HONG KONG (Dow Jones)--Investment banks are shipping some of their best talent to Asia, following the money as deals are drying up elsewhere, to bulk up their business in a booming region.
In recent months, global financial institutions from to Morgan Stanley and JPMorgan Chase & Co. to Deutsche Bank AG have transplanted heavyweight rainmakers to Asia, giving rise to talk within the industry that nowadays "it's Shanghai, Dubai, Mumbai or goodbye."
The moves are taking place as Asian markets and deals take up greater prominence within global banks, as well as on the world stage. Even as stockmarkets slump in the region, the alluring growth prospects out of China and India continue to draw business.
Asia, excluding Japan, already accounts for more than 15% of revenues for many investment banks, compared with just 5% or so five years ago while mergers and acquisitions from Asia ex-Japan make up for 18% of global M&A, according to Thomson Financial. Asia has also taken a smaller hit by the fallout of the U.S. subprime mortgage crisis. So far this year, M&A activity involving Asian firms has dropped 1%, compared with a 27% drop worldwide, Thomson data show.
"Colleagues from overseas are increasingly interested in transferring to the region," said Robert Morse, Asia Pacific chief executive officer for Citigroup Inc.'s Institutional Clients Group.
"They want to play an active part advising our clients on some of these industry-defining transactions that are increasingly coming out of Asia," he added. "The Asia Pacific region offers opportunities for investment bankers that were simply not available just a few years ago."
In addition to prominent heavyweights, who as one banker put it "would be wasted sitting on their hands in New York," institutions are also shuffling management-level professionals to Asia. Whereas a move to Asia was once considered a hardship posting, times have changed.
Goldman Sachs will soon move a number of senior staff in to key regional roles in Hong Kong and Singapore, according to people familiar with the situation.
Last week, Morgan Stanley transferred star mergers-and-acquisitions banker Scott Matlock to Hong Kong from London to fill a newly-created role as chairman of Asian M&A. The bank also recently tapped its global asset management head Owen Thomas to become its Asia chief executive.
JP Morgan transplanted 22-year New York veteran banker Winthrop Watson to Hong Kong a few months ago, also in a newly created role as head of Asia-Pacific High Grade Debt Capital Markets; and Credit Suisse Group (CS) appointed European structured derivatives sales head Osama Abbasi to head the newly created position of global securities for non-Japan Asia from Hong Kong.
"With the downturn in the West, we have the opportunity to bring out good people to build up our Asian business, and often, we create new titles for them," said one person at a U.S. investment house. "Increasingly, many bankers in the U.S. and Europe feel that Asian experience would be good for their career path."
In some cases, banks have even started basing their global heads in the region. Last year, Barclays Capital moved Ivan Ritossa, its global head of foreign exchange, from the U.K. to Singapore, while Citigroup recently relocated Ted Kuh, to Hong Kong from London to head the Asian consumer group while keeping his title as co-head of global retail. Also retaining his global title, Deutsche Bank's global equity trading head Noreddine Sebti has moved to Hong Kong from New York to head Asian equities.
"Relocating a global head to Asia ensures our center of risk management is aligned accordingly, while recognizing the changing polarity of global equity markets and the growing importance of the region," Deutsche Bank's Global Head of Equities Yassine Bouhara explained.
The defection to the region comes as bankers with Asian experience take on greater prominence within their firms. Last year, Credit Suisse's Asia-Pacific head, Paul Calello, was put at the helm of the bank's overall investment banking unit. Similarly, Goldman Sachs Asia Chairman Michael Evans was recently made global vice chairman.
Banks' private equity clients have also gotten in on the act, eager to make use of their big-ticket professionals at a time when deals in the West are hard to come by.
"A year ago, we went to auctions in Asia and only saw junior private equity players - now we're seeing the big guys from the U.S. or London here," said a Hong Kong-based partner at a U.S. private equity firm.
Savills PLC, a real estate brokerage which works with major banks to relocate employees, noted that some corporate clients had as many as 100 to 130 moves to Hong Kong last year alone, about 30% more from 2006.
Growing Prominence
Many investment banks posted record revenues out of Asia last year even as their U.S. operations suffered.
"The rise of Asian global champions in recent years has underpinned record levels for M&A and capital markets activity in Asia Pacific - in 2007 the world's largest announced M&A transaction and two of the five largest IPOs globally were from the Asia Pacific region," said Citigroup's Morse.
The region's companies have continued to make a splash this year. Excluding Visa Inc.'s US$19.7 billion initial public offering, this year's largest IPOs have all come from emerging markets with China Railway Construction's US$5.71 billion IPO and India's Reliance Power Ltd.'s US$2.92 billion offering being the second and third largest respectively.
On the mergers and acquisitions front, Chinese commodities companies and India's Tata Group keep bankers busy with their overseas buying spree.
Even star investors and not just bankers are feeling the need to relocate. Despite the recent market volatility in Asia, hedge fund guru Jim Rogers, cofounder of George Soros' famed Quantum Fund, is joining the rush, leaving New York for Singapore. The U.S. has more trouble ahead, he said in Hong Kong earlier this week, adding that he's selling all his U.S. dollar holdings. He's already put his 108-year old Manhattan mansion on the market and hired a Chinese nanny for his four-year-old daughter.
"To sell China in 2008 would be like selling America in 1908. You'd miss a huge move," he said in Hong Kong earlier this week.
-By Nisha Gopalan and Ellen Sheng, Dow Jones Newswires; 852-2832-2343;
nisha.gopalan@dowjones.com;
ellen.sheng@dowjones.com
(END) Dow Jones Newswires
April 11, 2008 04:32 ET (08:32 GMT)
Copyright (c) 2008 Dow Jones & Company, Inc.
