Citigroup office opening intensifies battle for staff

Citigroup's decision to open an investment banking office in Stockholm has highlighted the war for talent among banks in the Nordic region.

The bank announced its move last month with the hire of Mats Bremberg, head of investment banking at Carnegie in Stockholm, who will join as a managing director in September.

Citigroup's decision to open an investment banking office in Stockholm has highlighted the war for talent among banks in the Nordic region. The bank announced its move last month with the hire of Mats Bremberg, head of investment banking at Carnegie in Stockholm, who will join as a managing director in September.

It follows decisions by US rivals Morgan Stanley and Goldman Sachs to open offices in the region to capitalise on the boom in mergers and acquisitions.

With local banks struggling to hold on to their most talented bankers in the face of competition from the global bulge bracket and regional boutiques, many are looking to attract Scandinavian nationals back from London. Thomas Westin, director of corporate finance at Nordea, said: "Retaining good quality staff with three to five years' experience has become a real challenge for us. We've just recruited one Swede from JP Morgan in London and we are talking to another at a big bank. There are positions here because people are breaking out into boutiques, which are reasonably successful in the boom times, although we believe this will change when markets get tougher."

Michael Cunningham, head of Nordic region at Citigroup, played down the threat his bank posed to the local institutions. "We see what we are doing as complementary to local banks; our main competition is from larger international banks. It's a strong and exciting market to be in, which is why we want to increase our investment in the region."

He said the bank aimed to hire six staff in Stockholm this year in mergers and acquisitions and equity capital markets.

Westin said competition had been tough for the past decade and Nordic banks had looked closely at how to glean better returns from corporate finance, which previously provided a small part of their profits.

The conclusion, adopted by Handelsbanken, SEB and Nordea, has been to reorganise banking as a one-stop-shop. In 2004, Nordea outsourced its research to Standard & Poor's and closed its 30-strong equity research department. Westin said: "We are an important part of the cross selling of financial packaging in terms of debt sales and cash management. The big question is whether this model will win against the more boutique-driven model retained by Carnegie, which remains solely advisory."

Nordea closed its operations in London and New York in 2002, but industry observers said it might be tempted to try its luck overseas again. The lack of an equities desk in London is considered a big handicap and the idea of reopening has been raised internally. Westin said: "It makes sense to have a presence in London on the equities side but we have to make ourselves as strong as possible in Sweden first."

Magnus Carlsson, executive vice-president and head of SEB Merchant Banking, is bullish about the prospects for an integrated bank model after finalising last month the merger of Enskilda Securities, its autonomous corporate finance, equity finance and cash-trading business. "Corporate clients want to have a one-stop-shop where one organisation can service many parts. You need a greater revenue base to invest in product development."

Unlike Nordea, SEB has maintained a strong overseas presence in London, from where it runs shipping finance, leveraged finance and equity capital markets. "We have a lot of non-Swedes in London because it is good to have a foothold in a place where there is a long-established capital market. There are a lot of people that we couldn't hire if they had to work in Stockholm," said Carlsson.

He believes it is important to do non-Nordic business to maintain a prominent position in the local market, where overseas banks are increasingly active.

He said: "Margins on all products have been squeezed. I don't think the competitor landscape is tougher now - if anything, the number of local banks has declined. There is competition in corporate banking from the German and Dutch banks and from the likes of Royal Bank of Scotland and HSBC.

Swedish industrial companies have become so powerful that they have forced us to up our game, but competition has also made them attractive to overseas firms."

Following the Enskilda merger, he said SEB would be looking to bolster its presence in the region beyond Stockholm."The logic behind our hiring is to be stronger in other Nordic markets outside Sweden. We won't buy another bank but we will deepen the areas where we are active," he said.