PaveyÆs final day will be August 31. No future plans have been revealed, and Pavey is reportedly soon heading off on holiday to ponder his options.
Pavey and HSBC both declined to comment on the move.
Known for his passion for the business, which he has developed considerably since arriving from Credit Suisse in London in March 2005, PaveyÆs departure has puzzled many observers.
It could be part of a wider reshuffling at HSBC, following the recent hire of Frank Slevin as head of global banking in Asia-Pacific. Alternatively, he could have been made an offer from a rival bank, or from a private equity firm. Macquarie, for example, has recently lost some senior ECM people.
Several people have emphasised the amicable nature of the move. Indeed, both parties speak highly of each other, and Pavey appears to be working out his notice. Had he left for a post at a directly competing firm, he would normally be bought out, sent on gardening leave, or made to leave the firm immediately.
When Pavey first arrived at HSBC, he said that his aim was to capitalise on HSBCÆs uniquely strong relationships with local borrowers to feed the ECM division.
ôPavey brought a new intensity to ECM. He made it his mission to translate the hundreds of millions of loans that the commercial bank had made to clients, not least during the Asian financial crisis, into underwriting mandates,ö says one source close to Pavey.
ôPreviously, there was always a raft of excuses for not getting certain mandates û the investment banking wasnÆt there, the distribution platform wasnÆt there. Now there is no such excuse, and people get really upset if a mandate is not captured,ö he adds.
The question for HSBC was always how to capitalise on its lending relationships.
ôPavey could not use the bait and switch tactics often used in the Hong Kong investment banking scene, because HSBC had too many important commercial banking relationships to lose. So he focused on setting up first-class distribution and investment banking platforms and in expanding the market to South and Southeast Asia, while developing a reputation as an æhonest brokerÆ.ö
The man directly responsible for South Asia, which has seen spectacular growth, was Tom Lanners.
ôIn terms of P&L, the South Asian franchise is now comparable to North Asia,ö says one banker. Lanners, a director, has been appointed head of South Asian ECM, while Alexis Adamczyk has been appointed to the North Asian ECM slot. Together, they will replace Pavey and report directly to Slevin.
Although the scene would seem set for a power struggle, the two men apparently get on very well and socialise together. Both were reportedly recommended by Pavey for the positions.
PaveyÆs term at HSBC is generally considered a success, and China mandates have been especially noticeable in the North Asian franchise, including China Citic BankÆs dual IPO in Shanghai and Hong Kong. According to one banker, revenues at ECM have doubled in the past two years. Research coverage has also been substantially expanded.
One banker says that typical of PaveyÆs style was his telephone call to the chairman of China Fisheries at Christmas last year, a company on which HSBC had no research at the time. The Chinese group had already given the mandate for a high-yield offering to another investment bank. Pavey reportedly asked for a co-lead position on the same deal. But he asked for a sole book role on the next mandate in the event he outsold the other bank on the first deal. HSBC reportedly succeeded and was rewarded with a string of transactions. The banker says China Fisheries is now one of the most profitable relationships for HSBC.
ôGetting repeat business across a range of products was a key objective for George, as opposed to being a pure IPO house,ö says one observer.
According to Dealogic, HSBC is currently in tenth position for all ECM in Asia ex-Japan. For the whole of 2006, the bank was in 15th place and, in the 12 months preceding PaveyÆs arrival in March 2005, the bank was in 14th place.