eFC Briefing: Lehman Shakeup Continues

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Lehman Brothers ousted its international banking and global fixed-income division chiefs, and announced a $3.9 billion quarterly loss and another mass layoff. Merrill Lynch, RBS Greenwich Capital and Wachovia joined the lengthening list of institutions hiring recent Bear Stearns alumni for senior roles. JPMorgan ceased dealing in municipal interest-rate swaps.

Lehman Brothers replaced the heads of its international and fixed-income businesses, as the firm struggles to raise capital and announced Wednesday a $3.9 billion third-quarter loss and its fourth mass layoff of 2008. Lehman named Riccardo Banchetti and Christian Meissner as co-chief executives of Europe and the Middle East. Banchetti was the bank's chief executive in Italy and Meissner was head of investment banking in Europe and the Middle East. They replace Jeremy M. Isaacs, who served as chief executive for Europe, the Middle East and Asia-Pacific since 2000. Isaacs is giving up his executive responsibilities and will retire from the firm at year-end. Benoit Savoret, chief operating officer of Europe and the Middle East since May 2007, also is leaving the bank.

Lehman also named Eric Felder and Hyung Soon Lee as global co-heads of fixed income. They replace Andrew Morton, who is leaving Lehman just six months after being named head of fixed income. Felder was head of global credit products and municipal finance. Lee was head of capital markets, Asia-Pacific.

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JPMorgan is exiting the municipal swaps business and closing nine of 19 regional offices devoted to tax-exempt capital markets, according to media reports. The office consolidation "will affect about 15 people, most of whom will be given the option to relocate," according to Reuters. The decision to stop selling interest-rate swaps to state and local governments stems from mounting legal and regulatory fire over undisclosed fees and allegedly misleading advice to municipalities in connection with several swap deals that the bank put together. Other banks are under scrutiny for their roles as well.

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Merrill Lynch hired mortgage securities executives from JPMorgan and Citigroup to lead securitization and trading operations. Michael Nierenberg joins Merrill as global head of mortgages and securitized products. He headed global securitized products at JPMorgan since the acquisition of Bear Stearns, where he'd led various fixed-income trading desks since the mid-1990s. James De Mare, who was Citigroup's global head of mortgage trading, will assume a similar role at Merrill and will report to Nierenberg.

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RBS Greenwich Capital said it hired 16 mortgage-backed securities traders and sales people, all but one of whom came from Bear Stearns. The highest-ranking among them, Scott Eichel, was named co-head of asset-backed and mortgage trading, alongside of RBS veteran David Cannon. Eichel had co-led mortgage-backed and asset-backed bond trading at Bear Stearns when it was acquired by JPMorgan Chase in June. Six other ex-Bear Stearns mortgage and derivatives traders and eight Bear Stearns MBS salespeople joined RBS. Another trader, John Suh, was hired from Bank of America Securities.

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Wachovia Securities said it hired former Bear Stearns fixed-income co-head Craig Overlander as its global head of fixed income. Starting Sept. 15, he'll be based jointly in Charlotte and New York. The latest in a long list of senior-level Bear Stearns alumni landing prominent roles at other financial institutions, Overlander spent 26 years at Bear, most recently as as managing director and co-head of fixed income. He was closely involved in managing the transition during the firm's acquisition by J.P. Morgan.

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Blackstone Group launched a technology-sector mergers and acquisitions advisory operation in Silicon Valley, led by former Citigroup investment banker Ivan Brockman. Blackstone said Brockman joined as a senior managing director and will open a new office in Menlo Park, California. He was co-head of Citi's West Coast technology investment banking, and led Citi's global investment banking efforts in the enterprise systems and software industries.

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