Citi's European loans team have reservations about their new DCM overlords
After the exodus, a new arrangement.
As we have reported on various occasions, Citi has lost many people from its London debt capital markets (DCM) team. Some have gone voluntarily. Many have not.
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In the wake of the departures, the bank announced a new structure. Financial News reported last week that William Weaver, the former head of Citi's DCM business in EMEA is still a vice chair. That Uday Malhotra, head of the Citi strategic loans business, will continue in his job, with responsibility for the UK, Europe and CEEMEA. That Andrew Mason will report to Malhotra as head of strategic loans and syndicate. And that Paul-Emmanuel Micolet is back to being the mere head of FIG DCM.
This sounds eminently reasonable to us, but multiple insiders say it masks some bigger changes. The combined FIG and corporate DCM structure that Citi put in place last October has been unravelled. Plus, there's an ongoing gap in corporate origination.
Under the new structure, sources at the bank say the DCM bankers are clearly in charge and that the syndicated loans bankers have been relegated to a subsidiary role with a focus on execution and strategic deals instead of broad loan origination. This is how JPMorgan does it, and Citi's financing business is now run by Achintya Mangla, JPMorgan's ex-co-head of equity capital markets.
"It's no surprise - this is how JPMorgan does things," says one Citi insider. In the past, Citi's DCM and loans bankers would both attend client meetings. "The new push will mean fewer people need to visit clients and travel - the DCM people alone will handle that content."
Costs will be lower under the arrangement, but loans insiders say it's a false economy and it reflects a lack of understanding of Citi's business. "A successful loans house needs to build its knowledge from both relationship lending expertise and from financing episodic deals. Relationship lending demonstrates our best-in-class execution capability and allows us to glean insights into market behaviour so that we can win the mandates on strategic financing," says one member of the loans team. "Citi has a sub-par M&A franchise in Western Europe, so we can't really rely on them to win mandates on advisory and financing," they argue.
Citi isn't commenting on the changes. The bank is still understood to be looking externally for a head of UK and Nordics DCM, leaving Chris Monegard, the current head of Nordic DCM in the curious position of waiting to be usurped by a new boss.
In the meantime, Citi insiders say the DCM team is itself reeling after four reshuffles in a three-year period.
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