French take leaf out of Anglo-Saxon book
Investment banks are notorious for continuously restructuring.Hardly a month goes by without one of the major houses deciding to merge two departments, create a new division or reorganise in some other way. The aim is to serve the market more efficiently but the cost can be high in terms of restructuring fatigue and low morale.
At SG’s corporate and investment banking division, SG CIB, they have decided on a different approach. The structure stays the same but if the market needs resources brought together in a new way, the bank creates an internal joint venture.
It has already done this to deal better with financial sponsors (bringing together expertise from M&A, equity capital markets and debt), equity derivatives for corporates (derivatives and equity capital markets) and is developing a joint venture for sales to hedge funds (cash equities, debt and derivatives). The joint ventures have their own dedicated staff and P&L but the people in charge report to both heads of departments from where the resources were taken.
“Rather than have continual revolution, we prefer to be pragmatic and flexible,” says Thierry Aulagnon, chief executive of SG CIB’s global investment banking division. “In this regard we try to be more Anglo-Saxon than French.”
In particular SG has rejected the current trend of putting debt and equity together. “We think it’s not a good idea to merge debt and equity because the products have different decision makers within companies.” Brian Caplan
