What would you expect from someone whose CV includes “studies and final degree from the humanistic gymnasium in Basel”? A trainee social worker adept on the high parallel bars, perhaps? You would be wrong. Forget “humanistic” in its usual meaning of a system or process which puts human interests and the mind of man before all else. Humanism also applies to literary culture and, in the case of Hans-Peter Bauer, means the study of classical Latin and Greek. And what about the gymnasium and images of parallel bars and triple somersaults on a wooden horse? The reality is less exciting. This gymnasium simply means a school.
But there is little else which has been simple about the career of Hans-Peter Bauer, who recently arrived from Zurich to become one of the overlords of the burgeoning fixed-income, sales, trading and derivatives business of UBS in London. While he would be loath to refer to himself as a rocket scientist or a quant, he has all of the personal attributes and qualifications. Progressing from classics in Basel, Bauer read mathematics at university in Zurich and then took a PhD in mathematics and a thesis in algebraic topology at the Federal High School of Technology (FHTZ).
On his arrival at UBS in 1984, such quantitative skills were ideally suited to the new booming market in swaps and the development of new products in the capital markets area. Five years later Bauer, still only 36, became head of all swaps and new capital markets products in Zurich. The UBS top management quickly added derivatives to his portfolio and by 1992 he was appointed the bank’s head of derivatives worldwide.
Why did he move to London? Did the London office need him to bolster its fixed-income business which in 1994-95 had started to lag seriously behind arch-rivals CS First Boston and Swiss Bank Corporation which had just acquired SG Warburg? In fact Bauer took the initiative to move to London himself and the decision was not part of a rescue or supporting operation. “The Zurich base was already established, efficient and profitable with around 100 employees. However, to grow the business, London, with 500 sales and trading staff and its time-zone advantages, was the natural centre,” comments Bauer.
Nor is the UBS London office any more a lame duck after substantial reorganization under former chairman Rudi Mueller and present CEO David Robins. Bauer sees greater immediate profit potential in New York, where UBS has recently been embarking on a major hiring spree, and Tokyo.
While the east Asian operations, centred on Hong Kong and Singapore, have been very successful, results from Tokyo have been consistently disappointing.
Bauer has a formidable arsenal at his disposal, not least the worldwide UBS office network, its legendary private-client base and the bank’s rock-solid, triple-A credit rating. The credit rating is especially valuable in the derivatives sector where UBS is one of the most prized counterparties in any transaction. The focus of Bauer’s attention may now be leveraging that credit standing for securitization, credit enhancement and also repackaging products.
Bauer and his wife Marcella are expecting their third child. Apart from skiing, his main interest outside UBS is the study of Islamic history and culture (he is fluent in Arabic). However, if that gets boring, he also speaks German, English, French, Italian, Portuguese and Spanish. Contrary to UBS tradition, Bauer is not an officer in the Swiss army but then neither is Mathis Cabiallavetta, the new chief executive or Werner Bonadurer, head of sales and risk management, to whom Bauer reports in Zurich. Times are changing – even at UBS .
Tinny Hasendonckx
head of Euromarket trading – Kredietbank Brussels
Speaking of Tinny Hasendonckx’s probable election of the board of the International Securities Market Association (Isma), Charles Treuhold, a former partner at Arnhold & Bleichroeder in New York says: “In the early days it would have been rather like Mrs Pankhurst trying to join the Hellfire Club”.
Tinny Hasendonckx’s knowledge of Sir Francis Dashwood’s licentious 18th-century gatherings at Medmenham Abbey in Buckinghamshire thankfully may be vague, but as head of Euromarket trading at Kredietbank, she is set to break down the barrier of a 28-year-old club this May. At Isma’s 1996 AGM to be held in Cannes, she is one of five candidates standing for election to the main board. If successful, she will be the first female board member in its history.
For the self-assured Hasendonckx, joining the Isma board, doesn’t represent anything more than a natural, although long overdue, progression in the capital markets industry. Nor does the extra attention she will receive if she’s elected to the board especially concern her.
“Women have been both extremely active and effective on the Isma regional and sub-committees for years,” she says. “Look at the contribution made by Milvia Groff of Banca Euromobiliare, whose work is recognized by everyone.”
Once on the Isma board – election is virtually guaranteed for all candidates and Hansendonckx will carry the full support and votes of the powerful Low Countries region – she will immediately feel at home. The original Association of International Bond Dealers (AIBD, now Isma) was founded in 1968 by an influential but opportunistic group of bond traders to protect their own interests. Some 28 years later the trading influence is still strong. Current chief executive John Langton was once head of trading at Orion Bank. Deputy chairman William Watt made his name as a floating-rate note trader with Citicorp and Kidder Peabody.
Progress by performance
As head of Euromarket trading at Kredietbank’s HQ in Brussels, Hasendonckx won’t be intimidated by her new (all male) Isma colleagues. Now 35, she has been with Kredietbank for the whole of her working career since she won a scholarship from the bank to study oriental languages in Japan. She claims her once-fluent written and conversational Japanese is now rusty, but she speaks Dutch, English, French and German.
Returning from Asia in 1987 she was told that there were vacancies on the trading desk. She didn’t hesitate. “Prospects of advancement in the traditional commercial and lending areas of the bank were gradual but in the trading room progress was measured by performance,” she says. The only alternative career she considered was to stay in east Asia with one of the multinational industrial corporations, and she briefly contemplated joining Honda.
The Isma connection began two years ago with election to the Belgian regional committee where Kredietbank, Generale and BBL are the most powerful representative banks. When it came to the nomination for the main Isma board Hasendonckx was proposed to the regional members by Ludwig Coppens, manager of fixed-income operations at Generale Bank, where she was also supported by veteran Euromarket trader, Roland Organe. Coppens comments: “The fact that she might be the first lady member of the Isma board didn’t really concern the selection process, she was simply the best person and the best candidate to represent the interests of our members.”
If the current Isma board is expecting the arrival of a softie they are likely to be disappointed. Away from the office, Hasendonckx finds time for sheer-face rock climbing, mountaineering and long-distance cycling. On a board which makes little secret of its weakness for long and lavish dinners, she may encourage a new Spartan health regime.
On a recent trip to Morocco with some friends she covered 2,500 kilometres by bicycle and also climbed the 4,000 metre high Mount Toubkal. Does such an accomplished woman have any weaknesses? “I’m not sure whether she can cook,” says Coppens.
Thomas Keller
head of asset/liability management – L-Bank, Germany
Karlsruhe, the capital of Baden-Württemberg in Germany doesn’t quite have the same tourist pull as the fleshpots of Berlin or the fast-vanishing decadence of Hamburg. But Karlsruhe’s answer to “The Magic Kingdom” is the Schloss, built by the Duke of Baden in 1715. Some say the duke fell asleep under a tree and was told in a dream that he should build a castle where he lay. Others say he was simply taking a well-earned rest after running away from his wife. Today there is a regular flow of lawyers to Karlsruhe who come to the constitutional court. Middle-aged visitors, remembering a different era, come to take photographs of the special air-raid-proof courts built for the trial of the Bader-Meinhof terrorists. Visiting bankers from abroad, however, inevitably make a beeline for
Karlsruhe’s largest financial institution, Landeskreditbank Baden-Württemberg, which is known everywhere as L-Bank.
Seven years ago L-Bank was virtually unknown outside Germany. Owned by the state of Baden-Württemberg, it had little reason to look beyond the national borders. Cash-rich and ultra-conservative, the bank found that its infrequent calls for funding were easily satisfied by the domestic markets. During the late 1980s the bank’s first external borrowings in yen and Swiss franc private placements gave little indication that it would become one of the more professional and innovative Euromarket issuers. “I don’t think that the yen and Swiss franc liabilities were even hedged,” recalls former head of funding John Howell. Howell succeeded Bert de Kock (now with BNG in Holland) and his colleague Gertraud Foos Ollson, who initially widened the horizon of L-Bank’s external funding and established the name as an important new triple-A rated borrower.
The capital markets group at the bank includes vice-chairman Christian Brand, head of funding Stephen Tribull (who succeeded Howell) with his colleague Helmut Sternman, and the head of asset/liability management, the 30-year old Thomas Keller. Howell continues as outside adviser. Keller controls all of the bank’s asset/liability activities, derivatives, including all futures, swaps and swaptions, and the domestic Bund trading operations. He has been responsible for changing the asset/liability management strategy from micro-hedging to a more global view of risk management. The new macro-hedging philosophy provides greater transaction flexibility and a clearer view of the bank’s overall risk positions. The goal of Keller’s revised risk management strategy is to have detailed information and knowledge of L-Bank’s cash flows available at all times. A reporting system has now been developed which enables senior management to have daily updates on all of the bank’s trading and other risk liabilities. To put icing on the cake, Keller’s group has become an important profit centre for the bank by expanding margins between asset income and liability expense.
Although Tribull is the popular public figure behind L-Bank’s funding requirements in the international capital markets, he and Keller work closely together. Keller will specify the forthcoming funding requirements and the target price expressed in net sub-Libor cost of funds to the bank. Tribull and Sternman are the accomplished deal arrangers who will invite bids and are in regular contact with the syndicate desks of the main international investment banks.
With outstanding debt now denominated in 14 currencies, L-Bank has come a long way from the early unhedged private placements. Keller and Tribull are opportunistic borrowers receptive to competitive offers in any recognized currencies. Even if there is no immediate financing requirement, attractively priced deals will be completed and then parked by Keller until the funds need to be drawn down.
Loan engineering
In the close-knit community of top derivatives specialists, Keller’s reputation is spreading. Through the bank he is a major derivatives customer with volume rumoured to be around Dm50 billion a year. While that makes him a major player, he has also refined and improved a number of derivative products and has published several studies on exotic swaps and swaptions. His most recent eye-catching work introduced “loanly options”. Through the introduction of loanly options Keller has redefined L-Bank’s approach to making loan commitments to customers. Typically, a customer in Germany will receive a firm loan commitment from the bank at a fixed price. However, the customer does not have to commit himself to the loan for a period that may last up to six weeks providing him, in effect, with a free option. The underlying risk to the bank is the price risk of the bank’s refinancing if interest rates move against it. By developing a hedge through a complex pricing formula the loanly options have been imbedded in the firm’s loan commitments and remove or reduce the bank’s risk.
Banking won out over Keller’s other career option – joining the family business which operates Ford Motor sales franchises. His preferred taste in cars is Formula One and before the next challenge to loanly options he is trying to find time to finish his doctoral thesis. Not surprisingly, the thesis includes the study of option-pricing formulae.
