| Union Bank of Switzerland UBS's first major new recruit of last year was John Costas, who in March became head of global fixed income in North America. Costas had spent 15 years at CSFB but left two weeks after Bob Diamond's resignation from CSFB, amid rumours of dissent over the bank's annual bonus payments. Later the same month, UBS's New York operation also managed to entice renowned Wall Street bank analyst Thomas Hanley away from CSFB where his contract three years ago was said to be worth $1 million annually. Denying that his move was linked to the wave of bonus-related defections, Hanley said he sees more opportunity at UBS over the next three to five years given that the bank is "clearly in a building mode". Then in July UBS lured back Kyran McStay as London-based European head of financing and new issues after a three-year stint at Salomon Brothers. Later the same month it raided Chase Manhattan and JP Morgan for eight top emerging-markets fixed-income specialists. The most prized of these was Chase star Daniel Canel. Meanwhile UBS was strengthening its corporate finance team. Shortly after successfully repelling CS Holding's merger bid in April, it hired 45-year-old Michael Phair, NM Rothschild's former senior corporate financier in central and eastern Europe. Phair's impressive track record included advising on telecom privatizations in Hungary, the Czech Republic, Russia, Moldova, Cuba and Slovakia. His expertise is now being put to use as head of UBS's telecoms banking group with a brief to extend the bank's triumphs in the UK to the European continental and international arena. Phair was recruited by Malcolm Le May, who has led UBS's expansion in European corporate finance since 1995. Le May later hired an oil and gas team headed by John Knight from Chase and raided CSFB for a new head of European mergers and acquisitions, Heino Teschmacher. Teschmacher was guaranteed remuneration of around $2.5 million, double his earnings the previous year at his former bank, where his progress was blocked by the apparently unassailable incumbency of his boss Stephen Hester. Teschmacher says he was lured by the challenge of running a department where the bank "is clearly putting its full weight behind developing its M&A business". Since arriving in June he has secured mandates to advise Entergy in its bid for London Electricity, Doughty Hanson which is attempting Europe's largest leveraged buy out, and Framatone in France in its potential bid for GEC Alsthom. Deutsche Morgan Grenfell The poaching spree by Deutsche Morgan Grenfell, the fast-growing investment banking business of Deutsche Bank, has attracted even more attention than UBS. In April DMG went shopping at Morgan Stanley to recruit the main figures behind its high-tech banking group, billed as one of the biggest coups by a European bank attempting to break into investment banking in the US. Led by Frank Quattrone the subject of possibly apocryphal reports that he is earning $15 million over three years the team, now numbering around a dozen and still growing, has been at the forefront of the most active part of the US IPO market. Quattrone's team has retained a large degree of autonomy and operates as a separate group within DMG from Menlo Park in California. In May the DMG recruitment bandwagon rolled onward with the hiring of John Smith and Mark Rutherford from UBS to develop its UK equities business. Smith, who was regional head of equity research for Europe at UBS, is now DMG's head of UK equities. Rutherford, the former head of UK institutional sales at UBS, is Smith's deputy and joint head of European equity sales. But the biggest stir was caused by the hiring of 72 Latin American equities analysts, sales people, traders and support staff from ING Barings in June and July, provoking vociferous complaints about bidding up pay from ING chief executive Hessel Lindenbergh. The poaching provoked a $10 million law suit and eventually, in July, a highly unusual agreement that DMG would cease its raids on ING Barings although by that time the moratorium was somewhat academic since DMG had just about exhausted the opportunities in return for the writ being dropped. BZW was the scene of another notable series of hires in 1996, starting with David Karat, who came from Salomon Brothers in January to be co-head of financial institution services in the new department responsible for strengthening the firm's global relationships with depositary institutions, insurers, fund managers and securities houses. The untimely death of BZW's former chief executive, David Band, from a heart attack while skiing in Switzerland in March led to months of speculation over his successor. Discussions with Bill Harrison had in fact started in February after Band announced his intention to step down, but it was not until June that the appointment was confirmed. Barclays confirmed that Harrison will receive £5.8 million over two years, dwarfing the £791,000 earned by Martin Taylor, Barclay's chief executive, in 1995. The choice of Harrison, aged 47, formerly head of investment banking at Robert Fleming, was a clear sign of BZW's intention to boost its corporate finance and primary equities presence. Harrison is regarded as one of the City's top M&A specialists, having already filled senior corporate finance positions at Schroders and Lehman Brothers. Two weeks after Harrison's appointment came news that Bob Diamond was to become the new head of BZW's global markets division. Diamond, aged 44, built his reputation on CSFB's highly profitable business in Asian and emerging-market debt and before that at Morgan Stanley. Diamond's task is to fill the gaps in BZW's global fixed-income business, notably in the US and Asia. "We want to extend our government bond franchise and expand our emerging markets activities," he said. His arrival served notice of BZW's intention to challenge the supremacy of US firms in international debt securities and raised the likelihood of further high-profile hirings. The most noteworthy of these was Abigail Hofman, who became head of BZW's global debt origination team in August. Hofman's task is to expand BZW's coverage of the Eurobond market's major borrowers and she got off to a perfect start when her new employer was appointed sole bookrunner for the United Kingdom's $2-billion floating-rate note in September, followed by another $2-billion issue late in the year for Cades. The Chase Chemical merger Much was also written last spring about the job losses caused by the merger of Chemical and Chase Manhattan. The plan being worked through by Edward Miller, the new Chase senior vice-chairman and chief architect of the merger, involves $1.7 billion in savings over three years and 12,000 job losses. Executives from Chemical, the larger of the two banks, have emerged in charge of both the retail and wholesale banking operations (Miller and William Harrison) and of the bank overall (Walter Shipley). The dominance of former Chemical employees is especially pronounced in the bank's foreign exchange business, where the new Chase now challenges Citibank's top position. Not a single member of Chase Manhattan's senior forex management team was promoted and many effectively moved down in seniority. David Adamson, for example, Chase's former head of global forex, was made global head of options and sales co-ordination, a substantially reduced portfolio. Most of the senior forex positions have gone to former Chemical managers. Merrill Lynch At Merrill Lynch, much of the talk revolved around the transfer of the firm's colourful former co-head of debt capital markets, John McNiven, to Hong Kong in March to become co-head of Asian investment banking. McNiven is something of a legend at Merrill, having taken the firm from 21st place in the Euromarket table in 1988 to top position by 1994. McNiven's Swedish replacement, Anders Bergendahl, has taken on another 20 people. But Merrill lost a number of key people last year due to the culture clash between Merrill analysts and those from Smith New Court, the UK brokerage it acquired in 1995. These included the former head of UK research, Bruce Davidson, and the top-ranking team of media analysts, Richard Dale, David Forster and Ivor Jones, who defected en masse to Salomon Brothers in February. Lehman Brothers Lehman Brothers was the source of several high-profile departures. In March, Sumitomo Finance snapped up Bruce Cairnduff as its new executive director of MTN origination and trading. But Cairnduff's departure created nothing like the waves sent up by Andrew Pisker's resignation in November. During his 15 years at Lehman, Pisker was a key figure in attracting new business and bringing the bank within the top 10 of the bond new-issue league table. As global head of fixed-income syndication, he was also the only European to head a global division. Pisker's departure is widely believed to have followed a row with the bank's senior management over promises that were made to him when Lehman persuaded him not to move to BZW (where he was offered the job now being done by Bob Diamond). He is thought to have sought greater recognition for Lehman's international operations, and possibly to have clashed with the firm's reserved chairman and CEO Richard Fuld. Pisker is yet to surface elsewhere and until he does the whole story may not be known. Pisker was replaced by Glauco Cerri, who joined Lehman earlier in the year from Credit Suisse First Boston. Another to exit Lehman was its 51-year-old president Christopher Pettit, whose resignation was announced quietly the day before Thanksgiving Day. There was talk that he had already been pushed aside when he relinquished his post as chief operating officer in the spring. More tragically, Lehman had earlier lost Bruno Gabriele, its 37-year-old co-head of European investment banking, who died in a car crash in April. |