FinanceAsia caught up yesterday with ABN AMRO's global head of equities, John Smith and Asia CEO of equities, Mario Malt. Both are new to the firm and come with distinguished track records. Smith was a UBS long hauler between 1988 to 1996 in its highly regarded equity research team. He then had brief spates at Deutsche Bank and DLJ. He took over as global head at ABN in October.
Malt is a Japan buff, having been based there for about 13 years, and spent large chunks of his career with Jardine Fleming, Morgan Stanley and Kleinwort Benson.
Both know what they want: to take ABN AMRO's equities business into the top tier in the region. A tall order? They disagree.
FinanceAsia: Given that WI Carr has closed down and there've been so many changes in the Asian equity scene, is ABN AMRO still committed to the Asian equities business?
John Smith: It's interesting you put it that way. Actually we're even more committed. I'd like to be in a market where everybody has gone. That would be perfect. Asia's a hugely important market for us. We've been here for a long long time and are genuinely committed. We have a strong franchise, we're in the right markets, we have very good people. This is one of the markets I want to grow in and expand.
Obviously towards the end of last year there was some downsizing.
Smith: The message I've given people since I've been here is: we've done the downsizing. Last year, the markets were more savage than anticipated and the whole industry had to change the structure of their businesses. But we're now looking forward and I think we're the right size, in the right market, so structurally we're in the right shape and I want to see us building from here.
Clearly one of the biggest profit generators for your firm was Taiwan. But there has been a lot of staff turnover there, and stars like Sharon Su have left. Is that a market where you want to build again?
Mario Malt: Absolutely, and we are building again, although the manifestation of that is not visible yet. It takes a bit of time. We're putting strong management in place, and reinforcing the sales, trading and research. We intend to recoup our position in Taiwan. Three years ago we were number one. Over that time some heavy competition has come into the marketplace. Some of the big guys came in and did a lot of prop trading. So realistically we haven't lost as much ground as it appears, because we don't have the same sort of platforms as some of these operations. We still have a sound agency broking base.
In this fiercely competitive business, why will centralized dealing desks put their business through ABN AMRO?
Malt: We will be chosen thanks to the quality of the research. We have a new head of research called Michael Baptista, who is one of the best professionals I have ever worked with. He has some very high standards, which he is imposing on research. That's going to be backed up by me promoting good servicing of clients. It's a pretty simple business, and we intend to do it well.
Smith: If we give the clients moneymaking ideas, they will do business with us. So that's what we have to do. Ultimately our differentiating factor must be smarter people working harder. The big trend in the industry worldwide is direct contact between the client and the analyst. So a huge part of what we need to do is get our analyst on the road and in front of institutions.
We've written a few things over the past few days about the Maxis mandate. The telling thing is that it will have others on the deal too. Presumably you want to be in a position where the client lets you lead manage the whole $700 million single handedly?
Malt: That's exactly what we're aiming for. I am working closely with ECM and corporate finance to ensure that we have a quality product to capture lead management roles. We're very happy to be in Maxis. But we want to run books.
Will you always have to play a joint bookrunning role because you lack a major US presence?
Malt: We may not have quite the same US presence, but we have a formidable distribution network for the Asian business. I put my hand up and say we can compete with any one of the bulge bracket US firms. So if we have the same distribution, then we have to think about whether we can originate well with the corporates here. That comes back to relationships but also the research we do. In Asia, we are as competitive as anyone else.
Given you are both new, what is the culture you are looking to create?
Smith: The culture I want to create is one which is entrepreneurial, very P&L focused, putting the client absolutely first and driven. But I also want it to be fun. It is more fun if you're winning, so if we do all the other things and we win, it'll be fun. If we get this business really motoring, people will love it.
As a pan-Asian equities business where would you place yourself in the top 10 today?
Malt: We talk about this all the time. Asia overall, including India, I would say we are about eighth.
Eight is obviously a lucky number in Asia, but what number would you realistically like to be?
Malt: If we succeed with our strategy, I think by the end of next year we could be fifth. That's a dramatic move. Being fifth, would really transform our revenues.
In terms of hiring a good people, is it a challenge given that people in Asia have now become used to people in Amsterdam making the occasional barmy decision that totally changes the strategy?
Smith: The decisions are coming from me, and I don't live in Amsterdam. I am based in London. Secondly, we have to run a business according to P&L. Wherever I've worked I've always hired the best people and I will continue to do so.
In terms of where you are putting the most emphasis, Taiwan is one country, which others?
Malt: Korea, which is a huge market.
But you lost your research head, Keith Nam, in Korea recently.
Malt: Yes, and we are looking for a head of research as a matter of priority. And to return to the question before, another focus will be building in Hong Kong.