It took a year and at least one false start, but John Walsh has finally returned to the markets. He turned up at Royal Bank of Scotland, nearly a year after he walked out of his role at CSFB as global head of debt capital markets. His title at RBS is head of North American corporate credit markets.
He has a remit to build a primary and secondary debt business in the US. It?s a greenfield project, which is exactly the kind of role he was looking for. BNP Paribas tried to hire him for a similar role last year. It has a presence in US high-grade debt, though is not even a second-tier player in the US.
Walsh is based in Greenwich, Connecticut, in the offices of RBS Greenwich Capital, not in RBS Capital Markets in New York. He reports both to Ben Carpenter, co-CEO of Greenwich Capital, and Symon Drake-Brockman, global head of capital markets for RBS in London.
It looks as if RBS might integrate the boutique ? a significant departure for RBS, and yet another change in Greenwich?s role.
Back in 1999 RBS was locked in a battle with Bank of Scotland for NatWest, which had bought Greenwich in 1996. RBS considered selling the boutique but it had become the centrepiece of NatWest?s investment banking strategy following its exit from equities and M&A. NatWest Markets had rebranded as Greenwich NatWest.
The division contributed more than 10% of NatWest earnings just as the merger battle drew to a close, and could then not be sold without shareholder approval.
Ringfenced
RBS decided to separate Greenwich from the UK and European capital markets businesses and has effectively left it ringfenced since. Under Drake-Brockman the investment bank in Europe has started to break into the US, but out of New York, calling itself RBS Capital Markets, leaving observers wondering what fate awaits Greenwich.
Now it would appear the Scots intend to bring Greenwich Capital back into the fold. That could be tricky, as the boutique has always been either semi-autonomous or in charge of the entire division. But for now there should be little risk of it having to lock horns with London, or even Walsh. He appears to have no plans to grab responsibility for any of Greenwich?s core businesses, which are its US treasury primary dealership, asset-backed finance, money markets and proprietary trading.
Walsh is interested purely in the corporate credit sector. He has already got off to a rapid start, hiring five origination bankers from his old shop in mid-April, as well as luring Don Devine out of early retirement. Devine had been Walsh?s head of syndicate at CSFB but left suddenly in spring 2002, with colleagues saying he had decided to go fishing. Walsh has also brought in Ben Cohen as his deputy. They too worked together at CSFB.
The US capital markets are littered with the corpses of European houses that have tried to break in and failed. Only one appears to have made significant inroads into the high-grade market, UBS. It finished fifth in the first-quarter league tables, which exclude self-issuance and deals of 18 months? maturity and less.
Deutsche Bank has never managed to craft an effective high-grade debt presence, while Barclays Capital has brought in bankers and business but as yet no top 10 presence. US banks such as Wachovia and Suntrust are still attempting to set up or expand.
Walsh, though, say those close to him, has spent much of his 12-month absence refining his strategy for building a new credit markets platform from scratch.
Devine and the five originators he hired from CSFB grabbed the headlines, but his priority is to hire a sales and trading team to develop relationships with investors.
According to those who he has talked to, Walsh plans to hire up to 40 people this year, with as many as 75 there by next year. There?s speculation that he?ll dip back into CSFB to do so. Whether he?ll have as much luck with sales and trading staff is debatable. Friend and former colleague and boss Jack DiMaio took some of the best traders with him last year when he moved to Credit Suisse Asset Management to run alternative investments. Market sources say that Walsh is on the verge of hiring Sanjeev Gupta to run risk management for him. Gupta had been co-head of all credit trading, cash and derivatives, at CSFB, and quit last year. He is also close to luring a head of sales and a head of sales-trading from bulge-bracket banks.