Movin' On Up, Er ... Over, To An Unburdened Small Shop Off The Street
September 24, 2007
My mind is all a buzz with cliches - the bigger they are, the harder they fall; bigger isn't always better; good things come in small packages; and everyone's favorite, size matters.
Right now in investment banking, size really does matter, only not in the sense that women have always lied about. In leveraged finance, where the big kids on the block have managed to bloat their bellies on a buffet of debt they now could be stuck with for a while, smaller players may be able to take advantage in a number of ways. Including personnel.
Yes, we've heard rumors, lots of rumors about impending layoffs. And while no one seems clear on details, and deal lauches plus a few better than expected earnings reports gave a glimmer of hope last week, I'm going to go out on a limb and say you likely still won't catch many on the high yield loan and bond desks at the likes of JPMorgan and Citibank daydreaming about year-end bonus spending sprees.
Case in point: A couple of leverage finance bigwigs at Deutsche Bank - group head of leveraged finance Tom Cole and head of senior debt capital markets Dan Toscano - recently left the firm to join smaller rival HSBC (HYR, Sept. 17, 2007).
Hearing this, one has to ask herself: What? Why would top managers at a top-tier bank jump ship for a rival that last year ranked No. 25 on the Thomson Financial leveraged loan league tables? In September.
No properly self-serving investment banker quits his job in the fall and leaves his bonus behind. Unless, perhaps, he's got a mountain of debt to crawl out from under.
"I can see making that move," one banker told me. "[They're thinking] HSBC may not be a Deutsche Bank, but at least I'll have a job and be doing some deals. Or if I'm not doing any deals, I'll at least be able to pay my mortgage."
To be fair, these guys could have other reasons for moving on. But I wouldn't be surprised if we see more such shuffling in the months to come, which certainly wouldn't bring frowns to the faces of those banks that might snatch up talent.
"It's a buying opportunity for banks that are looking for people," another banker said.
It will be interesting to watch who might get bought up next.
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