November 6, 2012 / 1:45 PM / 5 years ago

Relationships at stake as bankers leave

* Issuers worried about coverage amid departures

* Bankers try to take relationships with them

* Banks cut debt teams, but still seek mandates

By Neha D‘Silva

Nov 6 (IFR) - Could the departure of a relationship banker make a bond issuer rethink a mandate? As banks continue to streamline their coverage teams, their competitors are looking to profit from key departures.

Last week, rival bankers attempted to use the departure of a key banker from Bank of America Merrill Lynch to persuade the government of the Republic of Mongolia to reopen the bidding process for a mandate.

Just as Mongolia announced it had picked BofA Merrill Lynch, Deutsche Bank, HSBC and JP Morgan for its debut sovereign bond, BofA Merrill said that Henry Ayliffe, a managing director responsible for coverage of emerging companies, was leaving.

Rival bankers described Ayliffe as a “point man” for Mongolia, and seized on the departure to question BofA Merrill’s commitment to the country. That led to talk of persuading the government to reopen the bidding process.

People close to BofA Merrill denied that Ayliffe was the key player behind their Mongolian successes, and confirmed that the bank was fully committed to the North Asian country. One person at the bank said that other senior executives had seen Mongolian officials more often than Ayliffe, who could not be reached for comment.

BofA Merrill has certainly won an enviable book of business from Mongolia this year.

The US bank ran the books on a five-year dollar bond for Mongolian Mining Corp earlier this year, alongside ING, JP Morgan, Standard Bank and Standard Chartered. It was also one of two bookrunners on Trade and Development Bank of Mongolia’s three-year deal in September, with ING.

Mongolian Resources not too long ago announced it had picked BofA Merrill, HSBC and ING for a dollar bond, before the government also included the US bank in its revived plans for a US dollar sovereign debut.


Lately, borrowers have become more cautious about handing out mandates amid sellside lay-offs, on concerns that the quality of execution could suffer if their primary contact should suddenly be let go.

“Bankers usually give us feedback if their company is going through a massive downsizing, but we haven’t got this kind of feedback from anybody else besides UBS - they told us they were still committed to DCM and to our market in particular,” said a funding official at a South Korean issuer. However, he noted: “If we see that issue surface and bankers we work with getting laid off, it is a serious concern and it will affect our mandate decision,” he added.

UBS has said it will cut as many as 10,000 jobs over three years, mainly in fixed-income trading. But the bank is not alone, and Asian bankers said that there have been piecemeal lay-offs at several shops this year.

Personnel issues also work the other way around - as bankers working with Mongolia have found in the past. A sovereign bond has been in the works for a long time, and Citigroup and ING had picked up a formal mandate in September 2006 with a US$300m-$500m deal at either five, seven or 10-year tenors under discussion.

Bank of Mongolia governor Ochirbat Chuluunbat, however, was replaced in late 2006, and Mongolia’s Ministry of Finance took over the responsibility for issuing offshore debt. That event voided the original mandate.

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