Dan Case couldn’t do it. Roddy Fleming couldn’t do it. Even Neal Garonzik, long-time friend of Chase CEO William Harrison, couldn’t do it. Through all the quiet discussions to buy a top investment bank and the change of tack last year to build through smaller acquisitions, vice-chairman Jimmy Lee remained king of Chase’s investment banking heap.
Case at Hambrecht&Quist (bought by Chase last December for $1.35 billion), and Fleming at Fleming’s (Chase is spending $7.78 billion on that one) have either been subsumed into Lee’s world or are leaving. Garonzik, a former equities co-head at Morgan Stanley, joined Chase last summer to spearhead an equities push, but now covers asset management and private banking.
But Wnally Lee has been pushed aside in favour of another friend of Harrison’s, GeoV Boisi. Boisi joins after Chase bought the boutique he founded on leaving Goldman Sachs in 1993, the Beacon Group, for about $500 million last month. Chase would have you believe it was a timely decision all round. “This all came about as a result of conversations I’ve been having with Jimmy for about a year now,” says Harrison. “He wanted to be less of a manager of the business and spend more time with clients. And spend more time with his children.”
Lee’s reaction, issued through a company statement, was terse. After praising Boisi’s skills, he said: “I also look forward to spending more time with my family.” But that’s fooling no-one.
Lee’s children are fast approaching their college years, a strange time to pick Wnally to spend time with them. More revealing is Lee’s last public interview, in a Xattering cover story in Forbes in mid-April, “Meet the New Michael Milken”. Aside from implying that Chase was placed to Wnance just about every business opportunity on the planet, Lee also said: “Money does not drive me. What drives me is coming up with the next idea and building a business around it.” That sounds like management, not client relationships.
Maybe the Forbes article was simply too much for Harrison, even though (or perhaps because) Lee referred to his boss as “somewhat of a father Wgure”, because it was too personal and not focused on the bank. Boisi, in true Goldman style, is more private: “I don’t want to read about my name,” he says. “I want to read my client’s name and Chase’s name.” That’s very loyal, and no doubt the kind of approach that would appeal more to Harrison, who still relishes the chance to compete across the board with Goldman Sachs and Morgan Stanley. These two built their success on branding and teamwork, shunning star-banker status. Coincidentally, Harrison says the discussions with Boisi started “about a month ago” – roughly the time of the Forbes article.
So what is Lee’s next step? Despite appearing to pledge loyalty to his usurper, Lee is rumoured to be considering setting up his own investment shop.
As for Boisi, he will bring a steadier managerial hand to Chase’s investment bank, as well as nearly 100 M&A professionals. But the Beacon newcomers won’t do much to improve Chase’s already impressive standing in the M&A tables – sixth in the US, eighth globally last year – and will have no impact on its broader investment banking expansion without yet more acquisitions. So $500 million is probably the largest ever signing-on fee for a senior executive, and one who isn’t even a star.
