Bankers tossed out of jobs in last year’s emerging markets crisis should now be brushing off their CVs. Quietly and cautiously banks are rebuilding their emerging markets teams – primarily in Asian and Latin American equities – in the hope that this year’s momentum in the asset class will be sustained. ING Barings which was heavily criticized for radically downsizing a tip-top team is leading the way back.
According to investment bankers in Asia, ING Barings has been on the most aggressive hiring spree in the region. The bank has made eight key appointments to its Asian research and economic departments so far this year, including new heads of research for Korea and Taiwan in July and filling five senior research positions in March. The position in Seoul is head of equity sales, trading and research and is a new post.
The latest move in rebuilding its Asia business was the appointment of Markus Rosgen as Asian equity strategist in August. Rosgen, previously with Morgan Stanley Dean Witter, distinguished himself as one of the first strategists to turn bullish on Asia by increasing the weightings of Hong Kong, Singapore and Thailand in Morgan Stanley’s model portfolios as early as November 1998.
Prior to Rosgen’s appointment ING Barings had hired Tim Condon in the bank’s Hong Kong office as chief economist for Asia ex-Japan. Condon was charged with hiring a Singapore-based economist to cover the local and Malaysian markets and another economist in Hong Kong who is concentrating on Greater China.
Fresh from the job market, Condon notes that “Deutsche Bank, Merrill Lynch, Warburg Dillon Read and Donaldson Lufkin & Jenrette are all looking to increase the size of their Asia offices”. Other banks known to be in hiring mode in Asia include ABN Amro, Bank Boston, Barclays Capital and Salomon Smith Barney.
Also expanding very aggressively in Asia is Credit Suisse First Boston, which recently appointed a managing director and head of investment banking, Alastair Walton, who has the mandate to restructure CSFB’s loosely organized Asia business into a more streamlined operation similar to New York and London.
Deutsche Bank, which has not been much of a force in Asia, also appears to be trying to get its act together in the region, now that the merger with Bankers Trust has been finalized. Philip Southwell and Steffan Till were recently relocated from London to head up Deutsche’s Asian equity capital markets operations. Southwell in Hong Kong says the bank will be hiring corporate relationship managers for the equity capital markets team.
While Latin America has underperformed all other emerging markets regions this year, banks are getting positioned for the expected emergence of Brazil, Argentina and Chile from recession in 2000.
“We’ve rebuilt our Latin business and are back in markets where we had downsized considerably,” says a New York-based emerging markets sales director with ING Barings, who declined to be named. “There has been a build-up on the equity side, both in sales and in trading.”
ING Barings had developed one of the strongest emerging markets brands entering 1998. But the sudden self-inflicted massacre of its once valuable Latin America business in New York in early 1998 was a blow to the bank’s reputation with US clients.
The bank was rudderless in emerging markets until earlier this year after a strategic review resulted in the reorganization of its activities along global business lines that include corporate and institutional finance, equity markets, financial markets and general banking. The restructuring put the bank back on course in emerging markets on the equities side.
Other banks recently strengthening their Latin presence are JP Morgan and Spain’s BBV Securities.
JP Morgan solidified its Latin America equity research team in August to include nine senior analysts covering 11 sectors in Latin America.
While the bank has hired three analysts and an equity strategist over the past three months, these were primarily replacements for departing analysts.
“This is the most complete team JP Morgan’s Latin America equity research has had to date,” says Annette Franqui, head of the research group. “But this has nothing to do with an ING-like rebuilding of its Latin team. We try to take a steady approach to the business rather than inflating and then eroding the team.”
Earlier this year, BBV Securities went on a hiring binge to build out its New York-based Latin American investment banking team in the anticipation that the Latin recovery will continue over the next several years. The bank has set itself the goal of becoming one of the leading Latin investment banks in New York and is also seeking to increase its local presence.
Elsewhere in the asset class, Citibank has decided that its emerging markets business has been growing too large for one individual to manage the whole thing. After the former head of emerging markets, Dennis Martin, retired in mid-May the bank divided the task three ways between Asia, Latin America and Europe.
According to Dipak Rastogi, the head of a region that Citibank lumps together as Central and Eastern Europe, the Middle East and Africa, the bank will open up offices in the former Soviet Union and in northern Africa.
Citibank’s approach is in contrast with that of Merrill Lynch, which has abandoned almost all business lines relating to Russia and the former Soviet Union after deciding there is little profit potential in the near future.
Reporting losses of about $165 million in emerging markets last autumn, the firm has virtually shut its proprietary trading business worldwide and is putting more emphasis on less capital intensive businesses in emerging markets such as corporate finance, asset management and M&A advisory. Brad Durham
