COMMENT: Why bankers are busy making painful lists before Brexit
While City bankers have UK politics on their mind and their eyes on markets to sense how Brexit is going to turn out, they still need to get deals done. The trouble is, there just aren't an awful lot of deals happening right now. Understandingly so. - If you are a large corporate in Europe right now it won't hurt to wait a little to see what happens in the UK. Especially if you are looking for a bargain in terms of external growth. - There may be some British companies going cheap in a few weeks' time.
So while a lot of banks have started the process of selectively sending their staff outside of the UK, or have lists of people with pre-booked one way tickets to continental Europe (Citi, Goldman Sachs, BNPP, BAML, JPM…), some have also taken the view to beef up their UK coverage. They have hired key bankers capable of helping out UK Corporates (both on the product and the coverage side).
This is because, if things turn out ugly there could be paradoxically a lot of deals involving UK corporates. After all, we've seen exactly the same thing in Italy, Spain, Portugal and a few other EU countries over the last few years. Political headlines are one thing, deals are another. And any seasoned banker will tell you that if one of his clients is under pressure, there is a lot of money to be made.
While some lucky bankers may be already working on deals about to happen, most of the others are busy building lists of potential targets and deals. This is the very famous “targeting list” exercise. It’s painful. It means spending hours going through list of names and potential opportunities associated with these names. In every bank, an army of bankers is going through these lists, hoping to spot the next gold mine. This is what you do when your clients have the “do not disturb” sign on their door and you need to get going. You organise meetings amongst yourselves, discussing lists.
The irony is as soon that as a serious meeting comes up or a situation lights up, the list gets dropped. Until then, the list is everything. The lists (for there are many of them) get produced, reviewed and discussed. Platinum clients list, mega deals list, tier two priorities list, sellside opportunities list...You name it, there is a list for it.
Lists are a powerful tool in the banking world. If you're a list-making banker, you can demonstrate to your management that even while nothing is happening you are still busy with the list. They focus minds on your next potential deal. The list is a source of endless chat and speculation.
Sometimes the lists actually come to something. All deals hitting the headlines have been on a list at some point. However, very rarely did a list start a situation. Clients relationships are far more likely to originate deals than lists are. The closer your stay to your clients, the more likely you will be helping them. And right now having a lot of relationships in the UK could prove to be a great asset in the short coming future.
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