Sumitomo Mitsui to Double U.S. Debt Team; Adds Ex-RBS Trader

  • Patrick Beranek to join U.S. debt team of about 12 people
  • SMBC Nikko's U.S. corporate bond underwriting rising this year

Sumitomo Mitsui Financial Group Inc. plans to double its fixed-income sales and trading team in the U.S. and has hired Royal Bank of Scotland Group Plc’s former head asset-backed securities trader. 

Patrick Beranek starts at SMBC Nikko Securities America Inc. Tuesday and is the first dedicated ABS trader to join a team of about 12 people, according to Jiro Inuzuka, a Tokyo-based spokesman for SMBC Nikko, Sumitomo Mitsui’s investment banking arm. Sumitomo Mitsui, Japan’s second-largest lender, plans to double the size of the team to about 24 in the next year, he said.  

Sumitomo Mitsui hired Jeff Zavattero as head of its fixed-income sales and trading team last year in the U.S. as the lender and domestic peers Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. boost such U.S. operations while rivals including RBS pull back. Last month, Paul Young, the head of international capital markets at MUFG, said Japan’s largest lender sees an opportunity to take market share in underwriting debt in the U.S. as European and American banks have bigger costs and balance sheet pressures.

“Regulators in the U.S. and Europe are trying to put in place structures to prevent the re-occurrence of a global financial financial crisis that is still very fresh in their memory and that in some cases has not been solved,” said David Threadgold, the Tokyo-based Asian research head at Keefe Bruyette & Woods, a boutique investment bank. Japanese banks don’t face the same level of scrutiny as they didn’t need to be bailed out in 2008 or 2009 and are seeking growth overseas as Bank of Japan stimulus makes lending to blue chip firms at home unprofitable, he said.

U.S. Operations

SMBC Nikko’s structured finance team in the U.S., headed by Yukimi Konno, already originates ABS bonds of various sectors including autos, credit cards, and aircraft, according to the bank. Sumitomo Mitsui and Sumitomo Corp. bought RBS’s aircraft leasing business in 2012.

Sumitomo Mitsui has underwritten about $3 billion in investment-grade corporate bonds in the U.S. so far this year, excluding self-led deals, up from $450 million during the same period a year ago. The bank managed $6.7 billion in the debt last year, trailing the $30.1 billion at Mizuho and $25.7 billion for MUFG, according to data compiled by Bloomberg.

Hiring Bankers

Beranek worked for both Bank of America Corp. and Mizuho before RBS, and has 25 years of experience in ABS, according to SMBC Nikko’s Inuzuka. Mizuho, which is the fifth-largest underwriter of U.S. investment corporate bonds this year, purchased some $42 billion of North American loan commitments from RBS last year, and hired more than 100 RBS bankers, including for its debt capital markets business.

Morgan Stanley included about 470 traders and salesmen from its fixed-income and commodities business in a plan to cut about 1,200 people worldwide, a person briefed on the matter told Bloomberg last month. Goldman Sachs Group Inc. is also considering staff reductions in the business, according to person with knowledge of the business. European banks too have been reducing staff amid pressure to strengthen balance sheets, cut costs and improve profitability.

SMBC Nikko hired at least five bankers, including Zavattero, for fixed-income sales and trading in the U.S. between August and October of last year.

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