Wachovia kicks off European push

The new chief executive of Wachovia's corporate and investment banking arm in Europe is under no illusions about the size of the task facing him.

Hiring Atul Bajpai was a statement of intent about the US financial services group's ambitions as it seeks to develop its wholesale banking business abroad. Rivals say the bank faces a struggle to build its European business in a crowded market.

Bajpai, who joined Wachovia this month from Dresdner Kleinwort Wasserstein, is adamant the group can develop a successful operation in the region despite the intense competition. However, he said: "We are not going to try and be everything to everyone. We will pick certain areas to target and will aim to make money from those."

Bajpai has made his first hires at Wachovia, bringing in former DrKW colleague Tom Burke as head of European principal finance and Lee Rochford from Credit Suisse as a managing director in Burke's team.

He said Wachovia would add staff to its European business through a combination of external recruitment and internal moves in the coming weeks, but stressed the group would not recruit swathes of people.

He said: "We have capital and a balance sheet behind us and we will use it but without going overboard. We will focus on being innovative and working for clients in particular asset classes."

Those classes included principal finance and real estate, said Bajpai. Wachovia has five real estate offices in Germany alongside its UK operation and Bajpai said it would expand its principal finance operation in Germany after developing a presence in the country. The business would provide loans and look to securitise those in the debt markets.

Bajpai said the bank would remain on the lookout for opportunities in other European markets. He said: "Our main priority is to develop a balanced corporate and investment banking platform in Europe.

"Some sectors offer better growth potential than others and we aim to grow those in line with our European strategy."

Wachovia's European push is based on its reputation in the main markets of the US, where it is a big player in the commercial mortgage-backed securities and in collateralised debt obligation sectors.

Bajpai said: "In the CDO market, our focus in Europe until now has been on distributing products we have originated in the US. That will change and we are starting to target asset managers in Europe."

Wachovia is thought to have won at least two mandates from European asset managers since starting its push.

Another target market is infrastructure, although Wachovia is keeping its options open in that area, one which has boomed this year as appetite for infrastructure assets has surged among banks and private equity firms and investors have poured billions of dollars into the sector.

Bajpai said: "Infrastructure finance will be a huge market in the next few years and we definitely want to play in that area. It is hard to say but we will be there."

Wachovia is planning to look at the leveraged finance and commodity sectors by early next year and will expand in rates trading, foreign exchange, structured notes and equity derivatives.

Wachovia has not set specific growth goals for its European business but the bank will target a few areas and carve out a niche in those before growing further.

Bajpai said Wachovia would not over invest. "There is no floor or ceiling to the amount of capital at our disposal but we will only deploy that capital when it makes sense. We will not embark on a huge hiring spree and we will take care not to spread ourselves too thinly across Europe by trying to cover every market in every country."

Quality, rather than quantity, is the watchword for Wachovia when it comes to hiring and choosing in which markets to compete.

Curtis Arledge, global head of fixed income in the US, said when the bank hired Bajpai: "Any hires will be made according to the demands of the bank and its clients and we are focused on being profitable in Europe."