HSBC Securities plans to overhaul its global debt underwriting business, says Stuart Gulliver, recently installed in London as head of the firm's global markets effort. He says further layoffs, along with select hires and internal moves, will likely follow later this year and early next as he begins a three- to four-year plan he hopes will move the British bank up the league tables in international and global euro- and dollar-denominated bonds. "We'd like to be seventh or eighth within the next three to four years," he says. As of last Thursday, HSBC ranked 12th in global debt and 13th in international debt, according to Bloomberg's underwriting league tables.
The firm has already begun a wholesale restructuring of its fixed-income sales effort, Gulliver says. Where coverage in France, Germany and the United Kingdom had been variously organized according to client type, geography and product, it will now be separated into a corporate group, a three-part financial institutions group and a structured derivatives group.
Eight fixed-income sales positions have been eliminated in London as part of the changes, Gulliver says. The two most senior people let go were Mike Stone and David Townsend, both of whom worked in client relationship management, according to a former HSBC employee. Gulliver declined to discuss individuals that have left the firm. Stone, reached on his mobile phone, declined comment and Townsend could not be reached.
Even as HSBC tries to rebuild, senior people in the U.S. continue to resign. The latest to leave the firm are two corporate bond traders: Kris Deodato, a former managing director, and Paul Stendig, who was a senior v.p. They have joined J.P. Morgan Securities, where they will report to Geoff Sherry, according to former HSBC colleagues. Calls to Deodato, Sherry and Stendig were not returned. The U.S. unit suffered a mass exodus last year (BW, 5/6/02) and has seen a steady stream of resignations this year (BW, 5/18/, 4/20). Former employees, some of whom are seeking legal remedy from the firm (BW, 4/21), argue that it will have trouble recruiting new talent.
Gulliver sees recent layoffs and departures as the inevitable result of fixing a unit he acknowledges was broken. The firm suffered heavy trading losses on its corporate and Treasury desks last year and late in 2001 (BW, 5/6/02). He points to senior sales hires such as Don Pruett and Craig Martone, along with Andrew Lombara, who took over the government bond trading desk in February, as evidence that HSBC has not lost the ability to attract senior talent.