Citi finally unveiled the real major reorganization of its fixed income, currencies and commodities (FICC) business in February. The shake-up puts meat on the bones of the October 2006 decision of then head of capital markets Tom Maheras to formally incorporate Citi’s extensive local markets/emerging markets business into its traditional fixed-income offering.
The first steps in truly integrating the emerging markets business, which had operated as a stand-alone silo since 1998, started in July 2005 with the formation of global credit markets run by Chad Leat. Leat now has a co-head in Mark Watson, who was previously European head of fixed income.
"We are different than pretty much every other bank/financial institution in that we have these emerging markets businesses in 100-odd countries that often resemble full-fledged fixed-income businesses," says Watson. "Most institutions don’t have those historic businesses. They were run somewhat separately but Tom Maheras felt it had come to the point where he wanted to put them formally together under Randy Barker, Geoff Coley and Paco Ybarra," says Watson. Ybarra had formerly run emerging markets, and Barker and Coley were co-heads of the rest of fixed income.
The latest restructuring emphasizes the firm’s expectation that growth outside the US, and in developing new product offerings for its client groups, will drive future earnings. At the same time the global rate and currencies (GRAC) business – which also included commodities – is disaggregated into its component parts of commodities, currencies and rates. Its former head, Richard Moore, is now one of four regional head of fixed income and looks after EMEA. EMEA fixed income now includes all the local emerging markets businesses in the region. Similarly, Asia Pacific and Latin American fixed income includes all the former local markets businesses in the respective regions.
"It’s a major shift – and I don’t think we should underplay that – towards being a global company headquartered in the US as opposed to being a US business that operates internationally. It is not by chance that most of the significant functional global product roles are now going to be based in London. It’s a statement of clear intent," says Moore.
In Asia, Jeremy Amias – co-head of Asia-Pac – is now sole head. His former co-head, Sim Lim, is awaiting a new assignment in the bank. Other regional heads are unchanged, so in LatAm Ricardo Braga is sole chief. In Japan, Brian McCappin and Michimasa Naka continue to run Nikko Citi. But it appears there remains a US-centric bias to the FICC structure in that no North American chief was deemed necessary. Given that Barker, Coley and Ybarra are based in New York it is clear they will be on hand to manage that area.
But Citi is right to proclaim a geographical rebalancing of its senior management. Of the 13 global FICC product/functional heads, six are based in London. It argues that this better aligns product and regional managers with client needs. The clear line of reasoning is that London is the best place to manage a global business because of the ability to talk to Asia in the morning and New York in the afternoon.
London-based managers include credit co-chief Watson, and G10 interest rates and derivatives boss Steve Compton (formerly head of European rates). Anil Prasad, who used to run local markets EM foreign exchange, is now head of FX and local markets.
Antonio Cacorino, co-head of investor sales alongside Mike Mauer, is based in London. They replace Steve Bowman, who was global head but is now running a new hedge fund services group (See Alternative Investments news section). Mauer was formerly co-head of leveraged finance and loans alongside Rich Zogheb.
Late commodities push?
The firm has also moved to boost its commodities business by appointing John Casaudoumecq as global head. He was formerly based in the US, and is moving to London, where the global commodities business will now be based.
"You could argue that if you didn’t have a big commodities business, you left money on the table in recent years. But when we think of the business that we’re building, we view it as very complementary to things like our origination effort rather than as a quick-buck trading business. It is going to be integral to the product suite we can offer to a pretty big book of customers," says Watson.
Other global product and function heads include Jeff Perlowitz, who now runs global securitization markets on his own. His former co-head, Mark Tsesarsky, is now head of special situations – securitization (see Market round-up)
Rick Stuckey heads finance, G10 risk treasury and relative value.
There are still a couple of holes in the structure. Where does leveraged finance and loans fit in? It appears there will be further announcements coming.