Edson Mitchell is usually credited with Deutsche Bank's rise up the debt-capital markets league tables over the past four years, and not without reason. He was brought in because of his earlier success in turning Merrill Lynch from an also-ran of the US bulge-bracket banks in the mid-1980s into the undisputed leader by 1994, and has turned Deutsche into a leading contender in just four years.
But when he left to join Deutsche in May 1995, one of the first people he called at his old firm was Grant Kvalheim, whom he hired to run debt-capital markets in North America for the German bank, and whom he has described as "one of the best capital markets people in the world".
Kvalheim was the first of the many from Merrill to quit and follow his former boss to Deutsche, resigning on the same day as Michael Phillip and Anshu Jain. Within two months, Kvalheim was also appointed co-head of global debt-capital markets, and was made sole head last year.
In February this year the 42-year-old added a third title to his collection when he was picked to replace Ed Carter, whose reign as chief executive officer for Deutsche's investment-banking operations in the US lasted just eight months.
What persuaded Kvalheim to leave the success story of the day for a virtual unknown in debt-capital markets in the US was exactly what had driven him throughout his career - the desire to be part of a building process. He started his career at JP Morgan, where he had been a summer intern and joined full-time after finishing business school. It was not an immediate success. "I considered becoming a trader, but ruled it out because I couldn't see myself doing the same job 10 years down the line," says Kvalheim. "I wanted to be able to use a broader range of skills and tools, and was interested in the corporate-finance aspects of the business. Mistakenly, I thought commodities finance would fit the bill."
He then moved into Morgan's budding debt operations. "JP Morgan created something out of nothing there," says Kvalheim. "We took the commercial-banking franchise, used it as a way into offering our services in the debt markets, and created a successful franchise."
His reason for joining Merrill was much the same. "It had a core business to build on, but when I joined in 1986 it was not considered to be a top player. But I enjoyed it there because there was a real hunger to get business in the first few years, and a real desire to build the number-one franchise."
His leaving sprang partly from the fact that Merrill seemed to be resting on its laurels, partly because another chance to build a business opened up. "Here was a bank," says Kvalheim of Deutsche, "with a great credit rating [Deutsche was rated triple A in 1995], capital to use, and with a commitment to becoming a global bulge-bracket firm. Added to that we had almost a blank sheet of paper to build as we saw fit."
This is what attracted him: Deutsche lacked exactly the kind of franchise that appealed to him the most - a corporate-related debt team. One of the deals he is most proud of is the restructuring of RJR Nabisco's huge debt load just before he left Merrill, transferring some from the holding company to the Nabisco foods division while keeping all the varied bond holders happy and saving the client millions of dollars.
One thing Deutsche lacked, in the US at least, was the corporate business. "Its strength always lay in supranationals and sovereigns, and its reputation as a EuroDeutschmark house," explains Kvalheim. "When I arrived the bank had never done a bond deal in the US, and didn't even have anyone covering corporates on a full-time basis."
Since joining, Kvalheim and his team have instigated several innovative debt structures for corporates. Chief among them is Hidro (high interest debt restructuring opportunity), used by several US corporates and federal agencies, including Ford, UPS, Freddie Mac, and Sun America.
His passion for building might not extend as far into his private life as that of Mitchell, who developed a large stake in a small town on Lake Mooselookmeguntic, Maine, including the local ice-cream parlour. But Kvalheim and his wife, an artist, have bought a 75-year-old porcelain business. An example of one of his wife's creations, a porcelain lamp, stands in his office.
And where work and family commitments allow - he has three children - he indulges in his favourite pastime, basketball. Having grown up in Los Angeles he is a committed Lakers fan, and also likes to take part. He and a group of friends have been playing together for nine years, and try to meet up once a week for a game
That might not be possible in the coming months, as his toughest challenge lies ahead in integrating Deutsche's debt coverage with that of Bankers Trust. Past acquisitions of US houses by European banks don't offer much hope, but Kvalheim remains optimistic. "It's certainly a challenge, but we're already making joint calls, and have most of the management structure in place already." Antony Currie