Lunchtime chatter on Friday was about how Mark Machin, former vice-chairman Asia-Pacific for Goldman Sachs, was joining Canada Pension Plan Investment Board as president of the region.
“You’re going to see more of these types of moves this year,” said a senior J.P. Morgan banker over dinner on Friday. “It’s inevitable.”
Some senior bankers who have been in the industry for a long time are looking to the buy-side as the next step in their careers. Money managers, after all, are showing some promise in Asia. Meanwhile, on the investment banking front, debt deals are fast and furious, and M&A transactions are ticking along, but the equity markets are quiet. Bankers who typically boast about pipelines aren’t bragging now. The outlook is improving, for sure, but it’s not hard to paint a dark picture.
While Machin wasn’t fired, it’s clear some bankers are concerned about the state of the industry. After all, the lay-offs have begun — again. Daiwa Securities’ Hong Kong business cut 10% of its staff last week, roughly 60 people, as part of an effort to meet cost-cutting targets. Samsung Securities announced on February 1 that it also plans to cut staff at its 100-person Hong Kong unit by more than half. RBS started cutting staff last year, notably in its equities division.
Other banks reportedly have outsourcing companies looking into efficiency efforts in human resources, accounting and other back-office functions. And IT employees have hit the street, CV in hand.
While these aren’t the jobs that usually capture FinanceAsia headlines — our readers are more worried about the bankers who get the axe — the cutbacks should serve as the canary in the coalmine. Next on the line are the higher-salaried positions. And indeed some firms have started firing on high. In January, Bank of America Merrill Lynch let 14 managing directors go.
Less noticed are the positions emptied through attrition and never refilled.
So it’s no surprise that there have already been a few high-profile bankers seeking greener pastures. “This isn’t worth it and the deals are less interesting and ground-breaking than they used to be,” is the sentiment. They’re looking for the buzz of excitement and growing businesses, not more of the same and laying people off.
Two weeks ago we reported that Hong Kong’s Noble Group had hired former Goldman Sachs partner Yusuf Alireza as its chief executive, which was an interesting move because thus far many of the ship-jumping has been to private equity.
During the start of the global economic downturn, when things were looking bad for investment banking, Richard Ong, who was Goldman Sachs’s co-head of Asia investment banking with Machin, left to join Hopu Investment Management. He joined Fang Fenglei, who ran Goldman Sachs’s Chinese securities venture. Ong has subsequently started his own fund called RRJ Capital.
Machin, who will be based in Hong Kong, joins Canada Pension as chief executive officer David Denison is expanding the retirement plan’s reach into emerging markets. “I was impressed by the calibre of the organisation’s investment team,” said Machin, of the decision to leave investment banking and go to the pension fund.
The fund is very clearly tapping into Asia’s top investment banking talent. In its press release announcing the hire of Machin, it also said that it has retained Vikram Gandhi and his firm VSG Capital Advisers (VSG) as senior advisers effective March 1.
“Based in India and Hong Kong, VSG and Vikram will provide strategic advice and develop and facilitate investment opportunities for the organisation in the Indian sub-continent,” the pension fund said.
Readers will remember Vikram as, prior to founding VSG, he was the global head of the financial institutions group and vice-chairman for the investment banking department at Credit Suisse, based in New York and Hong Kong. He also spent 16 years at Morgan Stanley in various roles globally, including president and country head of Morgan Stanley in India.
One of the former bankers who turned up on the buy-side said that when he went to the job interview he found the people “sensible, with great judgment and no arrogance. Like Goldman in the old days”.
But the same ex-banker noted that after a certain number of years in investment banking, the excitement is gone. However, he also advised up-and-coming bankers not to be too quick to write off the industry and give up on investment banking. It always comes back. The question is when?