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Morning Coffee: Andrea Orcel says 25% of M&A bankers won’t make it. The man who declined Steve Schwarzman’s can’t-refuse job offer

Deutsche Bank, UBS, Andrea Orcel, Blackstone, GIP, PE, IBD, IB, investment banking

Andrea Orcel, the president of the investment banking division at UBS, said that one in every four M&A advisory investment bankers doesn’t work out and that he prefers to hire them through word-of-mouth referrals.

“It’s not about the next quarter. It is about the next five to 10 years. It is by hiring 20, 30, 40 of the right bankers each year. When you hire that number, normally 25% don’t work out; the other ones do,” he said.

“You need to attract the right people, give them time to embed with the culture and the place, give them time with the client to get them to agree they can deliver for them, and then get them to deliver. That takes time. It’s not something you can do by saying ‘I’m hiring 300 people.’ It’s one at a time. It is slow but critical, because it impacts so many of the other businesses,” he added

In 4Q 2016, UBS cut 4% of headcount – 193 people – from the IBD, but Orcel is now looking to add between 20 and 40 bankers annually, according to Business Insider.

Orcel said that UBS has been improving its position in equities, claiming to “have more distribution than anyone else” and achieving similar success in research.

“As you rebuild your talent, and you spend the time with the clients, you build market share,” he said. “The US is a credit market, and we’re doing well in credit, but in terms of weight, it’s very small. We can increase, but it’s not by much.”

Separately, who turns down a lucrative job offer from Steve Schwarzman? The former head of General Electric’s infrastructure business, Bill Woodburn, that’s who.

Impressed by the soft-sell recruitment approach of two former Credit Suisse bankers – the three talked about raising kids and collecting classic cars over dinner – the self-proclaimed “square-headed engineer” decided to decline the Blackstone offer, according to Bloomberg.

Instead, he became co-founder of private equity firm Global Infrastructure Partners with those two ex-CS bankers, Adebayo Ogunlesi and Matt Harris. Despite the fact that none of the three had any prior PE experience, he has not lived to regret that decision.

GIP’s returns are in the top quartile of private equity funds – for example, GIP II has delivered an average annual return of 24.2%. Even though competition in the infrastructure space is ramping up – with PE giants such as KKR, Blackstone and Brookfield Asset Management stepping into the fray – the co-founders have done well for themselves and appear to be on an upward trajectory.

Meanwhile:

The CEO of former Barclays boss Bob Diamond’s African bank is leaving as the group cuts costs in the face of lower profits. (Financial News)

A woman took an unintended, prolonged absence from J.P. Morgan, then restarted her career at BAML via a ‘return to work’ program. (Financial News)

Even though Deutsche Bank has been hit by scandal after scandal, President Donald Trump – who owes the German bank around $300m – is currently its biggest headache. (The Guardian)

Trump is considering naming a former OneWest Bank executive – a lieutenant of Treasury Secretary Steven Mnuchin – Comptroller of the Currency, a key federal banking watchdog role. (WSJ)

Trump said Stephen Feinberg, the CEO of Cerberus Capital Management, had offered to review the structure of U.S. intelligence agencies but that he hopes the private equity billionaire’s services will not be needed. (Reuters)

Feinberg sparked controversy when he gave money to a congressman who saved a Navy contract benefiting Cerberus and when he lobbied for a government bailout for an auto lender that his firm owned. (Bloomberg)

Hedge fund managers’ latest headache? Students demanding that their school’s endowment divest all hedge fund investments because of their high fees and lackluster recent performance. (Bloomberg)

In her new book, Black Edge, Sheelah Kolhatkar recounts Steve Cohen’s quick ascension in the world of Wall Street and how he accumulated a $13bn fortune. (Forbes)

What if British politicians turn the immigration tap back on post-Brexit but no water comes out? (Independent)

The most engaged workers spend either three or four days working from home, and they are happier and more productive than those who spend all five days in the office and those who work remotely all the time. (Washington Post)

Photo credit: zoranm/GettyImages

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