Good News for Investment Bankers: Banks Looking East, Staffing Up
Barclays Capital is investing heavily in Asia and plans to boost its staff in the region as well as in the U.S. significantly, according to a Dow Jones Financial News report. The report states that Barclays Capital will focus on building its derivatives and commodities business. But Barclays is just one several banks bullish about growth prospects in Asia and looking to expand there. Dow Jones reports that Goldman Sachs, HSBC, Morgan Stanley, UBS and Merrill Lynch have all expanded their presence in Asia in an attempt to capitalize on soaring investment banking fees in the region.
Last year, investment banking revenue across Asia soared. Specifically, the North Asia fee pool increased 26%, to $3.8 billion, according to Dow Jones citing data from Dealogic. Executive search firm, A.E. Feldman says the trend is creating investment baking jobs. Opportunities exist for talent with expertise and experience in the region. Candidates with experience in the formation of venture capital and private equity funds, M&A, securities, IPOs, derivatives and U.S. tax law are in greatest demand. Law firms are also heading to the Far East in an attempt to capitalize on growth in buyout business. A.E. Feldman adds that a number of top firms are staffing their operations with transactional attorneys, including attorneys specializing in securities financings, private equity and mergers & acquisitions.
Last year, revenues from investment banking in the Asia Pacific region, excluding Japan, totaled $8.7 billion roughly 10% of the entire global fee pool, according to Dow Jones. The report quotes Robert Morrice, Chief Executive of Barclays Capital, Asia Pacific, as saying, “China, India and Korea are three countries where we see tremendous growth opportunities in 2008. Over the past five years we have seen tremendous growth in the Japanese and Australian markets, and we expect this to continue, as well as continued growth in Malaysia, Thailand and Indonesia and in new markets such as Vietnam and Pakistan.”
Barclays Chief adds that the significant increase in headcount in 2008 will include all product areas with an emphasis on further developing our client franchise, according to Dow Jones. Morrice says, “We see an opportunity to increase our BARX e-commerce footprint, particularly in foreign exchange; in equities we will continue to expand equity and fund-linked derivatives; and will expand in commodities, where we have a strategic alliance with the China Development Bank.”
The big banks are also looking eastward to offer advice on cross-border mergers, according to Bloomberg. M&A transactions in China and Hong Kong increased 38% last year, contributing to $12.6 billion of fees from Asia.
Overall, expansion in Asia is welcome news for investment bankers. Dow Jones lists a number of banks all enhancing their Asia businesses. The report says Goldman Sachs reports revenues from Asia had increased five fold since 2001, making it the bank’s fastest growing division.
Morgan Stanley also appointed Owen Thomas to head the bank’s Asian business. In a statement, Walid Chammah, Morgan Stanley’s Co- President, says, “Asia is a key growth opportunity for the Firm. We are confident that under Owen’s leadership our Asian franchise will continue to be a standout performer in the region.”
HSBC, which generates around 40% of its pre-tax profits in Asia, is also looking to build its business there, reports Dow Jones. In fact, HSBC just announced it has added four new members to its board to reinforce how Asia is critical to the bank’s strategy. The appointments will be effective as of May 1st. Sandy Flockhart and Stuart Gulliver were appointed executive directors to HSBC’s board while Infosys’s Narayana Murthy and Oracle’s Safra Catz will join as independent, non-executive directors. Each new member has expertise and experience specific to Asia. In a statement Stephen Green, HSBC Group Chairman says, “HSBC has one of the most international boards in the world and these appointments add to the breadth and depth of oversight enjoyed by our group. Asia is the heartland of HSBC’s business, so it’s not surprising that in this case international has a distinctly Asian slant.”
Additionally, Dow Jones reports that Credit Suisse, Merrill Lynch and UBS have all recently strengthened the management of their Asian investment banking and capital markets divisions. Goldman Sachs says that 17% of its new managing directors will be based in Asia, up from 8%.
