Investment banks shun secondments

eFC logo

When is a banker not a banker? When he or she takes time out on a secondment to work somewhere else.

Two high-profile figures in the European market are temporarily quitting the world of mergers and acquisitions in favour of something less commercial.

John Crompton, deputy UK head of Morgan Stanley, last month joined the UK Treasury on a two-year secondment. In December, Mark Warham, head of UK mergers & acquisitions at Morgan Stanley, will also start a two-year interlude as director-general of the UK's Panel on Takeovers and Mergers.

What is it that drives a banker at the height of his powers, and on the cusp of an apparent bull market, to seek a perceived sinecure somewhere different? And what do banks expect to gain from the untimely loss of some of their most senior staff? Crompton and Warham were not available for comment but others have taken temporary leave before them.

The Panel on Takeovers and Mergers has borrowed a senior investment banker as its director- general since its formation in the 1970s. Philip Remnant, a vice-chairman at Credit Suisse First Boston, was director-general of the panel between 2001 and 2003.

He said time on the panel had advantages for the individuals and the banks concerned. "It is positive for a bank's reputation to second the director-general to the Takeover Panel and when that individual goes back, it should benefit the bank's M&A business in terms of providing added value to clients."

Remnant dismissed notions that scrutinising the procedural integrity of M&A deals was restful. He said life on secondment could be hard work. "It's not just a question of dealing with cases but with all sorts of other policy issues. Given that the team at the panel is slim, contentious cases can be time-consuming, just as much as advising on the deal itself."

Bankers on secondment to the panel are well-rewarded for their endeavours: it pays them the equivalent of their earnings at the bank, including bonuses.

In a busy year this can be expensive for the panel but spokesman Noel Hinton said the benefits outweighed the costs. "We get a professional from the industry for two years who is prepared to sit down, learn and contribute an awful lot. It's good for the companies because they get back someone who understands a lot more intimately how the panel works. It's good for the panel since it has a regular influx of new people who are up to date with market developments."

By comparison, secondees to the public sector typically remain in the pay of their previous employers. Institutions such as the Treasury and the Financial Services Authority regularly borrow the skills of private sector lawyers, accountants and bank employees to supplement their staff. In the past six months, the FSA has received about 30 secondees from the private sector, most of them investment banking compliance specialists.

On the whole, however, investment banks are reluctant lenders of staff to government institutions. The Treasury's website reveals that Crompton is the only one of 24 secondees to come from an investment bank. Nahdia Khan, a manager at the Whitehall and Industry Group, an organisation that organises staff exchanges between the private and public sectors, said investment banks did not participate in its scheme.

By comparison, accountants and management consultants tend to be well-versed in the benefits of lending staff: a third of secondees to the Treasury are accountants.

Richard Gillingwater, chief executive of the Shareholder Executive, which manages the government's shareholdings in publicly owned companies, and a former investment banker at CSFB and Kleinwort Benson, said banks' failure to embrace secondments was regrettable.

He said bankers could learn a phenomenal amount from working in the public sector. "The government is a huge part of the economy. It helps to know how it works and makes its decisions. It's an opportunity to see things from a big-picture perspective."

If all goes well on secondment, some like Gillingwater may make the move full-time.

However, Hamish Davidson, a consultant at Rockpools, a recruitment consultancy specialising in transferring staff from the private to the public sector, said the pipeline of bankers looking to make the move had dried up.

He said: "Interest from bankers has slowed to a trickle now that bonuses have improved and the shake-out in the City of London has stopped. We get a few people who want to move for lifestyle reasons or because they want to do something more meaningful, but that's about it."

Popular job sectors


Search jobs

Search articles