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Opinion

The gen on SGCIB; conjugated co-heads; Abigail’s apposite awards

While writing this column I have met many interesting people. I have also met many delightful people. However, I have not met anyone more delightful and interesting than Jean-Pierre Mustier, the chief executive officer of Société Générale’s corporate and investment bank.

It was a sultry Friday afternoon. I had returned at lunchtime in listless mood from the ICMA conference in Berlin. The last thing I wanted to do was interview an opinionated investment banker. My garden and a glass of wine were beckoning invitingly.

But when a chief executive offers you time, it is unwise and unseemly to cancel on a whim. So I trudged in to the cauldron of the London tube, arriving in cantankerous mood at Société Générale’s London headquarters. Jean-Pierre bounced in to the drab room and I found myself saying: “Meeting you is the highlight of my day.” Jean-Pierre chuckled and replied: “Likewise.”

Jean-Pierre is revered in the industry for building a superb equity derivatives’ business for Soc Gen. From his stellar reputation, I assumed he would be old and grey. In fact, he is youthful (46) and light. Mustier has been with the French bank for over 20 years. He has none of the overweening arrogance often exhibited by successful bankers. I asked Jean-Pierre why he had never left the bank to set up his own hedge fund – a career path that could have been more lucrative. “Abigail,” he remonstrated, “I earn enough money. And my chairman [Daniel Bouton] has always been good enough to give me new challenges.”

Jean-Pierre Mustier, SG

Jean-Pierre Mustier bounced into the drab room and I found myself saying: "Meeting you is the highlight of my day." Jean-Pierre chuckled and replied: "Likewise"

In 2001, Société Générale’s investment bank decided to broaden the equity franchise to fixed income. And through focus, they have achieved results. They are now a market leader in derivatives, structured finance and euro capital markets. So far this year, Société Générale is ranked number three for all euro-denominated international bonds – my congratulations to the charming and energetic Olivier Khayat, global head of capital raising. Nevertheless, in the first quarter of this year, the investment bank’s revenues from equities were still more than the revenues from the other two areas combined, (fixed income, currencies and commodities, and financing and advisory). The investment bank’s net income for the first quarter 2007 was €666 million, roughly half the bank’s total net income. And the division had a 50% post-tax return on equity. Not bad for an outfit that doesn’t show up on most people’s radar screens.

Can Mustier create more value from his division? He is positive, citing potential growth from global capital markets, the role of Europe as the sweet spot for financial markets and risk management developments that lessen reliance on balance sheet. So far, the rise of Société Générale’s investment bank has been characterised by low staff turnover, lack of ego and plenty of French management. When I accused SG of being too gallic, Jean-Pierre highlighted efforts to bring in other nationalities at a junior level and train them. Fine, but I would still advocate recruitment of non-French at a senior level. Fresh blood brings fresh ideas. I think it would be great fun to work at Société Générale’s investment bank. Don’t forget that Société Générale won Euromoney’s 2006 award for global best bank.

Marriage dance

The dance for partners in the European banking quadrille swirls on. Press reports of a possible marriage between BNP Paribas and Société Générale should not surprise. What is startling is that Bouton’s smaller bank is talked of as the aggressor, vanquishing BNP Paribas’ two Ps (Baudouin Prot, chief executive and Michel Pebereau, chairman). Société Générale will probably merge or be munched in the next few years. Of course, we’ve all been predicting the demise of European banks for at least a decade. Yet the likes of Commerzbank, ING and Société Générale still stand tall and independent. ABN will fall, but as one investment banking chief snorted disapprovingly: “The battle for ABN is a complete management distraction.” Sometimes small is best. The chief executives of Citi and HSBC might agree with this sentiment as they struggle to control their unruly empires.

Conceptual co-heads

Does the concept of co-heads work? Or is it the banking equivalent of a gladiatorial contest? Rumours reach me that Tom and Michael each have their own camp at Citi, Grant and Jerry at Barclays are far from bosom-buddies, while Anshu and Michael at Deutsche display a grudging mutual respect. We all know Studs and Stew (HSBC) never saw eye to eye. So where does that leave Ahmass Fakahany and Greg Fleming, Merrill’s two Fs, who were recently elevated to co-presidents of the firm? They have worked together closely on Merrill’s executive committee for some years, but that closeness could come under pressure as they define their roles: at the moment, they plan to share the business of running the bank. Stan O’Neal will have more time to work on the bank’s strategy without having to worry about time-consuming irritants such as bankers moaning about their compensation.

Quigley's role

Can it be true that legendary human dynamo Jimmy Quigley has resigned as chairman of Merrill Lynch debt capital markets? A source sniffed: “That was an unofficial role. Jimmy is president of Merrill Lynch International and head of Latin America global markets and investment banking.” Quigley started at Merrill in the 1980s on the debt syndicate desk. He has awesome client relationships and I suspect spends more nights on a plane than in his own bed. Some were surprised that they didn’t see Jimmy’s name in the May memo from Fakahany and Fleming announcing Merrill’s new structure. Merrill insists the new world order is about flatter management. Dissenters growl that flat equals flakey. There do seem to be a lot of names on the list. I’m also not sure about two executive committees – GMI ExCo and GPC ExCo. I do hope the affianced Fs will not be continually interned in internal meetings.

The winner in all this – apart from F ‘n’ F – would appear to be gorgeous Andrea Orcel who is now sole head of global origination. “Abigail,” a mole grumbles. “You always refer to Andrea’s physique, which is so demeaning. The guy is the best European financial institutions banker in the market.” I retorted: “Welcome to my world. Women have been valued by pulchritude rather than cerebrum for centuries.” But Mole carried on, his voice rising to a high-pitched wail: “And now your nonsense has been picked up by another publication.” He was referring to a recent copy of the Financial News that claimed that Orcel bears an uncanny resemblance to handsome hunk Cary Grant. You read it first in the Abigail with attitude column.

Apposite awards

And talking of Abigail’s influence, Amir Hoveyda was promoted by Andrea last week to run global financial institutions origination. Previously, Amir was head of Merrill’s EMEA debt capital markets group. In my 2006 Christmas awards, I dubbed him “The one to watch”. Please pay attention to my awards in future.

Next week: vituperative charlatan or vigorous cheerleader? I revisit vice-chairmen. Please send news and views to abigail@euromoney.com

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