Are these the real reasons why people are leaving Citi's investment banking business?
As we noted last month, Citigroup has been suffering a fairly scary exodus of senior investment bankers.
Things are not getting much better.
Yesterday, it emerged that Citigroup has lost Reid Marsh. Like Ken McGrath, a senior Citi financial sponsors banker, and Richard Blackburn, Citi's co-chief operating officer of banking in Europe, Marsh is off to Barclays Capital.
As well as mssrs Marsh, McGrath, and Blackburn, over the past two months alone Citi's London investment banking operation has lost (at least) Bill Kennish, its former head of European TMT, Mathew Smith, who'd just been promoted to replace Bill, and Herve Malaussena, a TMT banker.
Why all the departures? According to some of the headhunters instrumental in dislodging Citi investment bankers, the alleged sources of disgruntlement are as follows:
1) Tom King has gone
Last October, Tom King, Citi's former head of banking for Europe, Middle East and Africa (EMEA), went to BarCap. People are leaving to join him.
"Tom was the glue which held the Salomon and Schroders factions together," alleges one headhunter. "Now that he's at BarCap, people want to be with him."
2) It's reached a tipping point
"Now that so many people have left (bearing in mind that Ian Hart and Robert Swannell have also gone), it's become cancerous," says one headhunter. "There aren't many good people left and the others don't want to stick around."
3) Investment bankers have to sit next to (or close to) corporate bankers
Headhunters also allege that Citigroup's investment bankers are being encouraged to work much more closely with its corporate bankers. Apparently, this is not going down very well.
"These people have different kinds of relationships. The corporate bankers will be talking to the treasurer, or the CFO at best, whereas the investment bankers will be talking to to the chairman," says one. "That causes resentment."
4) There's a focus on big clients
It's also alleged that Citi is focusing on serving big FTSE 100 clients. "This doesn't work for traditional Schroders bankers - they've always worked with FTSE 250 and 500 people," says the headhunter.
5) There's a bit of a leadership vacuum
James Bardrick and Manuel Falco were appointed co-heads of EMEA banking when Tom King left last October. However, according to one headhunter, the "structure is not clear."
"There's a paralysis of decision making," he alleges.
6) There are specific client lists
"Citigroup bankers are being asked to focus in on their key relationships," claims another headhuner. "This can be pretty dull, particularly if your key clients aren't doing anything."
Citi hits back
Needless to say, headhunters have good reason to talk up Citi's investment banking problems and some of the reasons given above may be at least slightly exaggerated.
"Our banking franchise in EMEA is vibrant and expanding," says a Citigroup spokesman. "We have made a number of strategic changes to our coverage model to increase the focus on our core clients, which has created a number of exciting new opportunities for our bankers and also may have resulted in some people choosing to pursue their careers elsewhere. Several of the departures were mutual, and in some cases, welcome. We have also made a number of important new senior hires, and plan to announce several more over the next few weeks."
Among those new hires are two senior financial sponsors bankers in London, one senior ex-Morgan Stanley banker in Poland, and Paul Coen, a former chief executive of Surrey County Council, as MD and vice chairman of the UK Public Sector Group.
