If any more evidence is needed for the growing dominance of the emerging markets in the international financial system, look no further than at recent senior appointments at the global investment banks.
Whether to lead the entire bank or a global product line, bankers with experience in the emerging markets are increasingly snapping up the big roles. Last month, for example, UBS appointed Andre Esteves, its head of Latin America, to run its global fixed-income operations too. Esteves is one of the leading lights at UBS along with Suneel Kamlani, another emerging markets veteran, who is now second-in-command to Huw Jenkins, head of the investment bank.
At Citi, several emerging markets specialists hold down prominent roles, including Paco Ybarra, co-global head of fixed income, currencies and commodities; Suneel Bakhshi, head of the global commercial bank; and Alberto Verme, co-head of global investment banking. Manuel Medina-Mora, the bank’s head of Latin America, is often touted as a possible successor to CEO Chuck Prince.
Another firm promoting bankers with emerging markets experience is Credit Suisse. In May, it appointed Paul Calello, most recently head of the firm’s Asia-Pacific business, to lead the investment bank. Granted Calello has held numerous roles outside of the emerging markets but his success in turning Credit Suisse from an also-ran to a top-tier competitor in Asia was a crucial element in his rise to the top.
What are we to read into all of this? First, that talented bankers from the emerging markets, and those who cover them, are now being recognized. The glass ceiling at investment banks is gradually shattering. Just running a G7 business in New York or London is no longer enough to qualify for the most senior positions.
Heading an emerging markets operation often provides better experience and grounding for a global role. Take Esteves, for example. He joined UBS in May 2006 after the Swiss firm bought Brazilian brokerage and asset manager Banco Pactual, where Esteves was a managing partner. During his career at Pactual, Esteves was a trader, an investment banker, a senior manager and an entrepreneur. He gained an understanding in fixed income, equities, corporate finance, asset management, local markets, international markets, sales and trading, underwriting, risk management, and compliance. All this while he is still in his thirties. How many of Esteves’ peers at UBS in New York or London can say they are as well qualified?
Esteves’ promotion is also indicative of another trend: how firms are looking to emerging markets bankers to turn around poorly performing businesses. The fixed-income division at UBS is in turmoil. Who better to turn to than someone who has spent his career in Brazil and so has experienced the vicissitudes of financial markets more than most?
The rise of emerging markets bankers is a reflection too of the growing importance of the developing world to the investment banks’ bottom line. At UBS, the emerging markets account for about 20% of the bank’s overall revenues, according to Dealogic, compared with just 5% in 2002. At Citi, these markets contribute anything between 40% and 60% of the firm’s net income (western Europe is not stripped out of the bank’s results so it is impossible to tell what the emerging markets’ exact contribution is).
As one of the fastest-growing businesses, emerging markets’ share of investment banks’ total revenues and profits will only get bigger. And, as it does, the power of the bankers who cover these regions will grow.
For those with aspirations to become a global product head, it is time to start spreading their wings.