Archive for  July 2014

Home / July 2014
10 Posts

(Bloomberg) Morgan Stanley is raising base salaries for junior bankers by about 25 percent as part of an effort to improve working conditions and retention, according to people briefed on the matter.

The firm is boosting salaries for associates and vice presidents worldwide in its investment-banking and capital-markets units, said the people, who asked not to be identified because the discussions weren’t public. Mark Lake, a spokesman for the New York-based bank, declined to comment.

Morgan Stanley’s move is intended to aid younger employees with their cash flow amid higher bonus deferrals since the financial crisis, said one of the people. The salary increases won’t necessarily mean a similar jump in bonuses.

Wall Street firms have been cutting hours for junior bankers as they seek to prevent defections to rivals such as private-equity funds. Investment banks including Credit Suisse Group AG and Bank of America Corp. have sought to improve working conditions for junior employees by encouraging them to take time off on weekends.

Morgan Stanley has also introduced time-management guidelines for junior and mid-level bankers, and has hosted internal conferences focused on career development, said one of the people.

The title of associate typically refers to employees who have worked for a couple of years or recently graduated from business school. The vice president title is often earned after a few years as an associate.

Associates at the largest investment banks can earn base salaries of $85,000 to $180,000, according to New York-based recruitment firm Options Group Inc. Salaries for vice presidents can range from $120,000 to $250,000, according to Options Group. Bonuses take those figures even higher.

Total pay is usually determined at the end of a year. For 2013, Morgan Stanley deferred at least half of bonuses for any employee with total pay of at least $350,000 and incentive pay of $50,000, a person briefed on the policy said in January.

Morgan Stanley’s investment banking revenue, which includes advisory and underwriting, increased 27 percent in the first half of 2014 from a year earlier. Mark Eichorn and Franck Petitgas lead the firm’s investment-banking business, while Raj Dhanda and Dan Simkowitz head the capital-markets unit, which focuses on underwriting.

(Bloomberg) Citigroup Inc. (C), the third-biggest U.S. bank by assets, appointed James Boyle as global head of equity derivatives, replacing Simon Yates who left this month.

Boyle, 44, who’s currently Asia-Pacific head of equity trading, will remain in Hong Kong until he relocates to New York at the end of the year, according to an internal memo obtained by Bloomberg News. Godwin Chellam, a Hong Kong-based spokesman, confirmed the contents of the document.

Citigroup posted better-than-expected trading revenue in the second quarter as sales from equity and fixed-income trading fell 15 percent from a year earlier, dropping less than the New York-based firm predicted two months ago.

Before joining the U.S. bank in 2012 as Asia-Pacific head of derivative trading, Boyle was global head of derivative trading at Bank of America Corp.’s Merrill Lynch unit and head of derivatives at Citadel Securities LLC, the memo showed. Reuters reported his appointment earlier today.

Yates, 43, left Citigroup to join hedge-fund firm Two Sigma Investments LLC in September as chief executive officer of a unit that runs an electronic-trading platform. He was among several top-level executives in equity trading who departed Citigroup this year as Wall Street firms contend with stagnant trading revenue amid low volatility and new regulations.

Michael Pringle, who was head of equity trading, and equity sales chief Adrian Faure also left.

Bank of America’s equities unit earlier lost about half a dozen members including John O’Brien, head of New York derivatives sales, who joined Deutsche Bank AG, two people with knowledge of the matter said in June.

(WSJ) JP Morgan Chase is learnt to be forming a team of about 150 employees that will monitor trades across asset classes and electronic platforms, look for opportunities and identify threats to the bank’s market share.

The new group, to be called JP Morgan Execution Services, will be led by trading veteran Frank Troise, and will work with clients who trade equities, fixed income, currencies, commodities and other asset classes, sources told The Wall Street Journal.

Troise said that his team will work to help clients determine how and where they will put their trades. For instance, the desk will work with customers to advise whether to send a trade to an electronic platform that would use an algorithm to execute the trade or to a human trader. The group will include traders, but they will not manage books or determine prices.

(Bloomberg) Canadian Imperial Bank of Commerce hired Robert Cummings, the former co-head of corporate credit at KGS-Alpha Capital Markets LP, who resigned as the brokerage closed its bond trading unit.

Cummings, a co-founder of StormHarbour Securities LP and a former managing director at Citigroup Inc., will head the U.S. fixed-income sales team at the Toronto-based bank, he said in a telephone interview.

Tom Wallis, a spokesman for CIBC, declined to comment.

KGS-Alpha, which hired Cummings as co-head of corporate credit in July 2013, shuttered its investment-grade bond trading unit, according to a statement last week. The broker-dealer let go of two-thirds of its 15 high-grade bond traders and salesmen and reassigned five others, according to Emily Tracy, a spokeswoman for the New York-based firm.

(Bloomberg) Bank of China Ltd. is hiring traders and sales people in Hong Kong as it sets up a high-yield bond-trading platform to boost market share and cement its position as one of Asia’s top 10 debt underwriters.

Surging sales of Chinese corporate dollar debt and Dim Sum bonds, or yuan securities issued outside the mainland, justify the additional headcount, said Tony Wang, deputy general manager for global markets at Bank of China (Hong Kong) Ltd. China’s fourth-largest lender is seeking to grow as companies step up offshore fundraising to finance overseas acquisitions, he said. He declined to say how many people the bank intends to recruit.

“We are expanding not only in the debt-capital markets business, but also in syndicate, sales and trading,” Wang said in a July 10 interview in Hong Kong. “We are starting high-yield bond trading on a limited, controllable risk basis. That’s mainly to make markets for the bonds we underwrite. We are looking to hire more sales people and traders this year.”

Excluding Japan, companies from China accounted for more than half of the $106.4 billion-equivalent of notes denominated in dollars, euro or yen that were sold by Asia issuers in the first half of 2014, data compiled by Bloomberg show. In the high-yield dollar debt market, they were behind almost 54 percent of offerings, according to a Bank of America Merrill Lynch index. Dim Sum bond sales will jump 53 percent to an unprecedented 570 billion yuan ($92 billion) this year, according to HSBC Holdings Plc.

Chinese companies have announced $135 billion of acquisitions since the start of 2014, up 33 percent from a year earlier, according to data compiled by Bloomberg. China Petrochemical Corp. raised $6 billion in this year’s largest dollar bond sale in Asia with Bank of China among the arrangers. In the past three months, the refiner has agreed to buy assets in countries including Canada, Angola and Kazakhstan.

Yuan Usage

Bank of China won a yuan-clearing mandate in Hong Kong in 2003, the world’s first. In 2007, it helped arrange the first Dim Sum bond sale by China Development Bank Co. and in April this year it led China Unicom Hong Kong Ltd.’s 4 billion-yuan issuance.

It is also riding on the government’s efforts to promote usage of the yuan, which the Society for Worldwide Interbank Financial Telecommunications ranked seventh for global payments in May. The currency has risen 0.8 percent from the end of April to 6.2080 per dollar in Shanghai yesterday, paring this year’s loss to 2.5 percent.

“As the yuan internationalizes, more Chinese companies are expanding overseas and Hong Kong is their first choice,” Wang said. “As a Chinese bank with international experience, we’re able to understand their needs and global dynamics.”

Dim Sum

Bank of China was the leading Dim Sum bond underwriter until 2010 with a market share as high as 44 percent. This year, it was ranked sixth in a group led by HSBC and Standard Chartered Plc. It was 10th in underwriting global bond sales by Asian issuers outside of Japan, with a 3.7 percent share in the first half, according to data compiled by Bloomberg. The leading three — HSBC, Citigroup Inc. and JPMorgan Chase & Co. — accounted for 32 percent.

Shares of Bank of China rose 0.57 percent to HK$3.52 in Hong Kong yesterday, while Bank of China Ltd. (3988) (Hong Kong) was little changed at HK$23.55. That compared with a 0.49 percent increase in the benchmark Hang Seng Index. (HSI)

The lender may take advantage of recent cuts at global investment banks when looking for new hires, Wang said. Barclays Plc said in May it will cut 7,000 jobs at its investment bank, while ABN Amro Group NV, the Dutch state-owned lender, said in June it would reduce about 100 jobs as it exits equity derivatives and shuts its Asian markets business.

“We are hiring people every day but we are also selective,” Wang said. “We want people who can bring in market experience and, at the same time, can better understand China, its legal system and culture, especially the Chinese banking culture. It’s not an easy job.”

(efinancialcareers)The job market on Wall Street is rather difficult to describe in any uniform sense. There’s plenty of hiring happening in certain sectors and just as much firing happening in others. It’s interesting then to see two firms that are bucking the trend by adding staff where others are cutting.

First, there’s Oppenheimer, which is apparently sweeping up as many bond traders, salespeople and researchers that investment banks are willing to cut, according to Business Insider. That’s a lot of people considering the fixed income pains being felt by large bulge bracket banks.

Oppenheimer’s head of fixed income told the site that it has no specific ceiling, “but [it] can continue growing.” However, a few readers were quick to point out that Oppenheimer’s hiring faucet is always on because employees keep leaving. Whether that is true or not is up for debate.

Elsewhere, Wells Fargo, a historically dominant mortgage house, is looking to expand into other businesses that aren’t hurting quite as much. The San Francisco bank is joining the highly competitive world of commercial banking – specifically targeting New York’s apparel industry, according to the Financial Times.

Wells has already hired two commercial bankers from HSBC, a mainstay in the Manhattan market that accounts for nearly $100 billion in annual sales. The move, like Oppenheimer’s, could be looked at as a bit odd considering commercial lending isn’t exactly booming, but several banks have shown a willingness to enter tight markets as others recede, hoping to get the timing right. Here are two of the latest examples.

(OnWallStreet) Deutsche Bank’s asset and wealth management unit is in growth mode in the U.S., hiring a string of managers and advisors.
The hires fit Deutsche Bank’s ambition to rely more on its asset and wealth management unit to maintain returns.

Michele Faissola, head of asset and wealth management for Deutsche, told reporters in London that executives expect the unit to be a “growth engine,” Bloomberg reported.

Recently, the Frankfurt-based firm updated its strategy, laying out goals of increasing its team of client advisors by 15% worldwide over the next three years and accelerating growth in the U.S. market through the hiring of senior professionals.

Jerry Miller, head of the asset and wealth management in the Americas, said that firm aims to be a leader in the U.S.

“Strategically acquiring top talent across our platform is one way in which we are fulfilling our ambitions in the region,” Miller said in an email.

He added, “We have been focused on expanding our reach based on client needs, and have made over a dozen hires in the past twelve months across the region.”

The focus on wealth management as a growth engine reflects similar trends at other large banks and firms such as Morgan Stanley.

“A lot of firms have overlooked wealth management in the past, but now many are looking to wealth management because it’s a natural extension of a lot of what they do,” says Bill Butterfield, an analyst with research firm Aite Group.

Butterfield adds that competition for high-net-worth and ultra-high-net-worth clients has heated up in recent years.

“Firms have a huge focus on that segment and want to take advantage of the services they already offer,” he notes.

Among the German firm’s most recent hires, the firm recruited advisors Matthew Coombe and Patrick Menerey for its private bank, J.J. Wilczewski as co-head of the Americas global client group, Deepak Khanna as head of U.S. large cap value equities and Thomas Clarke as head of lending and deposit products for the Americas.

Menerey and Coombe will be based in Los Angeles and serve ultra-high-net-worth clients.

Miller said that Deutsche has been increasing its presence in Southern California, Texas and the Southeast.

(Bloomberg) Cantor Fitzgerald LP’s brokerage arm hired two traders from Royal Bank of Scotland Group Plc (RBS) to expand its mortgage-bond business.

Cass Tokarski joined Cantor Fitzgerald & Co. as head of mortgages and asset-backed securities, while James Murray will serve as managing director to trade U.S. government-backed securities tied to adjustable-rate mortgages, the New York-based unit said today in an e-mailed statement.

Cantor Fitzgerald & Co. Chief Executive Officer Shawn Matthews said on Bloomberg Television this month that his firm had an opportunity to grow as the largest banks face new regulations and cut staff in response to lower market volatility that’s poised to continue depressing trading volumes and profits over the next few years.

“The banks are going to get smaller, which means we’re going to get bigger,” he said in a July 1 interview with Betty Liu.

Tokarski, who led RBS’s trading of bonds known as collateralized mortgage obligations, was one of at least six traders to leave the bank’s Stamford, Connecticut-based securities unit in April as the British lender signaled plans to shrink its investment bank and faced political pressure to reduce bonuses. The bank announced in May it would cut hundreds of jobs, including by reducing mortgage trading by two-thirds within 12 to 18 months.

(bloomberg)Jeffrey Lipton has joined Oppenheimer & Co. as head of municipal-bond research in the company’s New York headquarters.

Lipton previously worked for four years as a senior muni analyst at Metlife Inc., Oppenheimer said in a statement today. Lipton, who declined to give his age, has almost three decades in the financial industry. He has also worked at Neuberger Berman and Weiss Peck & Greer.

Lipton “will be instrumental in providing municipal credit analysis and general market trends to both the high net worth and institutional investor community,” Robert Lowenthal, Oppenheimer’s global head of fixed income, said in the statement.

The need for research in the $3.7 trillion municipal market has intensified since the financial crisis, when bond insurers lost their AAA ratings. Bankruptcy filings from Detroit to Stockton and San Bernardino in California underscore the importance of researching weaker credits as investors seek extra yield with interest rates near generational lows.

(Bloomberg)As banks scale back in their fixed-income businesses, Societe Generale SA (GLE) is hiring for a new group that trades U.S. government-backed mortgage bonds.

France’s second-largest bank added four traders, hiring from Goldman Sachs Group Inc., BNP Paribas SA and Royal Bank of Canada for the New York team this year, after recruiting former UBS AG mortgage-securities executive Brian Cohane in October to manage the desk, said Tae Park, who was tapped to create the group after making bond investments for the firm. It will next bring on dedicated salesmen, with some already identified, he said.

With banks such as Barclays Plc, Royal Bank of Scotland Group Plc and Morgan Stanley making cuts in fixed-income trading amid new regulations and a slump in volumes, Societe Generale’s bid to become a player in the $5.4 trillion agency mortgage-bond market is being bolstered by the reductions, Park said.

“As others are retrenching, we feel that there is room for a new entrant,” Park, a managing director, said yesterday in a telephone interview. “It should be easier to grab market share. And it definitely hasn’t hurt our effort to build a desk, especially on the sales side, that most desks are scaling back, or in hiring freezes, and very conscious of their headcounts.”

The initiative is expanding the Paris-based company’s presence in the U.S. debt market, where its SG Americas Securities LLC unit was named in 2011 as one of the primary dealers required to bid at Treasury auctions and able to trade with the Federal Reserve.

The team partly reflects the bank’s desire to move away from activities such as proprietary trading with its own money amid new rules, in favor of “flow businesses that cater to our clients,” Park said. It plans to have a “full-fledged mortgage desk,” dealing in bonds known as pass-through securities and collateralized mortgage obligations, Park said.

Cohane joined Societe Generale after taking time off following his work at UBS’s investment arm Dillon Reed, the Swiss bank and predecessors between 1987 and 2007, according to regulatory records. Brian Snyder arrived last month from Goldman Sachs, where he had worked since 2000, the records show.

Other hires include Scott Mooney from BNP, Richard Liao from RBC, and Rahul Krishnan, who last worked at hedge fund Cello Capital Management LLC and previously traded for Credit Suisse Group AG through 2012, Park said. The group also includes three junior traders who already worked at the bank in different areas, he said.

Societe Generale has dedicated the resources to comply with new rules such as trade disclosures and margin requirements that “have erected something of a barrier to entry,” Park said.

While the Fed’s debt purchases are helping to lower trading volumes by suppressing volatility, that dynamic should change as the central bank finishes its buying later this year, he said. In the meantime, any activity that Societe General sees represents growth.

“We’ve begun from scratch,” Park said.