How RBS quietly emerged as one of the big fixed income recruiters of 2017

Think of RBS’s investment bank and it’s inevitable that massive cost-cutting comes to mind. The bank is supposed to be chopping 14,000 of the 18,000 jobs in its investment bank, and yet it’s quietly been picking up some big names for its markets business.

Rebranded as Natwest Markets to comply with UK ringfencing rules, the fixed income focused sales and trading business has been bringing in senior staff this year. The latest hire is Eoghan O’Neill who has just joined as head of distressed credit sales from Jefferies, where he was a managing director focused on leveraged, high yield and distressed credit sales.

O’Neill’s hire is a message of intent from Natwest Markets. Assuming he was poached from Jefferies, he's likely to have been an expensive hire. Jefferies pays cash bonuses up front, but there are clawback policies in place. If an employee leaves after 12 months, they have to pay 100% of their bonus back gross. Within 25 months this shrinks to 50%, and then 25% after 36 months. Headhunters suggest that the solution is simply to buy these bonuses out.

Jefferies has, however, also lost another senior credit salesman. Johnny Moore, a managing director within leveraged loans, HY and distressed credit sales, also departed in November and has yet to land elsewhere.

Natwest Markets, which purely focuses on fixed income markets, has been spending significantly more on staff this year. In 2016, it spent £256m on its employees, but has already racked up staff costs of £440m in the first three quarters of this year.

In the first quarter, its traders were killing it – fixed income revenues were up 75% year on year. However, it was down 23.8% in Q3, which is says was down to an exceptional quarter last year due increased activity after the EU referendum. Overall, its revenues were flat on last year after the first nine months of 2017.

NatWest’s performance has been the result of a slow build out of some big names over a number of years. In 2013, it hired Kieran Higgins from Nomura as head of fixed income trading for EMEA, who set about building its London business. Peter Duenas-Brckovich joined as head of EMEA credit trading in 2015, David Henness came from Bank of America Merrill Lynch to run its European and Asian rates trading business in the same year.

More recently, Ian Donaldson, BAML’s head of EMEA rates sales, joined in October last year as head of flow sales, Mark Deniston, the former head of sterling rates swaps at Goldman Sachs who was latterly at Brevan Howard, joined as head of GBP rates trading in January and Christopher Agathangelou, head of credit syndicate at Nomura, came in as head of fixed income syndicate in February.

Away from the marquee hires, Natwest Markets has also been hiring lower down the tree. Christophe Martin, an executive director at UBS, joined in October as a director focused on financial institutions origination for France and the Benelux. Craig Rinder, a credit trader at Lloyds Banking Group, came in as a corporate bond trader in the same month and Randell Hines joined its credit trading team in Stamford, Connecticut from BMO Capital Markets.

“They’ve quietly been beefing up,” says one fixed income headhunter. “They’ve not been shouting about their build out, but they continue to creep up in the background.”

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