Barclays Said to Have Averted Exits of Energy M&A Advisers
Barclays Plc (BARC) almost lost several key U.S. energy investment bankers this year after they raised concerns about compensation and tougher regulatory scrutiny of European lenders, said people with knowledge of the matter.
Senior members of Barclays’s U.S. oil and gas team, including co-head Gregory Pipkin, entertained job offers from Bank of America Corp. and Wells Fargo & Co. in April, said the people, who asked not to be named because the matter is private. Hugh “Skip” McGee, who became Barclays’s chief executive officer for the Americas in May, persuaded the group to stay, said one of the people.
Pipkin and McGee joined Barclays in 2008 from Lehman Brothers Holdings Inc. after the U.K. firm bought the bankrupt company’s U.S. units. The loss would have dealt a blow to Barclays in a key area, as the bank ranked first among advisers on deals involving energy companies last year, with $116 billion in transactions.
It isn’t clear whether McGee agreed to give them raises to get them to stay, one person said. The thwarted defections underscore the turmoil faced by investment banks in Europe, where proposed laws to limit compensation pose a threat to the millions of dollars top merger advisers typically get for their work.
Barclays fell 0.4 percent to 284.50 pence by the close of London trading today.
At least three senior energy bankers have separately left Barclays since the near group-defection, according to the people familiar with the matter. Carlos Fierro, a Lehman veteran who ran the global natural resources investment banking business since 2008, announced his retirement in May, said the people. Barclays replaced him with natural-resources co-heads Jeremy Michael and Julian Vickers, both promoted from within the firm, the people said.
Hank Hilliard, an oil and gas banker based in Houston who joined Barclays with the Lehman crew, left recently for Goldman Sachs Group Inc., the people said. Russell Johnson, who joined Barclays in 2008 from Deutsche Bank AG, also departed to join Capital One Financial Corp. (COF), the people said.
Marc Hazelton, a spokesman for Barclays, declined to comment. Representatives at Bank of America, Capital One and Wells Fargo didn’t reply to requests for comment. A voicemail message left for Fierro seeking comment wasn’t returned, while Hilliard and Johnson couldn’t be reached.
The proposed pay rules in the European Union, which would also apply to overseas units of European banks, would cap bonuses at no more than twice fixed pay, although there is no limit on base salaries. That has led some banks to consider increasing base pay: HSBC Holdings Plc, Europe’s largest bank, said yesterday bonuses shrank during the first half, while fixed pay rose.
The near-defection of the Barclays advisers coincided with a broader management shuffle at the investment bank, which accounts for more than half of London-based Barclays’s earnings. Barclays in April said that McGee would become head of the Americas business and that Eric Bommensath and Tom King would become co-CEOs of corporate and investment banking as the firm’s securities unit refocuses on the U.S.
McGee was tasked with improving relations with regulators in the U.S., after the U.K. bank agreed to pay $450 million in fines for rigging benchmark interest rates. The firm has also pledged to cut pay and embrace humility.
Some U.S. investment banks also are trimming payrolls, putting them at risk of employee departures. Morgan Stanley, owner of the world’s biggest brokerage, set aside 1.4 percent less to pay people at its investment banking and trading division in the first half even as revenue rose in the unit.
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