TRLPC - Mizuho to hire 200 RBS employees to build U.S. unit
By Michelle Sierra and Danielle Robinson
NEW YORK (Reuters) - Mizuho Bank [MZFGEU.UL] is expected to hire roughly 200 Royal Bank of Scotland [RBSRB.UL] employees as early as next week following its agreement to buy RBS's U.S. and Canadian $36.5 billion (£25 billion) loan portfolio, banking sources told Thomson Reuters LPC and IFR.
As part of its agreement to buy the loan portfolio, Mizuho had the option to acquire personnel, according to a source at Mizuho.
With that move, Mizuho expects to bolster its fixed-income department with key appointments. Among the new hires are RBS's heads of debt capital markets debt syndicate and leverage finance.
Two top bankers, loan personnel, and a small derivatives team are also going to Mizuho, sources said.
RBS and Mizuho declined to comment on the moves.
RBS will still have a capital markets business, said the source, but it will be significantly reduced.
"They are getting rid of the bulk of their DCM bankers, as well as the leverage finance team and 99% of the syndicate desk," said one source at RBS. "It looks like they will still have people minding the shop."
Mizuho is expected to announce the hires by Tuesday.
Mizuho hired RBS's head of debt capital markets, Jennifer Powers to co-head DCM with her Mizuho counterpart; its US head of bond syndicate Victor Forte to partner with Mizuho's syndicate manager; Dick Smith who will head up leverage finance, and bankers Don Sutton and Michael Keating.
Unusually, it is believed that none of the key personnel are going on the standard three-month gardening leave, said one market source.
"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 the source.
Mizuho's acquisition of RBS's loan portfolio is causing a stir in the investment grade loan market, bankers said, as U.S. banks and borrowers adjust to the Japanese bank's push for a bigger role in North American lending. Second-tier banks are also fighting to capture ancillary business in areas where RBS has historically been strong.
As Mizuho, Japan's second-largest lender by assets, builds and deepens new and existing relationships with U.S. companies, banks and companies are adjusting to the changes in existing loan syndicates and are reassessing their expectations of relationship lending and potential cross-sell from Mizuho rather than RBS.
Mizuho Financial Group Inc said in a February 26 press release it had reached an agreement to acquire RBS's credit portfolio, which was made up of approximately $36.5 billion in loan commitments, including $3.2 billion of drawn assets. The portfolio consists of approximately 200 U.S. and Canadian clients, which are mainly in the investment grade space.
In the release, Mizuho also said it was exploring the transfer of certain associated derivatives, and the transition of select coverage banking, debt and loan capital markets, syndicate, and associated capabilities related to the portfolio.
The Mizuho/RBS portfolio purchase and expected acquisition of select related capabilities is anticipated to "significantly expand the depth and breadth of Mizuho's client relationships and product offerings in North America," according to the release.
(Editing By Leela Parker Deo, Lynn Adler and Tessa Walsh)
