was a great raconteur and just wanted everybody to learn.”

Buzzing around Europe by private jet, especially between London and Geneva, Rudloff opened many clients’ doors for Barclays, particularly in Russia.

It was a clear rule that no one did anything in Russia, eastern Europe or Switzerland without getting approval from Rudloff.

“But across Europe he played a very important role in developing our client base,” Diamond said. “People lined up to be the person that got to travel and meet clients with Hans-Jörg.”

One who travelled to Moscow with him recalls “The Russians loved him. Going to Rosneft [the state oil company], he would have his own escort inside, they knew him so well. He was with us but you knew he wasn’t really with us because he was cut from a different cloth… he knew everybody.”

Like many a high flier, “he certainly didn’t suffer fools,” said Ardalan. “He was a demanding person and could be quite difficult at times. He had quite strong views and high expectations. You couldn’t just walk in there and hope it was going to go past him. But if you really wanted to be best in class he certainly made you think about it and up your game.”

Rudloff’s last seven years at Barclays, from 2007, were tumultuous ones for the bank and the whole financial markets.

Barclays nearly bought ABN Amro in 2007 but was gazumped by Royal Bank of Scotland — a lucky escape, which likely helped Barclays avoid needing a bailout in 2008 like several of the other leading UK banks.

It raised capital instead from Qatari and Abu Dhabi investors, keeping the bank afloat without having to call on the taxpayer — though that led to investigations, a fine by the Financial Conduct Authority and a failed prosecution.

After the crisis there was controversy over Barclays Capital’s market-leading tax structuring business, known as structured capital markets, and its involvement in the Libor rigging scandal, which forced Diamond to resign in 2012, after one year as group CEO.

Throughout that time, Rudloff remained chairman of Barclays Capital, a steadying presence whose reputation was not damaged.

Barclays was one of very few investment banks that could take a decisive growth step in the thick of the crisis, by buying the north American business of Lehman Brothers for $1.75bn just two days after it failed on September 15, 2008.

The deal catapulted Barclays into investment banking’s global first division.

“Because of the way we had built the investment bank, we were quite healthy and profitable, so we were able to execute,” said Diamond. “[Rudloff] was extraordinarily helpful in planning the Lehman deal. We had started working on it in March after the Bear Stearns [collapse]. It seemed clear to us there could be another shoe to fall. He was a very big part of planning and executing [the acquisition].”

Rudloff’s investment banking activities were enough to earn him hero status in bond circles.

But he also intervened decisively in the market’s governance. Rudloff was one of the prime movers when in 1984 the Association of International Bond Dealers resolved to set up a separate trade body for the primary market.

The International Primary Market Association brought together the major lead managers to standardise documentation and market practices, collecting them in a primary market handbook.

“The recommendations adopted by IPMA early in its existence,” wrote Robert Gray for GlobalCapital in 2007, “played a crucial role in bringing stability to the market, and helped create the level playing field that contributes so much to our market’s success in competing — in cost effectiveness, speed and efficiency — with other capital markets around the world.”

Times were good for the dealers. A banker active in the ’80s remembers “The fee structure was always 1.875% for a five year, 2.125% for a 10 year. It was as if it was written in a Bible.”

One of IPMA’s main thrusts was to lobby for Euro-securities to be exempted from national securities laws.

Twenty years on, change was needed again. AIBD had become the International Securities Market Association, a broader group than IPMA which mainly dealt with the secondary bond market and repos.

But the creation of the euro and rapid growth of European Union regulation towards a single financial market were increasing demands on the trade bodies.

“The main challenges became external rather than internal within our industry,” as Gray put it.

The associations had to present complex arguments to influence policy-making at a high level, and felt the need to speak in unison.

The idea arose that the New York-based Bond Market Association, ISMA and IPMA should all merge.

Rudloff was having none of it. “The BMA was essentially a US organisation,” said Martin Scheck, former head of fixed income at UBS. “His vision was that we needed a lot of strength in Europe, which was a much more international market, while the US market was largely domestic. So he made sure that the merger happened purely on the European side, rather than with the BMA.”

IPMA and ISMA coalesced in 2004 as the International Capital Market Association, with Rudloff as its first chairman.

“He really shook the place up,” said Scheck, a board member then, later CEO. “He shook up the governance, changed the direction of the association, changed the board and the composition of management.”

ISMA ran a trade matching and reporting system called Trax. All members had to report certain trades through it and pay fees to do so, or penalties if they failed.

“Those fees and penalties funded very handsomely the old ISMA,” said Scheck, “so the focus had been on running that, rather than the policy and market practice work. It created a slight conflict of interest.”

Rudloff engineered the sale of all ICMA’s commercial activities, which took several years to achieve, and steered it to focus on its core tasks of market self-governance and advocacy.

ICMA sold Xtrakter, which ran Trax, to Euroclear in 2009 — it was sold again to MarketAxess in 2013.

Rudloff had very well defined ideas of how ICMA should develop and promoted them actively.

“He was a very dominant personality, extremely effective in making sure that things got done,” said Scheck. “That’s one of the reasons he was so good in the early days of the Euromarkets — he was really a pioneer.”

He strove to grow and broaden the membership, doubling it to about 600 firms, spanning the whole value chain from issuers to investors.

“Regulation only goes so far,” said Scheck. “For the industry to function effectively there is an area beyond regulation, which is market practice. He was very keen on making sure ICMA promoted market practices that functioned efficiently so the market could grow.”

Rudloff served at ICMA until 2011 and retired from Barclays in 2014.

He was also vice-chairman of Novartis, the Swiss pharmaceutical group, and a board member at Rosneft until 2022, when he withdrew his candidacy for re-election.

In later years, he was chairman of Marcuard Heritage, a wealth manager with offices in Zurich, Singapore, Limassol and Abu Dhabi.

Rudloff kept his private life strictly separate from business, with only his closest associates knowing his wife and family.

“I think he was a great man,” said Diamond, “the father of the Euromarkets that we have today in Europe. He was a visionary for how the business was going. Clients trusted him, and he was a great mentor and guide and adviser. I feel much richer as a professional for having worked with him.”