Mizuho pushing to become top-10 bond bank
By Danielle Robinson
NEW YORK, April 13 (IFR) - Mizuho took a giant leap towards becoming a top 10 underwriter of US corporate bonds this month by hiring 130 debt capital markets and corporate finance bankers from RBS.
One of the biggest mass moves ever seen on Wall Street outside of a merger, it was part of a February agreement for Mizuho to buy the UK bank's US$36.5bn loan portfolio.
RBS sold the book as part of a global retrenchment that will see funded assets fall by two-thirds - to less than £80bn - and leave the investment bank a shadow of its former self when the decade-long revamp concludes in 2019.
But for Mizuho, the moves will turbo-charge its push to become the most active Japanese bank in the US capital markets and a bond house to be reckoned with on Wall Street.
The loan portfolio expands Mizuho's blue-chip corporate client relationships, and the hires add a group of senior bankers who have distinguished themselves by maintaining a viable debt capital markets business at a time when RBS has been overtly withdrawing from investment banking.
"The RBS transaction accelerates our growth plans by about two years," John Koudounis, president and chief executive of Mizuho Securities USA, said in an email.
Koudounis was hired seven years ago, when Mizuho - like other non-US banks at the time - saw the fallout of the credit crisis in the financial industry as the perfect time to scoop up top talent.
Since then, Mizuho Securities has steadily built a respected DCM and syndicate group.
And with the support of the Mizuho balance sheet, it has gone from 17th in the high-grade bond underwriting league tables in 2012, to 14th in 2015 year-to-date.
Koudounis believes that the talent from RBS will vault Mizuho up to 10th spot within months.
"Our short-term goal is to be top 10 overall in the league tables in investment-grade credit," he said.
"And with the team on board we are optimistic that we will accomplish that ranking this year."
If the Mizuho and RBS high-grade bond underwriting businesses were combined, the Japanese bank would today be in 11th, just behind Credit Suisse, HSBC and Deutsche Bank.
SENIOR TEAM
To get so many RBS employees to sign on, Mizuho hired five of RBS's most senior debt capital markets and corporate finance bankers in the region - head of DCM Jennifer Powers, head of syndicate Victor Forte, head of leverage finance Richard Smith and two senior corporate finance bankers, Michael Keating and Donald Sutton.
Their respective teams then followed, and Mizuho has ensured the most senior hires will be easily absorbed into the existing managerial structure.
Powers will co-head investment grade DCM with Mizuho Securities' existing head, James Shepard, while Victor Forte will co-head debt syndicate with Vincent Murray, the current head of syndicate at Mizuho Securities.
Richard Smith will head a new leveraged debt capital markets business for Mizuho Securities. Donald Sutton will be co-head of origination overseeing the healthcare, real estate and basic industries sectors and Michael Keating will head global subsidiaries coverage. Both will report to Andrew Dewing, head of corporate finance at Mizuho Bank Americas.
"We now have a team that I know can compete with any firm on the Street," said Koudounis.
RBS will be left with a minimal DCM staff to manage existing business.
Sources said that none of the key personnel at RBS need to go on the standard three-month gardening leave.
"RBS may say they are not getting out of the business, but it's unusual for a bank to allow key business heads and staff to join another bank immediately," said one.
(A version of this story appears in the April 11 issue of IFR Magazine, a Thomson Reuters publication) (Reporting by Danielle Robinson; Editing by Gareth Gore and Marc Carnegie)
