Protium shows there's (lots of) money to made structuring and managing toxic waste
One of the more notable facets of BarCap's new Protium Finance innovation, are the rewards for the people working on it.
45 people are set to share management fees of $400m over 10 years, amounting to 537k a year each.
However, management fees are only part of the story. The Financial Times says partners in Protium will also be entitled to any surplus cash generated by the assets once BarCap's loan (and their management fees) have been serviced.
The lucky partners could benefit even further if the assets put into Protium recover some of their value - a possibility given the 1.7bn of subprime assets to be housed by Protium have, for example, declined 82% since 2007.
Can you get a job there? Probably not. The staff are being drawn from BarCap and include the likes of Stephen King, a horror author former head of BarCap's US ABS and CDO business. BarCap is however, at pains to point out that most of the CDO-type people responsible for putting the toxic assets on its balance sheet in the first place have been removed.
The non- Protium possibilities
Some of them may be working as trouble shooters restructuring toxic products for rival firms. Headhunters say former CDO specialists are being employed on six month contracts for up to 1k a day by organizations seeking to reduce their exposure to the structured credit products on their balance sheets.
Elsewhere, banks are said to be keeping securitization staff onboard as they seek to wind down their exposure. Commerzbank, for example, is rumoured to be paying Dresdner's securitization team a staggered bonus package involving around 100k in cash paid in September and December, plus a deferred stock award, while they dispose of Dresdner's toxic legacy.
Failing that, there's always distressed debt boutiques. Yesterday, it emerged that the former heads of European distressed debt trading at Deutsche Bank and proprietary trading at Morgan Stanley have launched a new distressed debt-focused broker, Yorvik Partners, while funds like Harbourmaster Capital Management have set up new distressed debt advisory businesses.
"There's a huge amount of discussion about setting up new distressed debt funds or carving toxic assets out of existing funds," says Nicola Ralston, co-founder of London-based PiRho Investment Consulting Ltd.
