“Dear A, am in New York, but heading to JFK for day flight home, as I can't face another overnight flight. Funny that many of my colleagues describe this travel pattern as decadent. They clearly don't get out much. Had dinner at Jean Georges last night. It was delicious and would have been a lovely evening if only I had been able to let my hair down properly. I also met the dashing Olivier Sarkozy (half brother of you know who). Olivier bought and lives in Richard Avedon's house. He is co-head of FIG at UBS. So handsome. I must introduce you.”
Garbled
There are things that I miss from my years in banking and others that I don’t, such as long-haul flights and interminable client dinners. Last week I received a memo that reminded me just how irritating investment banking can be. In fact, I danced with glee that I was free of all that corporate smugness. This sentence, in particular, irked me: “As we continue with the build-out of our product initiatives, we want to closely align our enhanced product platform with our unparalleled global distribution footprint.” “Incomprehensible,” a writer friend fumed. “Go back to the school of plain English.” I won’t name the bank in question – who is not guilty of such crimes against the language? But what does ‘build-out’ mean? I might reluctantly accept ‘roll-out’. ‘Product initiatives’ is odd. A product exists; initiative implies a lack of existence. ‘Closely aligned’ is a tautology. For me, ‘enhanced product platform’ is meaningless. Are the ‘product initiatives’ the same as the ‘enhanced product platform’? I am so confused I could scream. Is the firm’s distribution unparalleled, as in having no equal? Maybe, but I doubt it. And ‘footprint’ is something animals and criminals leave behind. When juxtaposed with ‘unparalleled global distribution’, this garbled attempt at English is teeth-grindingly dreadful. How about: “As we continue building our products, we want to align them with our excellent global distribution”? Over 5,000 people received that memo. One is tempted to say: “Garbage in, garbage out.” But perhaps that’s a tad vicious. What do you think?
Blood
And talking of vicious, sources insist there is blood flowing in the corridors at Nomura’s London headquarters. As I have mentioned before, lawsuits, sackings, resignations, and recriminations abound. A mole insists that two congenial capital markets officials, with a Teutonic tint, departed in the dying days of November. This Tuesday, Simon Hussey’s suit against the bank for unfair dismissal started. Hussey claims he was fired for whistleblowing. Nomura ripostes that he was let go for poor performance. A source who recently called on Yugo Ishida, the London chief executive relates: “He is charming and I am an old friend of the Japanese. But they are in an also-ran league for capital markets compared with the American or European houses. And that building is so magnificent. Isn’t it too expensive for them?”
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| I’m sure it’s something the clever Paul Achleitner and Stefan Jentzsch – both former Goldman Sachs employees with an eye for a deal – must be considering |
There’s also blood–letting at Dresdner Kleinwort. A campaign of mass redundancies was underway as this column went to press. I understand that 50 people have departed in New York and 100 in London. The redundancies are understood to include Ian Platt, co-head of primary rates, and Paul Thomas, head of credit sales. My source initially grumbled: “Abigail, I’m too busy to bother about departures at second-rate institutions.” He then called back: “This could be big. It looks like Dresdner is ditching the flow business.” Dresdner denies a major strategic shift. A Dresdner spokesperson told me, ‘ In general, these dismissals were part of a performance review. They are across all areas not just fixed income.’ It was clear in October, after another round of departures involving the likes of Sean Park and Joe Dryer from the fixed income team, that Dresdner Kleinwort needed a period of stability.
These latest changes won’t help. One begins to wonder why Dresdner’s paymasters continue to bother with its capital markets business.
But could Allianz have one trick up its sleeve? The securitisation of insurance assets makes huge economic sense, but has remained steadfastly difficult to achieve?
Why? My sources tell me that insurance companies aren’t too keen to open their books to the investment bankers who would structure such deals. But Allianz has an in-house investment bank so would not have to reveal any state secrets in the run-up to a deal.
Once Dresdner Kleinwort had done the work at home, perhaps it could export its new-found expertise to other insurance companies. I’m sure it’s something the clever Paul Achleitner, Allianz’s CFO, and Stefan Jentzsch, CEO of Dresdner Kleinwort – both ex Goldman Sachs employees with an eye for a deal – must be considering.
Two Swiss
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| Note to youthful-looking UBS chief executive Peter Wuffli: cost control is beneficial even in the boom times |
“I loved your ‘Tale of two Stans' piece,” a reader commented generously. “Perhaps you might want to write a tale of two Swiss?” Schadenfreude is a shameful emotion. I experienced it when I contemplated the third-quarter results of Credit Suisse and UBS. In September, a request to meet one of UBS’s private bankers was refused. “Are they hiding something?” I asked. I understand of course that a visit from an inquisitive journalist is not every banker’s idea of winning the lottery. But those who were friends of the column in the early days, when others scoffed, will always be remembered affectionately.
UBS’s third-quarter results were more akin to a limp lettuce leaf than the comforting cup of hot chocolate we have come to expect. Rising costs and poor performance in equities and fixed-income trading were blamed for a 21% fall in net profits, compared to last year. I hope Prince Alwaleed bin Talal is not a major shareholder of UBS; he would have been unimpressed by this portion of the press release: “Increased levels of staff and business expansion led to higher spending on travel and entertainment, telecommunications and administration. Expenses for marketing and public relations were up as well.” Note to youthful-looking UBS chief executive, Peter Wuffli: cost control is beneficial even in the boom times. And while the PR message might not be as positive as Wuffli may have liked, at least the reason was expressed in straightforward language.
Then there is the saga of Dillon Read Capital Management, the in-house hedge fund started last year by John Costas. When I think of Swiss banking, three adjectives spring to mind: solid, sensible, uncontroversial. Well, UBS’s decision to allow John Costas, previously head of the investment bank, to waltz off and form an in-house hedge fund with many of the firm’s best traders is none of those words. Like eating fish and chips with mint sauce rather than tomato ketchup, it does not sit easy on the stomach. Pre-tax profits for the Global Asset Management division, which now includes the Costas hedge fund, declined by 15% from the second quarter of 2006. Nine days after the announcement of the poor UBS third-quarter results came the abrupt decision to replace Mark Sutton, chief executive of the Americas, with Robert Wolf, chief operating officer at the investment bank. Does this reveal dissatisfaction with the performance of the US operations? Yet, Wolf was previously chairman of UBS’s investment bank in the Americas. Again, I am confused.
Coos in a parallel universe
Will Wolf’s promotion be an improvement? Chief operating officers are often wheeled in when there is a whiff of chaos in the air. “We need someone to stabilise the situation,” a chief executive says to himself. For me, chief operating officers are better in the shadows than the sun. After all, their area of competence is budgets, premises, head-count and IT projects. Sexy stuff perhaps, but only in a parallel universe. Is this the fodder for great leadership? Winston Churchill would have been a disaster as a chief operating officer. It says a lot about investment banks today that such a post is an acceptable career step to the top. UBS has let me down. However, Credit Suisse seems to be on the way up. I delve deeper next week.
Not for Euromoney
In January, I will travel to Asia to see my dear friend Elizabeth. Elizabeth is the perfect wife of the British consul-general in Hong Kong. “I am organising a small dinner while you are here,” she wrote. “I may invite a financial type or two, if you promise not to be too woundingly arch about them in your column!” Lately several friends have revealed delicious nuggets of gossip prefaced by the stern warning: “Not for Euromoney.” How irritating is that? My editor-in-chief mused recently: “I never refer to you as a gossip columnist. I always insist that you are an opinion former.” Gratifying as this description is, I remain firmly in the Oscar Wilde camp: “There is only one thing in the world worse than being talked about, and that is not being talked about.”
But what if you’re talked about and it’s not you? John Winter, head of European investment banking and debt capital markets at Barclays Capital, knows that feeling. A piece in last week’s Sunday Times magazine contained a quote from Torsten Boehler, a director at Dresdner Kleinwort. Next to the quote was a photograph of a smiling Mr Winter. Note to Rupert Murdoch: such an error may seem small but it undermines the credibility of the whole article. The devil is in the details. And, by the way, she does wear Prada.
Next week: Christmas gifts. Don’t miss the last Abigail with attitude column for 2006. Please send news and views to abigail@euromoney.com.
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