Movin' On Up, Er ... Over, To An Unburdened Small Shop Off The Street

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.

(c) 2007 High Yield Report and SourceMedia, Inc. All Rights Reserved.

Recent Posts

Investors Win Warner Chilcott Battle, But Expect a War

Investors this week pushed back on Warner Chilcott’s attempt to reduce pricing on its $1.95 billion term loan B, but most don’t believe the market’s repricing fight is over...

Bad Buyouts and What We Could Do about Them

Allied Stores. Burlington Industries. Charter Medical. E-H Holdings. Federated Department Stores… These companies are among the 13 that, between 1985 and 1989, issued a billion or more in junk bonds to help fund a buyout—then promptly went bankrupt...

A Repeat of 2009 Returns? Not. But No Disasters Either

As we here at Leveraged Finance News join you in saying goodbye to 2009 and looking ahead at the year to come, two little words spring to mind: do over? Maybe not all of it, but certainly returns...

Cha-Ching! High Yield Brings High Bonuses

While returns in the 40% to 50% range portend a 2009 Grinch-free holiday season for most leveraged loan and high yield bond professionals, those dedicated to selling and trading junk bonds are on track to receive the highest bonuses...

Index of Posts