Several banks are benefiting from the slew of former DLJ bankers who have decided that their new owners, CSFB, are not for them. Lehman and Salomon Smith Barney have done particularly well in the US, and UBS Warburg and Deutsche Bank are not far behind. But in Europe another name has joined the list, and it may be a surprise to some: Bank of America.
The exodus from DLJ is gathering pace not just in New York but in London too where BofA is dropping in a team of DLJ analysts to help kick start its fledgling European equities operation.
By bringing in 29 new staff, mostly from DLJ, BofA is looking to make a splash in the European market.
Originally Stephan Kendall, BofA’s head of European equities in London, was aiming to have his team in place towards the end of 2001 but the sudden recruiting- opportunities allowed him to speed up his plans. “What has happened at DLJ has given us the chance to pick up analysts and we have accelerated by six months,” he says.
The new arrivals include Chris Williams, who was DLJ’s lead bank analyst, together with his full team. Mike Anderson also joins as head of the equity capital markets team.
Although BofA undoubtedly has a brand name in the US, it is not so widely known in Europe though Kendall says it has more history there than is commonly realized. “The bank is comparatively unknown in Europe but has actually been here since 1932,” he says.
But really that is just in commercial banking. BofA’s investment banking operations are very slim outside the US, and even back home it is not a major league player. Its operations are based on Montgomery Securities which was soon emasculated when Montgomery’s CEO Thomas Weisel left in protest at the end of 1998, taking 100 of his best bankers with him to set up Thomas Weisel Partners. Since then it has been a slow process of rebuilding at BofA.
Kendall is realistic about how quickly he can build the European business. “We have started very pragmatically,” he says. BofA is going to concentrate on five sectors: telecoms and media, technology, healthcare, financial services and energy and utilities. By retaining this focus the bank aims to differentiate itself in the market, says David Atkinson, head of European equities research.
But that is questionable:
SG Cowen has followed a similar strategy for several years and these are the major areas of growth which all the investment banks are concentrating on.
What’s more, building a profitable franchise from scratch is hardly easy. Just ask DLJers: one reason the bank was sold is because of the huge spend in Europe without a quick payback.
BofA’s new arrivals do not want to comment on what they are leaving behind at CSFB but its dumping of the DLJ name and the announcement of job cuts were bound to unsettle staff, even those being oVered positions in the revamped set-up.
CSFB, which paid $11.5 billion for DLJ is facing further departures following the news that DLJ bankers can cash in a $1 billion bonus scheme, thanks to a change of ownership clause that will mean huge payouts for some.
High-profile DLJ bosses to have walked already include Hal Ritch, global head of mergers, who has gone to Salomon Smith Barney, and Louis Friedman, global head of telecoms, who has moved to Bear Stearns.
For CSFB the worst may not yet be over because bonus time, which is due in March, is almost bound to prompt another spate of departures.
That is, if they haven’t already left by then.
