Outstanding Contribution Award: Blythe Masters

GlobalCapital’s annual Global Derivatives Awards in London on September 18 will honour the people, companies and deals that shaped derivatives markets over the last year. Among those winners will be Blythe Masters of JP Morgan, winner of the Outstanding Contribution Award. Ahead of the gala evening, Masters granted a rare interview to GlobalCapital’s Beth Shah to talk about her life and extraordinary career.

  • By Beth Shah
  • 12 Sep 2014
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It’s hardly a wonder as to why Blythe Masters is often dubbed as one of the most successful people on Wall Street when you take a look at the long list of accomplishments in her career spanning nearly three decades. As a marketer, structurer, trader and portfolio manager, Masters has become a global leader of innovation across many markets and asset classes. She has been at the forefront of increasing risk management awareness among dealers, and led the industry during the biggest era of regulatory reform it has ever witnessed. Masters has created and built successful businesses from scratch and perhaps most impressively, has accomplished all of these things within the fabric of just one firm.

As Masters approaches the end of her tenure at JP Morgan as head of global commodities, she recalls a hectic start to her career at the firm: “Every summer during university I did summer internships, the second of which was here in New York and happened to be in the commodities group. In the summer of 1990 the Gulf War happened. I arrived in July and on August 2 war broke out in the Middle East, oil prices went through the roof and that was my first experience with commodities.”

Upon graduating Cambridge University with a degree in economics, Oxford-born Masters returned to JP Morgan full time, joining the commodity derivatives group before moving into investor derivatives marketing a couple of years later.

Masters quickly climbed the ranks, becoming managing director at the age of 28, an ascent unheard of in finance. “Blythe is both strategic and able to execute,” says Bill Winters, CEO of asset manager, Renshaw Bay and a former co-CEO of JP Morgan’s investment bank. “She possesses extraordinary intelligence, super high energy levels and has the ability to connect with all sorts of people in all walks of life all over the world.” Before becoming managing director, Masters worked closely with Winters as part of the firm’s Global Derivatives Group. Peter Hancock, now CEO of insurer American International Group, led the team. He remarks on attributes frequently echoed by other industry bigwigs: “Blythe is a leader with a rare combination of vision, work ethic and intellect.”

The Global Derivatives Group sought to build on existing concepts in order to find innovative ways to transfer risk in a credit market that had almost no liquidity. “At the beginning this was really driven by people looking to lay off individual specific credit risk, most commonly banks, as well as a whole range of investors from hedge funds to pension plans looking to take on that risk,” Masters explains. “This increased the rate of turnover of credit risk in the system which led to it being dispersed. That was the beneficial impact and intent of credit derivatives.”

Building a market

Masters has endured much criticism, given the part derivatives played in the financial crisis of 2008 and in other infamous market episodes since — including at JP Morgan — and is often described as the creator of credit derivatives. But she points out that this tag is inaccurate. “I remember to this day having the concept of credit derivatives already explained to me by someone,” she says. “What I was asked to do was think about commercialising the idea. It wasn’t an invention, it was a commercialisation.”

Masters explains that the commercialisation of credit derivatives was to make real the idea that a market participant could separate the credit risk from the underlying instrument and trade it.

But this required not just a grand vision of what the market could become, but an eye for detail and willingness to graft, so as to bring about results. “One of the things that stands out about Blythe is that when interest rate derivatives were fairly new and credit derivatives were just an idea, she took it upon herself to lead the charge in building the infrastructure for such an industry — not in terms of settlement processes, but in terms of the legal structure, such as ISDA agreements and resolutions on workouts,” notes William Demchak, chairman, president and CEO of PNC Financial Services Group and a former colleague of Masters in the JP Morgan’s Global Derivatives Group. “These are the boring parts of building a market, but the necessary parts of making it sustainable. Blythe was always thinking about the big opportunity and not the next trade — that’s probably the trait that most makes her unique.”

Before becoming CFO, Masters was asked in 2002 to take over the credit portfolio at JPMorgan Chase and she immediately began the task of remodelling the way that the bank ran credit risk, an endeavour that was fraught with difficulties. JP Morgan had merged with Chase Manhattan only a year earlier and the markets were still suffering from the accounting frauds surrounding Enron and WorldCom. Masters says this was one of her biggest achievements while at the firm.

“Having helped contribute to developing a credit originating business model that allowed us to remain top of the credit business globally — and to do that in such a disciplined way in actively managing those risks — that’s one of the achievements I’m most proud of,” she says.

Two years later, in 2004, JPMorgan Chase went through another merger, this time with Bank One — the same year that Masters was appointed CFO and when she met Mike Cavanagh, former co-CEO of JP Morgan’s investment bank and now co-president and COO of Carlyle Group.

“I was coming in from the outside,” he says. “My first impression of her was she’s a professional with an incredible amount of intellectual horsepower. She has the sensibility for how the real world works, especially complicated parts that other people can’t get their heads around. She can go between real economy and markets, and deals with high levels of complexity and bring it all back together in an articulate and persuasive way. This brings others along. She’s also incredibly committed. When she’s involved in something you can count on her to give it everything she’s got.”

These skills were put to use as Masters was tasked with assessing the firm’s overall capabilities as an investment bank. This included cost cutting and streamlining the infrastructure in various departments, while also making the right investments in others. JP Morgan’s enviable league table positions in many markets suggest that the outcome of this work was a success.

Commodity return

Three years later, Masters was named head of global commodities. “The challenge was to build a diversified, balanced, global business that was client facing in an environment where doing it organically, or doing it via acquisition, were both just as difficult,” she says. The financial crisis then struck in 2008, wreaking turmoil on the financial markets, although ironically it helped JP Morgan to start a commodities operation as the firm was able to snap up numerous businesses over a short period of time, including Bear Stearns, RBS Sempra, UBS’s Canadian energy business and EcoSecurities.

However, it soon became apparent to Masters that the new task lay in solidifying the acquisitions and assimilating them into JP Morgan’s existing culture. “Ultimately being able to integrate all of that into one business that was JP Morgan from a cultural point of view, from a client facing point of view, and from a morale point of view, was a real challenge. I would say that was probably the greatest achievement for me,” she says.

There were credit, legal and risk management obstacles to be hurdled, along with difficulties in persuading the firm’s bankers to naturally consider the commodity products as part of their toolkit. “Nobody really knew about commodities,” she explains. “There was a lot of inherent resistance to building that degree of a new and different kind of product. Those were the big challenges and we did it.”

Nonetheless, Masters successfully constructed a world leading commodities platform. Earlier this year, JP Morgan sold its physical commodities business to the Swiss commodities and energy trading group Mercuria, following rising political and regulatory pressure and to concentrate on core banking activities.

But while regulators look to clamp down on such enterprises by banks, Masters still believes that there’s an economic need for banks in the commodity space. Nonetheless, Masters was still instrumental in the commodities franchise’s sale.

Paul Fribourg, chairman and CEO of Continental Grain Company remarks that Masters has been one of the leading figures in the rough-and-tumble commodities world for years. “She was a leader in developing the derivatives markets and has a long record of success in building and managing one of the most successful commodities businesses at JP Morgan,” he says. “She led the sales process to a very successful outcome, in a totally selfless way. It couldn't have been easy to sell the business she built from scratch. She is a class act and I'm sure the next chapter in her career will be equally as interesting and successful as the last one.”

Industry voice

But Masters’ presence in financial markets extends beyond JP Morgan. She was the chair of the Securities Industry and Financial Markets Authority for two consecutive years, during one of the toughest times in financial history in 2008 and 2009. Although that may have seen her face criticism, it also won her admiration.

“To speak on behalf of the industry on the value of derivatives during the course of the financial crisis, and the reputation suffered by the financial industry because of the financial crisis, took enormous courage and principles,” says Jes Staley, managing partner at BlueMountain Capital and former CEO of JP Morgan’s investment bank. “I just don’t know of many people who would stand by their beliefs and convictions in such an adversarial environment. But Blythe has a very strong compass in her beliefs in what’s right and wrong. She is willing to defend what she believes is right and she is willing to acknowledge when the industry makes mistakes.

“It’s her conviction and her principles that I think allowed her to be such an effective spokeswoman for the industry at a time when very few people would have stood up the way she did, and I think she paid a price for it.”

Masters views her undertaking at SIFMA as nothing less than an industry responsibility, remarking on the importance of maintaining public trust and confidence in the markets: “If you know what went wrong, you know the answers and you’re in the unique and rare position of being able to help diagnose it — which is distinct from having caused it — then it’s your job to speak up, even if there’s a cost associated with that,” she says.

Since 2008, the financial industry has watched regulators craft a glut of new and ever changing rules. Masters admits to having concerns relating to clearing houses and businesses — such as commodities — which appear to be migrating out of banks and into the shadows. However, she still fervently believes that the changes are undeniably better for the markets overall.

Cancer charity

Anyone who knows Masters will know she has a passion for horses, but aside from that, she has spent countless hours contributing to a number of good causes. She spent six years as chair of the board of the Greater New York City affiliate of Susan G. Komen for the Cure, a well known and highly regarded breast cancer awareness organisation. She now sits on the boards for both the Breast Cancer Research Foundation and the Global Fund For Women.

The passion and humility with which Masters talks about these charities is palpable, and ever the pragmatist she has managed to bring her wealth of talents to the causes she has been involved with. “My training from years at JP Morgan in leadership, financial discipline, governance and accounting are all incredibly useful in a charitable context,” says Masters. “Worrying about fundraising, sustainability and financial ratios are not things that are first on the list for the person next to you who is worrying about whether people are going to be alive next week.”

Dara Richardson-Heron, MD, CEO of YWCA USA and former CEO of Komen, talks as passionately about Masters as she does about the charities she is part of, pointing in particular to her impressive determination and unwavering commitment to making a difference in the lives of others: “Her professional schedule was always gruelling. Yet she was always willing to give generously of her time, knowledge, expertise and resources to make sure that Komen Greater NYC was able to meet the needs of the thousands of women and families who depended upon the organisation for assistance when faced with the devastating diagnosis of breast cancer.”

“Blythe is special,” says Leonard Lauder, co-chairman of the Breast Cancer Research Foundation. “She was one of the main fundraisers for breast cancer when she was the chair of the New York group of Susan G. Komen. On the personal side, when Hurricane Sandy hit, she brought two families into her home, where they stayed for more than six months. With Blythe, they found a safe harbour. Not too many people would go to such extraordinary lengths, but then Blythe always does more than is expected or asked of her. She’s one of my heroes.”

So what is next for Masters? Several of her former colleagues — Demchak, Winters, Staley, Hancock, Pinto, to name but a few — have gone on to become CEOs of other businesses. Will Masters leave JP Morgan for the last time only to walk into a job of similar status elsewhere in future?

Whatever she does next, one former colleague expects Masters to be make a success of it. “Blythe not only built a world class commodities business at JP Morgan, but she devotes the same passion and commitment outside of work to charitable causes and to mentoring fellow colleagues. She is remarkable, and will excel at anything she will ever do,” notes Daniel Pinto, CEO of JP Morgan’s Corporate and Investment Bank.

Looking back through Masters’ 27 year career it is easy to see why she has been characterised as remarkable time and again, and it would be a brave bet to go against that trend continuing.

  • By Beth Shah
  • 12 Sep 2014

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 344,473.92 1340 8.09%
2 JPMorgan 340,456.96 1464 8.00%
3 Bank of America Merrill Lynch 305,654.09 1051 7.18%
4 Barclays 256,667.84 965 6.03%
5 Goldman Sachs 227,104.06 767 5.34%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 46,952.57 194 6.54%
2 JPMorgan 46,108.71 102 6.43%
3 UniCredit 39,106.98 168 5.45%
4 Credit Agricole CIB 36,670.04 182 5.11%
5 SG Corporate & Investment Banking 35,773.91 138 4.99%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 14,088.48 62 8.97%
2 Goldman Sachs 13,469.15 66 8.58%
3 Citi 9,948.21 58 6.34%
4 Morgan Stanley 8,572.10 54 5.46%
5 UBS 8,391.04 36 5.34%