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Your long term business partner, your consultant, your career adviser, your friend who puts you in a taxi at midnight. Whatever you call them, headhunters are keen to stress that they provide a multi-faceted service to the financial industry. And right now the pressure is on for recruitment firms to prove their worth. Their practices and services are coming under far closer scrutiny as the slowdown bites and they find themselves just as vulnerable as their client base. Quentin Carruthers visits the recruiters to report on their unique view of the banking world.

For some in the careers industry, the current climate is proving fruitful. "Business has almost doubled this year," says Caroline Swain, managing director of Lee Hecht Harrison Ltd (LHH). She suspects that it may have increased even more for others, such as Meridian Consulting, one of the market leaders in the City of London. At Right Management Consultants (RMC), Anthony Payne, director, reports: "Events have accelerated and we are exceptionally busy. September 11 compounded the recessionary effects being imported from the US."

Strategic hiring

Enron's bank debt has been hit the hardest this week, landing in the 75-80 range from the high 99 range last week. Dealers estimate about $15 million had traded as of yesterday afternoon. The company is seeking $2 billion from private-equity firms and power trading firms. Also, American Tower's bid-offer spread softened about 3 points to 88-90 on a weak earnings release. PG&E's debt traded up to 93.675 from the 93 range on news of the company's third-quarter figures tripling over last year.

Aanders Haagen, formerly v.p. of structured credit products at Bank of America in Hong Kong, is joining ABN AMRO in Singapore, according to a market official familiar with the move. He is expected to start in two weeks. Haagen did not return calls.

Sydney-based hedge fund Basis Capital is considering entering an asset swap in the coming months as part of a convertible bond arbitrage strategy on Singapore's Chartered Semiconductor Manufacturing. The corporate is trading at around 650 basis points over the swap curve, according to Steve Howell, cio in Sydney. He added that he expects the converts to tighten to around 500bps in the coming months. Howell attributes the temporary widening to part of a general credit spread widening since the Sept. 11 terrorist attacks in the U.S. It will likely enter the trade within three to six months if credit quality stabilizes and the credit risk premium narrows.

ABN AMRO has hired Wing Hong Chan, v.p. in the corporate advisory group at J.P. Morgan in Hong Kong, as v.p. of derivatives marketing for the financial markets group at ABN in Hong Kong. Chan will handle derivatives marketing for Hong Kong and China, according to Bruce Shu, spokesman at ABN in Hong Kong. Chan reports to Greg Major, senior v.p. and head of Asia Pacific derivatives marketing at ABN in Singapore.

AXA Investment Managers is planning to offer an Asian absolute return and a statistical arbitrage hedge fund in the first half of next year to institutional investors. Both funds will be able to use over-the-counter derivatives and the firm expects to raise approximately USD500 million for each strategy over the next three years, according to Joanna Munro, global head of business development and fixed income and structured asset management in London.

BNP Paribas is suggesting Taiwanese corporates with U.S. dollar exposure buy three-month at-the-money U.S. dollar calls/Taiwan dollar puts because it anticipates an easing in monetary policy and increase in volatility caused by a weakening Taiwan dollar. Thio Chin Loo, currency analyst at BNP in Singapore, said, "We expect the engineering of weaker exchange rates [after the election]." She continued that after a general parliamentary election in early December the central bank will probably allow the Taiwan dollar to fall by TWD.50 to TWD35. The bank currently keeps the Taiwan dollar around TWD34.5.

Credit derivatives market makers and end-users in New York and London have stopped entering derivatives transactions with Enron--or at least severely curtailed their activities-- in the wake of a Securities and Exchange Commission inquiry into the company and the possibility of further credit downgrades. Alex Parsons, spokesman at Enron in London, admitted that credit lines to Enron are constrained but said it still has access to the derivatives markets.

The Hong Kong branch of Bayerische Landesbank plans in the coming months to start trading credit derivatives for the first time. The bank will purchase protection to hedge its bond portfolio and sell protection for investment purposes, according to Sattpy Chan, fixed-income trader. The bank will focus on Hong Kong credits, which make up the majority of its fixed-income portfolio. The typical notional sizes of the transactions will likely be USD5-10 million, noted Chan. "We want to make money," said Chan of the branches' reason for applying for approval, adding that previously the market was not sufficiently liquid to trade these products.