People & markets: All change in European ABS
In recent weeks significant moves have taken place in the higher echelons of European structured finance.
Barclays Capital has lost its head of corporate securitization. Philip Basil is taking a sabbatical from Royal Bank of Scotland.
One of Citigroup’s co-heads of European ABS is now looking after the European Special Situations Group. And Citi has also raided Deutsche Bank, taking its head of global CDO group and co-head of global securitized products. JPMorgan has gone full circle and is reconstructing the European ABS group it broke up in 2002.
|Robert Palache: surprise departure|
Robert Palache resigned from Barclays Capital last month. BarCap said that Lynn Gilbert, head of European CMBS for the past three years would take over his role. Palache was hired as co-head of European securitization in 2001 with a mandate to look after corporate asset backed securitization while his partner Allen Appen took care of ABS for financial institutions. Palache is a European structured finance stalwart. His sudden departure has surprised observers at other banks who believed that during his five-year tenure at BarCap he had created a strong platform for originating and distributing corporate risk.
He has a strong track record in the field. At Nomura, alongside his then co-head – Henry Cooke – Palache was responsible for executing many esoteric securitizations, especially in the then nascent whole business securitization market.
Up until last autumn Palache’s title at BarCap was head of corporate securitization, real estate and infrastructure finance. Then, though, the latter business was shifted into the energy and utility business part of UK investment banking. Observers have speculated that the reduction of Palache’s responsibilities might have been a factor in his decision to seek a new challenge.
Palache has decided it is time for a new challenge but he is not moving directly to a competitor. However, given his profile and experience it seems unlikely that he will be out of the market for long.
Barclays Capital is now firmly on the map with private equity houses such as Whitehall, Loan Star, MesRef and Cerberus. The UK bank has also heavily built up its franchise in German commercial property and non-performing loans over the past two years (run by Robert Bell). In Italy (headed by Francesco de Bartolo), the bank created innovative financial solutions for M&A situations, specifically Aeroporti di Roma and Autostrade.
More recently, Barclays was part of an innovative €3.3 billion deal for the Italian state called Fondo Immobili Publici. Other high-growth and high-profile sectors that Palache has been instrumental in building out include the CMBS conduit run by Gilbert. Cooke now looks after the leveraged finance business and runs a growing real estate equity fund.
|William Cumming: moving positions at Citigroup|
The principal side of the structured finance business is clearly where the hottest action is; that explains why Citigroup has made co-head of securitization William Cumming its European head of its special situations group (SSG). David Basra takes sole control of the European securitization team. The principal investing and special situation team at Citigroup makes use of Cumming’s unique skill set on many asset classes, but typically distressed debt, performing or non-performing loans, infrastructure, equity real estate and non-real estate, using Citigroup’s funds. In his new role, Cumming will look at all aspects of the capital structure from senior and mezz all the way through to equity.
In January, Citigroup decided to make a concentrated effort to bring together all the separate teams that operate in this space. The aim is to provide clients with a single powerful platform and give the bank an extra edge.
Citigroup is not the only bank that wants to get its internal departments aligned to deal with financing in a holistic manner. The question being asked is: ‘How well do you get financing and prop capital to work together?’
The securitization toolkit and SSG are highly complementary. The fact that Basra and Cumming have worked harmoniously for a number of years and in fact grew up together as Citigroup bankers will provide the US bank with a very powerful presence, using its proprietary capital to give a range of solutions for clients.
Cumming reports to European head of fixed income Mark Watson geographically and Jim Zelter (global head SSG) and Mark Tsesarsky (co-head of securitized markets).
Basil has handed over the reigns as European head of securitization at RBS following 8 years in the role. He is returning at the end of the summer to a new role in the UUK bank. The ABS business will now be run by a triumvirate of Richard Bartlett, Damian Thompson and Mark Hickey who already head up the corporate, property and financial institution businesses respectively. These three have worked together for several years under Basil now.
JPMorgan comes full circle
JPMorgan has some serious catching up to do away from the vanilla structured finance space. That is why the bank says it has made Oldrick Masek head of its European securitization product group – a new role at the US bank. Masek will bring together all the component parts of the disparate structured finance business at JPMorgan, pointing to a new focus on securitization under Patrick Edsparr, global head of rates and securitized products, who is moving to London from New York. Edsparr also looks after Morgan’s principal and proprietary risk taking and his involvement provides a strong clue to where JPMorgan is seeking to go [see feature on JPMorgan].
In effect, JPMorgan has reinstituted its securitization product group, which it disbanded after the departure of Jonathan Laredo in 2002. The ABS team was split three ways: financial institutions, run by Colin Evans, who now reports to Masek; CDOs, which became part of structured credit; and a corporate securitization business that has slowly withered.
Masek is a structured credit and JPMorgan veteran. Until he was appointed global co-head of structured credit alongside Brian Zeitlin a year ago, he worked in a number of senior management roles in the European structured credit business, especially origination and structuring. Zeitlin is now sole head of JPMorgan’s structured credit group reporting to Don McCree, the new global head of credit.
JPMorgan wants to return to prominence in some of the businesses that have fallen off ever since the securitization group was split up in 2001.
JPMorgan will be taking some principal positions so it can take more of the value chain. This is something rivals such as Citi, RBS and Barclays have been doing for some time. JPMorgan has a proven distribution platform in the structured credit area and the aim is to source more product to push through it.
Raynes joins Citi
Citigroup has engaged Michael Raynes as its head of global structured credit products. Raynes looks after both the cash and synthetic businesses, for primary and secondary markets.
It is a major role for Raynes but he was already head of Deutsche’s global CDO group and co-head of the global securitized products group (SPG). But at Deutsche he had no secondary markets responsibility. What is unusual is the injection of new blood at a senior management level at Citigroup. Raynes reports directly to Chad Leat, head of global credit markets. His former co-head of the SPG at Deutsche, Richard D’Albert is taking on sole responsibility.
In marked contrast to elsewhere in fixed income, structured credit is one area where the US bank has followed such rivals as Deutsche and JPMorgan.
Raynes joined Deutsche in 2000 as part of a group of 55 bankers to leave CSFB and is the first high-level official from that wave to move on.