JPMorgan’s relocation of its global head of investment banking coverage to Hong Kong is the latest indication of eastern promise. It also suggests US bankers remain the bank’s preference for senior posts overseas.
Jeff Urwin is not the highest profile of JPMorgan’s senior bankers but is one of the highest-ranking survivors from Bear Stearns, the defunct US bank bought by JPMorgan in 2008.
He will take on the role of Asia-Pacific chief executive alongside his existing global roles as head of investment banking coverage, capital markets and M&A.
It is the first time JPMorgan’s head of investment banking coverage will be based in the region. Several of the bank’s regional and country heads were moved to their current positions from the US.
The appointment serves as evidence that the bank thinks some of its most important relationships, in the years ahead, will be in Asia.
Asia is a work in progress for the bank that has been the undoubted success story of the global financial crisis. In Asia Pacific, it still lags behind rivals including Morgan Stanley and Citi in mergers and acquisitions, Goldman Sachs and UBS in equity capital markets, and Bank of China and Standard Chartered in debt capital markets, according to figures from Dealogic.
However, overall, JPMorgan ranks third in the first-quarter rankings for investment banking revenue in the region, with a 4.4% market share, up from eighth place for the first quarter last year. It was ranked number one in investment banking revenue globally in the first quarter this year.
Banking sources say Urwin, a 56-year-old who holds dual UK and US citizenship, is regarded as an outstanding manager and a straight talker who generally takes a less aggressive approach than many peers, preferring to advise rather than confront.
Some analysts have questioned if sending in a New York-based banker, albeit a seasoned one, is the right approach when building a business in Asia Pacific. One Hong Kong-based banker says: "I’d be surprised if he has the depth of contacts needed to make an impact just through being sent to Hong Kong, although I’m sure he is here often carrying out his global role."
Urwin will continue to report to Jes Staley, chief executive of the investment bank.
Before taking up his global banking, capital markets and M&A role, Urwin was co-head of investment banking for North America. He was previously co-head of investment banking at Bear Stearns.
Perceived wisdom is that Asia will be the future for investment banking revenues and a key driver of profits. But, at present, the US remains by far the largest market, accounting for 44% of global investment banking revenues in the first quarter this year compared with 25% for Europe and 11.2% for Asia excluding Japan. Asia’s share of the market is down from 14.6% in 2010, prompting concern in some quarters about its immediate prospects.
The investment banking business in the Asia Pacific region continues to rely too heavily on ECM. When volatility spikes in equities, as it frequently has in recent months, the prospects for the ECM business, particularly with respect to the primary market, are hit hard. M&A mandates have also been hard to come by as companies wait for more stable and predictable market conditions.
Urwin replaces Gaby Abdelnour, who is standing down as head of Asia Pacific and leaving the firm after 14 years. Recently, the bank has been trying to broaden its presence in the vital Chinese market, setting up a joint venture with First Capital Securities, as well as a locally incorporated bank, and opening a series of branch offices.
With concerns over Chinese growth, choppy stock markets have meant primary ECMs have effectively been closed this year. The IPO of Haitong Securities, the second-largest Chinese brokerage, is being seen by many as an important test of investor appetite in the region. JPMorgan is a joint sponsor and joint global coordinator on the deal.
Some analysts have questioned if Urwin’s relative lack of Asian experience would be a hindrance in the new role and if his appointment meant the bank was reluctant to promote senior local talent to top positions in regions beyond the US.
Sources close to JPMorgan say the bank has a deep bench of talent and that if they could hire from within, they would. They also say the bank is taking a long-term view with respect to its Asian operations and that focusing on the next quarter’s league table positions would be a mistake.
Urwin’s appointment is expected to accelerate the bank’s plans to push into the treasury and securities services businesses dominated at present in Asia by HSBC and Citi.