Sitting in a brand new, 700-position dealing room in the City, Deutsche Bank is digesting its June acquisition of Bankers Trust. The German bank is now positioned as one of the top three global custody banks, and has adopted some key areas of strength from Bankers’ forex business.
On top, things look very much the same. From the London headquarters, Hal Herron remains the global head of FX; Dan Almeida is global head of FX trading; Joe Norena heads spot trading; Sikander Kanji runs the global forwards book; Jim Turley oversees global options; Steve Kennedy (who joined last September) runs global proprietary FX trading and Zar Amrolia heads global corporate sales. Overseas, Wayne Grigull runs sales for North America and global hedge fund sales; while Alex Barrett heads sales from Frankfurt; Peter Chen overees sales in Asia and Noboru Harada heads Japan.
Meanwhile, most of the management names from Bankers Trust have left. In London, they include global FX manager Ivan Ritossa; global FX sales manager Bradley Leek; chief dealer Paul Ehrlich; head of forwards Maria Philpott; and head of FX sales Sandra Crowl. In New York, FX trading manager David Sandelovsky and emerging markets marketing manager Susan Safarti have left, while in Singapore, FX manager Gary Lord, his deputy Henry Yeoung and sales manager Mal Thompson have also gone.
But despite what it may look like from outside, Herron says Deutsche has kept almost half of Bankers’ 149 global FX staff; although, about 15 per cent of these are said to be in custody. Deutsche has therefore added a number of new areas to its own business, building on Bankers’ strength in such key areas as custody, derivatives and proprietary trading, says Herron, as well as the strong “real money coverage” Bankers’ brings, particularly in New York. The global forex group now numbers 400.
“When undertaking an integration of this kind, it’s impossible to accommodate everyone. We tried very hard not to have a ‘them and us’ situation – everyone involved in the process had several interviews each. In some ways, acquisitions are a bit easier than mergers. We’ve made the decisions and now it’s time to move forward,” says Herron.
“Bankers had a strong institutional sales network in North America, good problem solving skills and an entrepreneurial spirit, and we’ve tried to keep these elements alive,” he adds.
A handful of Bankers managers have been named to the management team. Eileen Taylor is the new chief operating officer for FX. She was previously based in New York and Singapore, but is now located in London.
Another addition is John Finigan, who is now global head of FX operations, which covers payments and settlements. Deutsche will be rolling out Bankers’ internally developed FX PCA back office settlement system globally, starting with New York this summer.
Meanwhile, Bankers’ Ruth Lloyd was named head of the global FX custody business, and Herron adds that Deutsche took nearly all of Bankers’ FX derivatives team.
Kennedy’s global prop trading business has added 10 Bankers traders, and Herron says his goal is to derive 10 per cent of the division’s income from this area.
In Asia, Deutsche has relocated two Bankers staff from Singapore and put them in charge of operations in the Philippines and Taiwan.
Another area Deutsche has kept is Bankers’ New Zealand operation. Drew Bradford, who ran Bankers Trust New Zealand, oversees a “virtual centre”, encompassing Sydney and New Zealand. Now located in Sydney where Deutsche has an existing dealing room, Bradford runs the group with counterpart Ian Town, who now oversees the sales side of the forex business for both countries.
Deutsche’s Loss is Macquarie’s Gain
But one area that has, from the start, not been part of Deutsche’s plans, is Bankers’ Sydney-based FX division – one of the strongest in Australia. Since the announcement that Macquarie Bank would acquire the Australian investment banking activities of Bankers from Deutsche at the end of June, planning for the integration began almost immediately. The official integration is expected to take place by early August.
“Macquarie is culturally the closest fit with what we have in this part of the world,” says Luciano Febo, executive vice president and Bankers Trust’s head of FX in Sydney. “Macquarie is not as global as some of the banks we’ve been talking to, but an international player may not have seen the importance of this part of the world, and given it as large a degree as autonomy.”
Bankers Trust’s Sydney team, which numbers around 32 spot, forwards, proprietary trading and sales dealers, has long been regarded as a gem in Bankers Trust’s crown. But Deutsche made it clear early on that its acquisition plans did not include the Australian unit, citing a large degree of overlap with its existing Sydney operation. In 1996, Deutsche absorbed the activities of its corporate finance subsidiary Bain & Company. Herron, then head of the Sydney global markets division, oversaw that merger. Herron was dubbed Deutsche’s global head of FX last year, transferring to London to assume the post.
Macquarie’s team has about the same number of forex dealers as Bankers, but the FX product line comprises a wider range of instruments, including currency options, long-term FX and interest rate swaps and options.
“Although we both have large teams by the standards of this part of the world, there’s not as much overlap as we thought,” Febo adds. “Some areas – such as major currencies, proprietary, non-Australian dollar forwards and some sales sectors – will be regarded as additive.”
Macquarie’s FX team, which is run by Simon Wright, has been assured they will survive the merger, according to sources, while Bankers’ team is likely to bear the brunt of any cuts. “However,” Febo says, “In terms of getting the most bums on seats, Macquarie is the preferred suitor.”
“Macquarie is more entrepreneurial than the average bank. They are very happy to try new things when the opportunity presents itself. So really, I couldn’t ask for much more,” Febo says.
Febo’s own future has yet to be determined within the new structure, but he says that it is more important that the structure is worked out in the best light, than questions of seniority. “There will be more people than either one has now, and the range of products and services will be wider. But there will also be some fallout – it’s just a by-product of a market that’s in more of a contraction than a growth phase. You have to be realistic about what’s taking place,” he adds.
Bankers has one of the largest trading rooms in Sydney, with about 230 positions, so sources speculate the Macquarie team may relocate to the Bankers floor.