They have turned up the pressure at Salomon Smith Barney (Salomon). The house is back on top of the private placement league table after four months of mid-table positions and last month it became the proud owner of MTNWeek's Best Euro-MTN house award. But the team is not content. They feel there is still more they can do. "We want more market share," says Peter Jackson, EMTN trading at the bank. "It is a key driver of our overall investment banking business. We do want to be top of those league tables and, as an institution, we should be. If we were anywhere else we would be disappointed." Last year Salomon outstripped its nearest rival by more than $4 billion in terms of private placement volumes. It was the leading bookrunner for corporates and financials and was the only bookrunner in the top three for yen, euro and US dollar. But for Chris Cox, fellow Euro-MTN trader at the bank, there is no secret recipe to their success. He believes it is simply down to hard work and discipline. "I don't think there is any magic to what we do. It is about discipline. We have built a machine that works. Nowadays it's more a case of making sure that machine continues to work and grow."He adds: "If there is a trade to do, then we want to do it. It makes the issuer and the investor happy, and increases the likelihood of us getting the first call next time around. Ultimately business begets more business. If we can shut competitors out from doing trades then that can only be a good thing." Nearly half of Salomon's private trades last year were smaller than $50 million and more than half of these were less than $20 million in size. Salomon places a lot of emphasis on these smaller, and more structured, trades and Cox believes this is important if you want to run a profitable desk. He says: "The majority of our business comes in the form of comparatively small deals. Other banks come at it from completely the other end of the spectrum. Most of their trades are big vanilla trades. Seventy percent of our business is structured, through which we get good funding levels for our customers. That is what we focus on. Yes we do some of the big-ticket business, but other banks are not offering the same amount of structured business that we do. The way we operate is better for issuers and is certainly better for the bank, which as a commercial enterprise is supposed to make a return on the resources it invests." Salomon has six people working on the desk in London and seven people working on its Japanese desk. Both desks report to Peter Jackson but Chris Cox is in charge of the everyday running of the team in London. And Cox is quick to praise the calibre and stability of the team, which he believes has been essential to the growth of the business. "We have had a low turnover in terms of staff and that is a reflection of the fact that what we do is not boring," he says. "There are some desks that are doing a huge amount of very simple trades for little or no reward, and that can be demoralizing. We have a lot of very bright people in the team and they have plenty of latitude in terms of what they can do. They can always be working on something that interests and challenges them." Salomon has won the Best Euro-MTN house twice in the last three years. And, according to Jackson, the competition will have its work cut out if they are going to take the award from them next year. He says: "We have the biggest operation on the street. We have access to all the corporate borrowers in the market and, hopefully, we have access to all the investors in the market. We are everywhere and pretty much no one else can say that."
May 10, 2002
