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Opinion

Pheasant or plucker?

John Varley is dicing with death. History reveals several examples of British banking chiefs who have made bold moves only to fall flat on their noses and into the mud. SG Warburg courted Morgan Stanley and was gobbled up by Swiss Bank Corporation. NatWest bid for the insurance group Legal & General and became lunch for the Royal Bank of Scotland. The transformation from predator to prey can be precipitous.

John Varley has an eye for the detail. He is not one of those broad-brush bigwigs who wander around mouthing platitudes. And by Varley’s side hovers experienced dealmaker Marcus Agius, the recently appointed Barclays chairman. It was clever to persuade ABN to agree to exclusive discussions – presumably by offering ABN chief executive Rijkman Groenink a role in the new structure. A cynic might argue that no one else was interested in bidding for the whole of ABN. A few months ago a seasoned commentator moaned to me: “What is the point of ABN?”


Citigroup and RBS have been mentioned as possible partners. Citi is preoccupied with propping up its limp share price, but there could be a good fit with RBS. RBS is expert at integrating large acquisitions whereas the jury is very much out on Barclays integration skills. The execution of the Woolwich deal, purchased in 2000, is probably a lesson in how not to do a takeover.


A long way away lurks the lion in its lair. In Charlotte, North Carolina, Ken Lewis, Bank of America’s chief executive, must be watching developments closely. Bank of America has lusted after Barclays for a while. And when you have a crush on a fair maiden, it is dispiriting to see her marry another man. What will canny Ken do now? He needs Europe in his portfolio of businesses and he needs investment banking. Is he prepared to let Barclays slip through his fingers or, if negotiations falter, will he pounce? The performance of Barclays shares – up about 8% since the talks with ABN Amro were announced – suggests that some think Barclays is the pheasant not the poacher. However, hostile takeovers are tricky and the timing is horribly inconvenient for Mr Lewis as the dollar is so weak. John Varley must feel like he is crossing hostile terrain, one false step and he will detonate a landmine. I am tempted to say: “Watch this space for a big bang.” What do you think? Pass go

Does a nasty shock also await investors in the forthcoming Blackstone IPO? Surely there is something Kafkaesque about a company that has made a fortune denigrating public markets turning itself in to a public company? Blackstone’s CEO, Stephen Schwarzman, is a financial titan. If he thinks this is the best time to sell his company’s equity, do you want to be on the other side of the trade? Private equity is one big party at the moment: interest rates are relatively low, so buying and leveraging up is easy. Equity markets are buoyant, so selling and reaping large returns is easy. Will the future be as rosy? “Pure greed,” snorted one hedge fund manager when I tentatively raised the topic. But the reaction of another friend who works at HSBC was more amusing. “I can’t believe it,” he wailed. “That wretch, John Studzinski passes go again.” For the uninitiated, John Studzinski was appointed as co-head of HSBC’s investment bank in 2003. Insiders were dazzled by the rumoured munificence of his compensation package. Ten months ago, Studzinski left HSBC and joined Blackstone as a senior managing director.

Internal movements

And talking of people who pass go more than once, today is Kevan Watts’ first day back in Hong Kong. Kevan is chairman of Merrill Lynch International and was based in Hong Kong in the late 1990s. Watts, like Agius, is a vintage investment banker and should probably prance around with an unfurled umbrella emblazoned with the words: “Been there, done it. Got the t-shirt.” Mr Watts has excellent contacts in Asia. “I am quite well-known in Islamabad,” he told me modestly.


Kevan Watts, chairman of Merrill Lynch International

Kevan Watts is a vintage investment banker and should probably prance around with an unfurled umbrella emblazoned with the words: "Been there, done it. Got the t-shirt." Mr Watts has excellent contacts in Asia. "I am quite well-known in Islamabad," he told me modestly

Kevan was one of my first bosses when I worked at Merrill as a tadpole graduate trainee. And he was a good boss; always prepared to give young people a chance. Kevan has a dry, British sense of humour. I recall that I was asked to organise a celebration dinner for one of his deals – such were the tasks of a lowly associate. We were discussing the details and he wrapped up by asking: “Anything else Abigail?” “Yes,” I said proudly. “I’m going to wear my new, beige Jasper Conran suit.” Kevan replied with a smile, “Ah yes, Abigail, that is very important.”


And in fact, Kevan has an empathy with women in investment banking that, looking back, few of my other banker bosses matched. He is not part of the macho crony club who consider a female financier more dangerous than a double-headed hydra. It did not surprise me to learn that Kevan chaired Merrill’s European and Asian Diversity Committee for several years and that his wife is a successful businesswoman. I wish Kevan well in his new role and look forward to hearing more about his Asian adventures when I am next in Hong Kong.


Someone else who is moving internally is Allegra Berman. Energetic, articulate Allegra has been head of the frequent borrower desk in UBS’ fixed-income division for the last six years. A Washington source divulged: “She has a special way to build trust with clients. It is a pleasure to work with her.” From this week, Allegra will become co-head of UK corporate and public sector debt capital markets with derivatives’ wizard, Mahnaz Safa. Amusing, talented, Guy Reid moves up to become head of UBS’ frequent borrower desk. Abigail with Attitude is on Easter holiday. The next column will be released on April 12.

Please send news and views to abigail@euromoney.com.

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