Why is BarCap getting all the M&A hires?

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True to its word, BarCap is building a European M&A business to supplement the US operation it acquired from Lehman. It emerged yesterday that it's hired veteran Rothschild FIG banker Stefano Marsaglia to add to its existing stable of Matthew Ponsonby, Mark Warham, and various others.

BarCap aims to add 69 people in M&A this year. So far, it's done a better job of building the business than SocGen, which has also indicated its intention of expanding in M&A, but doesn't seem to have had much success. Instead, SocGen lost one of its senior bankers to boutique Bryan Garnier earlier this month.

What makes BarCap a draw? Money has certainly got something to do with it: the bank is said to be paying generous single year guarantees. But according to investment banking headhunters (who aren't working for BarCap), it's not just about the cash.

"If you want to move to a European start-up M&A business, Barclays Capital is the most exciting game in town," says the head of investment banking at one international search firm. "The big selling point is that they already have a strong US business."

Thanks to the ex-Lehman franchise, Barclays ranked sixth for announced US M&A in the second quarter according to Thomson Financial. In Europe it ranked 15th.

The strength of BarCap's US business should safeguard against HSBC-style failure. HSBC spent 2003-2006 hiring senior M&A professionals and has little to show for it (it ranked 22nd in Europe in the last quarter).

However, headhunters say potential M&A hires still have lingering doubts about the BarCap endeavour. "People see it as a debt financing house and question whether advisory bankers will ever really hold sway there," says one.

"Barclays are great in fixed income, but less strong in ECM in Europe," says another. "That could make it difficult for them to win M&A mandates outside debt-focused areas like FIG."

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