Things are not going so great over at Portuguese bank Espírito Santo. Yesterday, shares were suspended after falling 19% due to 'ongoing material difficulties' at the parent company. There have been 'accounting irregularities,' at the bank's ultimate (unlisted) parent, Espírito Santo International, which has been selling short term debt to its banking subsidiaries in a deeply complicated house-of-cards-type structure. Banco Espírito Santo insists it's all fine. Maybe it is, but it feels a bit 2008.
Is now, therefore, the best moment to be joining Espírito Santo’s investment bank? We're only asking because Espírito Santo’s investment bank is hiring. A spokeswoman tells us the Portuguese entity is in "hiring mode," that it's "hiring across the board" and has appointed new people only recently.
Those new people are Graham Jones and Damian McNeela, two top rated consumer goods analysts from Panmure Gordon. In the past few months, Espírito Santo has also scooped up Owen Jones, a financials analyst from Shore Capital, John Whitcher, an equity salesman who's seemingly been working in Singapore, and Rodrigo Franca, a senior trader who formerly worked for an Espírito Santo subsidiary, Avistar SGPS.
New hires follow the departure of 12 corporate brokers from Espírito Santo for Liberum in July 2013. They also follow several years of bullish statements from Espírito Santo's investment bank in London. In 2010, it acquired Execution Noble, a stockbroker turned investment bank. In 2011, it hired ex-Lehman banker Anthony Fry from Evercore to lead a push into the UK. Fry planned to hire mid-market M&A and ECM bankers for Espírito Santo in London. However, there hasn't been much sign of a big build-out. The Financial Conduct Authority (FCA) register shows that Banco Espírito Santo itself employs only five registered people in London. As of June 2014 Execution Noble employed 86 - down from a peak of 120 in April 2010, and down from 107 when Fry joined in March 2011.
If you join Espírito Santo's investment bank in London today, you'll find people like Richard Few, a former UBS US equities trader who joined in February 2013, or Gavin French, who came from RBC Capital Markets in 2013. In recent years, Espírito has also come to the rescue of various bankers stranded at outfits like Religare and MF Global.
Is it safe to join Espírito Santo's investment bank in the current circumstances? The spokeswoman insists it is. The troubled holding company only owns 25% of the investment bank, "so the problems are a long way away. There aren't really any implications," she says.
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