As neighbours in Scarsdale, one of New York City's classier suburbs, Nathan Gantcher, then Oppenheimer president, and Andrew Heyer, a managing director in Canadian Imperial Bank of Commerce Wood Gundy's US high-yield-bond unit, liked to talk shop. And when a proposed sale of Oppenheimer to Bayerische Vereinsbank fell through two years ago, the chats turned to a CIBC-Oppenheimer merger. Glass-Steagall rules prohibiting certain investment and commercial banking combinations meant this was then speculative fantasy. Still, Heyer was struck by the firms' affinity.
"When I sat down and talked with Nate Gancher," Heyer says, "the philosophy behind how they ran Oppenheimer and how we ran Argosy [the high-yield boutique Heyer and two other ex-Drexel bankers created before selling it to CIBC in 1995], was amazingly similar. There was a drive for profitability versus league table rankings and an 'us against them' mentality. The underdog philosophy works well against the big guys."
When Glass-Steagall was relaxed early last year, CIBC Wood Gundy Securities' chief executive officer, Michael Rulle, who heads the US region, asked Heyer to set up a lunch with Gantcher. The two agreed in principle right away, but it took a due-diligence process which uncovered an expensive World Financial Center lease signed by Oppenheimer before the 1987 real-estate collapse to forge a deal by July.