Standard Chartered Bank continues to make use of the downturn in the financial industry to expand its own investment banking business in Asia, with sources saying yesterday that it has hired convertible bond specialist Ronnie Potel from Citi to head its equity-linked origination team.
Potel, who was a director and head of equity-linked origination for Asia-Pacific at Citi, resigned from the US bank on Friday and will start his new job with Standard Chartered in a couple of months when his gardening leave is over, the sources say. At Standard Chartered, Potel will become a managing director and will lead a team of at least three people focusing on equity-linked issuance in Asia and the Middle East.
A Standard Chartered spokesperson in Hong Kong was unable to confirm the new hire last night, saying only that the bank doesn't comment on market speculation. Likewise at Citi, a spokesman said he couldn't comment on whether Potel was still with the bank or not, but noted that Citi's equity-linked franchise continues to be led by Craig Duffy, who is head of capital markets origination for structured products and privates in Asia-Pacific. The equity-linked business is part of this division and as head of equity-linked origination, Potel reported to Duffy.
Potel leaves one of Asia's top convertible bond houses -- Citi was awarded best equity-linked house in Asia ex-Japan in 2008 by FinanceAsia only a few weeks ago -- but is no doubt attracted by the opportunity of working with a bank like Standard Chartered that has a strong lending franchise and a solid balance sheet that it can use to back its CB transactions. This is expected to be key in terms of getting deals done once the CB issuance market, currently at a complete standstill courtesy of the global credit crunch and the heightened risk aversion among investors, starts to pick up again.
In light of Citi's current financial troubles and lingering concerns that it might be nationalised, it is more questionable how active the US bank can be in terms of providing credit in connection with CB issuance. And the same goes for most of the other global investment banks.
UK-based Standard Chartered, which derives the bulk of its revenues from emerging markets, has been gradually moving into the convertible bond market in Asia over the past 18 months, securing mandates both on the back of its lending capabilities and its strong client relationships in the region. In August 2007 it worked alongside Citi and ABN AMRO on Tata Steel's $875 million issue of convertible reference securities (CARS), and contributed greatly to the success of the deal by providing a letter of credit as a guarantee for the bonds.
A couple of months later it again teamed up with Citi to bring a $250 million CB for India's GTL Infrastructure and in April last year it was the sole bookrunner on a S$280 million ($203 million) CB for Singapore's CapitaCommercial Trust (CCT). According to market participants, Standard Chartered has also built a secondary trading platform that is already getting high marks, which shows that it is serious about becoming a key player in the CB space. The hiring of Potel will add the origination skills needed to achieve this.
Potel joined Citi in March 2005 after five years in equity-linked origination at Deutsche Bank in London, Hong Kong and Japan. Prior to that, he was pursuing a career as a barrister.