In 2014, in what would be the first of many rounds of job cuts in its investment bank, Barclays said that it had earmarked 20% of its managing directors and directors for the chop. Peter De Clercq, who was a managing director and country head for Belgium and Luxembourg at the time, was hit. Redundancy turned out to be a blessing in disguise.
“If I’d stayed in investment banking, I’d never have started my own company,” he says. “It’s a golden cage – a lot of people are frustrated, businesses are scaling down and it’s less fun. But, you can still make a good living, and this is better than a leap into the great unknown.”
For the past three years, De Clercq has quietly been heading up a fintech firm called Quantessence, which is looking to disrupt a niche, but massive, part of the financial sector. It had been running under its own steam, but in May this year Euroclear, the Belgium-based post-trade firm that settles €675 trillion ($808 trillion) annually, bought control of the company.
“I didn’t have much choice about leaving Barclays, but once out I decided I’d really go for it setting up this company,” says De Clercq. “I didn’t want it to be something on the side. If I made it, great – but if it didn't work, I'd end up sleeping under a bridge.”
The idea behind the firm is to provide a solution to the operational headache for investment banks and insurance firms that results from the individualisation of Constant Proportion Portfolio Insurance (iCPPI). iCCPI has been gaining traction within the insurance industry in recent years. It allows people to ensure a balanced portfolio for their savings by using an algorithm to reallocate investments depending on their performance. Insurance firms protect some of this for investors, but investment banks usually ensure that it’s fully hedged in exchange for a fee.
“It’s really an insurance tool, and it’s highly individualised which means it can operationally complex,” he says. “But it’s a problem for all banks – they hate doing operations and this is very burdensome for them. Our platform automates this process.”
De Clercq was responsible for Barclays’ biggest iCPPI project during his time there as well as heading up its Belgium and Luxembourg investment banking business from London. Quantessence has just seven employees including Giles Beale, a former director in EFS trading at Barclays who is its chief operating officer and Wim Hautekiet, latterly a J.P. Morgan managing director, who is a non-executive director.
De Clercq says it’s hiring for sales and business analysts, but is struggling to find the right people.
“We’ve found it hard to recruit – not for a lack of applicants. We had over 250 people apply for a recent role, but we want a mix of commercial awareness and quant skills,” he says. “We have four open roles, but we’re looking for around five years’ experience within financial services.”
After nearly 30 years in investment banking, at Barclays, Goldman Sachs and J.P. Morgan, De Clercq has now embraced the start-up lifestyle. He says that the recruitment of Nikolaos Papadopoulos, its chief strategy officer, began with a recommendation from a former colleague who said that he was “the best brain in systems architecture”.
“He was developing a platform for the real estate sector in Australia, but dropped everything to move to London, and crashed at my place for months while we hashed out the idea,” says De Clercq.
Quantessence has essentially been in stealth mode for the best part of three years, but had been negotiating the deal with Euroclear since the outset. Throughout this time, De Clercq has been keeping the business afloat with his own money. Insurance firms were interested in the concept “from the start”, he says, but it’s only since June – after the Euroclear deal was finalised – that they’ve approached big investment banks and asset managers.
“The biggest challenge was funding and finding a sponsor,” he says. “We funded it ourselves, and were very keen to avoid VC investment. We were in discussions for a long time with Euroclear – they’re risk-averse and investing in a fintech firm was a challenge for them. In the meantime, it was hard to move forward and play the waiting game.”
De Clercq says that the challenge for a lot of bankers who are seeking to leave the comfort of a large investment bank is breaking the deal mentality. “A lot of bankers who leave big firms are still going from deal to deal. For example, some people are sourcing assets from an insurance company, then selling them to hedge funds. For me, this is too nerve-wracking. I wanted to set up a sustainable business – if I fall under a bus now, the business keeps going.”
Contact for news, tips and comments: email@example.com
Image: Getty Images