A smattering of hires and a whiff of scandal rounded off a mixed year for financial services and investment banking jobs as the top two executives at Fannie Mae were ousted after the government-backed mortgage giant was found guilty of violating accounting rules by the SEC. We look back at the year that was 2004.
Last week, Fannie Mae's Franklin Raines, the 55-year-old chairman and chief executive, said in a statement he would retire. Timothy Howard, vice chairman and chief financial officer, has resigned. Daniel Mudd, formerly vice chairman and chief operating officer has been appointed as interim chief executive and Robert Levin, who previously served as an executive vice president, takes over as interim chief financial officer.
Fannie Mae is still under investigation by the Securities and Exchange Commission. The Department of Justice is conducting a criminal investigation.
Other yuletide moves
On the plus side, Credit Suisse First Boston, which announced a wholesale restructuring across its business groups two weeks ago, named 142 new managing directors, 78 of them in the Americas, 45 in Europe and 19 in Asia.
CSFB promoted Jonathan Baliff, an advisor in the global energy group, and Roger Reynolds, a research analyst covering utilities. Other appointments include Manny Santayana, responsible for algorithmic trading strategies; Rod Dubitsky, an ABS/real estate fixed income analyst; Tim Opler, in healthcare banking; Sean Grady, in equity derivatives; Matthew Tuck, in par loan sales/sourcing; Alex Dubitsky, in the emerging market structured insurance group; and Amy Grossman, in client advisory in San Francisco.
In other moves, BrownCo, JP Morgan Invest's online brokerage, named Richard Hart as vice president and director of operations. He was formerly with Penson Financial Services in Dallas, Texas.
Harris Nesbitt, the U.S. investment banking arm of BMO Financial Group, hired James Love as a managing director in its healthcare group where he will be responsible for strengthening the firm's advisory practice. Love was previously with MTS Health Partners in New York.
The year in review
Looking back over 2004, the best you could say about it is that it was better than 2003. Relatively hot sectors included asset management and hedge funds, which saw a good level of hiring throughout the year and salaries up 15-20%. Compliance, too, received a boost as firms sought to tighten up procedures in the wake of various scandals and investigations.
European banks were among the biggest hirers throughout the year, led by Barclays Capital, BNP Paribas and Deutsche Bank - although other European institutions, including Dresdner Kleinwort Wasserstein, Commerzbank, ABN Amro and Credit Suisse Group retrenched at year end in Europe, with some cary over in U.S. hiring.
HSBC was also in hiring mode, starting the year by growing its U.S. debt finance operations and continuing with a move into mortgage-backed securities in the summer.
Equities, meanwhile, were not so hot. The year started with Goldman Sachs and Merrill Lynch laying off 50 and 20 equities staff, respectively. As 2004 wound on there was some hiring here and there, but the recovery was modest.
It was a good year for... asset management jobs
The fund management sector experienced the best employment market for five years, according to recruitment firm Russell Reynolds.
Particularly buoyant areas included portfolio management in European and emerging market debt and fixed income hedge funds as well as alternative investments. The hot product for 2004 was structured credit, with some international organisations leveraging their experience in the U.S. market as a way to jump start their fixed income business.
The New York Stock Exchange added more than 60 people to its compliance department over the course of the year in a bid to convince the Securities and Exchange Commission that self-regulation can work. Governance was also a hot area in both asset management and investment banking - and can be expected to be strong in the insurance sector next year, following investigations by New York State Attorney General Elliot Spitzer.
...women on Wall Street
Women on Wall Street won a further class action victory in 2004, this time against Morgan Stanley. In July, the bank announced it would pay out $54 million in settlement of a sex discrimination lawsuit filed on behalf of a number of women in the firm's institutional equity division. The lawsuit alleged a pattern of sex discrimination, including men-only outings to strip-clubs with clients, unequal pay and promotions, groping, and lewd comments.
The former female employees will have the opportunity to make claims to a $40 million fund, adjudicated by a so-called Special Master; at least $2 million was provided for diversity and anti-discrimination programs at the bank.
Meanwhile, two women were promoted to the very highest echelons of Wall Street. Sallie Krawcheck was made chief financial officer and head of strategy at Citigroup in October. A month later, Suzanne Nora Johnson was promoted to vice chairman of Goldman Sachs. Johnson retains her positions as head of Goldman Sachs' global investment research division and chair of the firm's global markets institute.
...European banks on Wall Street
Several European-owned institutions spent this year beefing up their U.S. presence. Barclays Capital announced a global hiring spree that would see numbers boosted by 3,000 over by 2007, many of them in the U.S. Among other areas, it added teams in mortgage-backed securities, global credit derivatives and emerging markets in the U.S.
French-owned BNP Paribas and Germany's Deutsche Bank were rarely out of the hiring news in the second half of the year.
The dealer-broker announced plans to add 200 staff and a new Manhattan headquarters. Some of the staff will be in its new asset management division. The firm lost 638 in the World Trade Center on 9/11.
2004 was a bad year for... CSFB
Team defections and senior level walkouts became the order of the day at CSFB in the second half of the year. Chief executive John Mack was outsted from the top position at the investment bank in June, after three years in the job. He turned up a few months later as a non- executive director at private equity group Kohlberg Kravis Roberts. Mack was succeeded as chief executive by Brady Dougan, who has inititated a painful restructuring process involving up to 300 redundancies worldwide.
Omar Bayoumi, the German-owned bank's top U.S. banker left in October amid a wave of senior departures worldwide.
The UK-listed, global search firm with a strong finance presence had a disastrous year, not helped by the departure of its top team of financial recruiters in New York in October. Takeover talks with rivals Korn/Ferry International and Heidrick & Struggles collapsed as the year came to an end with the group's share price tumbling and losses reaching $17 million.
...Charles Schwab Corporation
David Pottruck was removed as chief executive of the online broker in July after clients pulled $6 billion worth of business. Thereafter, Schwab Soundview Capital Markets seemed to lose staff to rivals on an almost weekly basis.
...Marsh & McLennan
The insurance group lost most of its top executives in the last two months of the year, after coming under investigation by Elliot Spitzer for price rigging. Those who fell under the axe: Jeffrey Greenberg, chairman & chief executive; Roger E. Egan, president and chief operating officer of Marsh Inc., the group's risk and insurance services subsidiary; and Christopher M. Treanor, Marsh Inc.'s chairman and chief executive officer of global .
And finally, the prize for the year's most unusual job move goes to...
Jeffrey Vonderback, head of global risk management at Lehman Brothers, who left investment banking in March to become owner-chairman of the New Jersey Devils ice hockey team.
Runner-up is Mark Gagen, veteran boss of venture capital firm 3i in the U.S. He left after 20 years to take a Masters in Philosophy at Stanford.