No "I" in team: End of an era for Europe's rainmakers?

LONDON Wed Apr 11, 2012 3:42pm EDT

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LONDON (Reuters) - A series of high-profile departures from major investment banks in Europe is raising the question: are these "rock star" bankers the last of a dying breed?

As financial watchdogs get tougher, rules on banks' capital requirements become stricter and the public turns against fat-cat bonuses, the so-called rainmakers seem to be out of step with the current mood even if they can bring in the big deals.

Yoel Zaoui is quitting Goldman Sachs after 24 years because he feels he has nothing more to prove at the firm and Ian Hannam has resigned from JPMorgan to contest a fine for market abuse.

Andrea Orcel is leaving Bank of America Merrill Lynch for a top job at UBS, a bank which sought him out for his client-pulling abilities but whose more egalitarian culture may come as a shock.

Such men, with their big reputations and their loyal clients, are hard to replace, but it may well be that banks are happy enough not to do so.

The next generation is likely to be far more low key, people in the industry say, reflecting the more austere climate that has followed the global financial crisis.

"I think that the whole question of the star culture in investment banking is dying out," said Brian Scott-Quinn, director of banking programs at the ICMA centre, part of Henley Business School at the University of Reading.

"I don't know if what he was doing was illegal or not. But the Financial Services Authority is right to clamp down. It is firms and brands that matter, not individual stars," Scott-Quinn said, referring to Hannam, JPMorgan's "mining king".

Orcel is a suave linguist once dubbed the "The last of the Mohicans" for his powers of survival. The keen water-skier was described by an acquaintance as a "force of nature" who thinks nothing of ringing people before dawn.

But it remains to be seen how such a challenging figure will fit in the with the more collegiate culture at UBS, bankers who have worked with the 48-year-old Italian say.

Hannam, another prolific dealmaker who has earned millions, resigned after Britain's regulator fined him 450,000 pounds ($720,000) for passing on market-sensitive information.

The colorful special forces veteran who has done deals in wild places on the frontiers of capitalism such as Afghanistan, Iraq and Africa, brought to banking the discipline, aggression and appetite for risk of the soldier.

But JPMorgan seems to have plugged the Hannam-sized hole in its mining coverage, according to bankers, who say two lieutenants are well-placed to step in the dealmaker's shoes: Adam Brett and Barry Weir.

"Hannam was the big banker, but there are enough not quite as big people below him," said one banker familiar with the mining industry, asking not to be named.

Goldman Sachs (GS.N) has generally been able to withstand high-level departures, with the strength of its brand helping to maintain its position as the world's most active adviser on corporate mergers and acquisitions.

When Simon Dingemans - the man behind Vodafone's (VOD.L) 180-billion-euro ($234 billion) acquisition of Mannesmann in 2000 - left for GlaxoSmithKline two years ago, Goldman went on to secure regular business from the mobile phone company.

MARADONA

Goldman's approach is similar to that of its arch-rival Morgan Stanley.

"Instead of having a Maradona and ten weak players, he (Morgan Stanley's global co-head of investment banking Franck Petitgas) thought that it was a better bet in the long term to have a team of 11 equally good players," said a Morgan Stanley banker, who asked not to be named.

The banker said he feared that the 2008 departure of Michael Zaoui, brother to Yoel, could have been disastrous for the firm.

"Instead nothing happened," he said.

Michael Zaoui ended his time at Morgan Stanley as head of institutional securities and was a top M&A banker responsible for several mega-mergers that created European giants like GDF-Suez (GSZ.PA).

Speculation that the two brothers would form a boutique banking business together following Yoel's departure from Goldman may be wide of the mark.

"It is telling that Michael has been on his own for the last four years since leaving Morgan Stanley," said a person who had worked with them both.

Yoel, a Moroccan-born Frenchman, developed a very public business rivalry with his brother.

In one of their most celebrated clashes in 2006, Yoel advised Mittal Steel in its hostile takeover of rival Arcelor, a deal that pitched him against Michael, who was advising Arcelor while at Morgan Stanley.

If it is not always clear what awaits a prominent rainmaker once he quits his job, employers may also be left scrambling to fill the gap if they have not prepared for a handover.

Bank of America had precious little time to ready itself for Orcel's defection, people close to the matter said, because he only told his employer he was jumping ship after the bank had informed London regulators he was to be their top man in Europe.

Christopher Kummer, affiliate professor at Grenoble Ecole de Management, said it was extremely difficult to transfer key relationships even with plenty of warning, however.

"High-calibre people are often of a very unique personality and not capable of actively contributing to their replacement," he said.

While some argue that the tide is turning against the rainmakers, the breed is not extinct just yet.

Currently, Simon Robey is seen as one of the biggest losses Morgan Stanley could face. Robey advised on Cadbury's defense against Kraft and helped UK-listed miner Rio Tinto (RIO.L) see off a $66 billion hostile bid from rival BHP Billiton (BLT.L).

"There are only a handful of people who have the power to change clients' mind over a meeting. Robey is one of them," the Morgan Stanley banker said.

(Additional reporting by Sarah White; Editing by Anna Willard and Giles Elgood)

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