The experiences of Robin Saunders, Guy Hands and Nicola Horlick prove that finance doesn't work as a branch of showbusiness
In the past few years, the City of London has had no more glamourous a star than Robin Saunders.
Overseeing the buyout unit of the German state-owned bank WestLB AG, she has helped engineer a series of high-profile transactions, including deals by motor racing tycoon Bernie Ecclestone and retail entrepreneur Philip Green.
It helped that Saunders was a woman, photogenic and colourful. British newspapers reported that she spent £100,000 on her 40th birthday party in Tuscany.
Now all that glamour may be turning to ashes. Saunders financed a merger that created the UK consumer electronics company Box Clever. WestLB faces writedowns of as much as e500m related to Box Clever, Financial Times Deutschland reported earlier this month.
WestLB spokesman Michael Wilde declined to comment. If the story turns out to be true, it may contain lessons for banks and bankers working on pumping up their profiles.
WestLB's troubles with Box Clever may tell us something about what happens when relatively obscure banks try to make names for themselves in one of the most competitive capital markets in the world.
Saunders' troubles may tell us about the perils of becoming a star in Britain's financial district.
The main lesson for bankers is that they invariably become famous for the wrong reasons, and this gets them into trouble.
Guy Hands, who ran Nomura Holdings' leveraged buyout unit before setting up his own private equity business, has been struggling to stop Nomura-owned Le Meridien Hotels from slipping into bankruptcy.
His reputation for pulling off profitable buyouts has suffered, and the same British newspapers that built him up as a financial prodigy are now delighting in tearing him down.
Nicola Horlick, the banker papers dubbed 'Wonder Woman' because she runs a large family and Societe Generale SA's London-based SG Asset Management unit, has come in for criticism.
Sir Mark Weinberg, chairman of St. James's Place Capital, has withdrawn £500m from Societe Generale because he feels Horlick's unit is investing by tracking benchmarks rather than picking stocks, according to The Sunday Times.
What do Saunders, Hands and Horlick have in common? They are all better known than they should be. A search of news service Lexis-Nexis shows that Saunders has been mentioned in UK newspapers 269 times in the past year. Hands has been mentioned 259 times, Horlick 174 times.
Compare that with the news generated by three bankers whose jobs place them at the heart of the City: Bruce Wasserstein, head of Lazard LLC; John Studzinski, the former deputy chairman of Morgan Stanley International who last month became co-head of investment banking at HSBC Holdings; and Michael Uva, who succeeded Studzinski as Morgan Stanley's head of European investment banking in 2001.
Wasserstein rated 99 Lexis-Nexis mentions in the past year, Studzinski 43. Uva has yet to be mentioned by a British newspaper even though Morgan Stanley was among the world's top advisers on mergers and acquisitions last year, according to Bloomberg data.
Still, fame counts. It helps firms promote themselves. Only in the City itself, where bankers gravitate to power more than glamour, is Studzinski a bigger name than Hands.
Ask anyone in the City with whom they would rather have lunch ” Wasserstein or Saunders ” and most would choose the former.
Tell a banker that Uva and Horlick are holding on separate lines, and most would ask to be put through to Uva. The high public profiles of Saunders, Hands and Horlick reflect the relatively low quality of financial coverage in British papers. Editors fear serious business news. They go for colour more often than substance.
Bankers with a desire for publicity exploit this. They employ public relations advisers to court the media on their behalf.
In this way, news of the hobbies of bankers, their conspicuous consumption, anecdotes about their children, parties and haircuts fill pages and airwaves.
Such trivia serves its purpose for the bankers who pursue publicity. Celebrity equals money. Saunders, Hands and Horlick all work, or have worked, at financial institutions that lag market leaders. Courting publicity is a way of attracting business opportunities.
Hands left Goldman Sachs Group to set up Nomura's London-based buyout unit. While a leader in Japan, Nomura does less business in the City. Hands, as a celebrity, brought in business.
Horlick quit Deutsche Bank AG's Morgan Grenfell unit to join a firm with less money under management. Saunders moved from Deutsche Bank to WestLB and achieved fame at the smaller rather than the bigger German bank.
The trouble is the fame game can get bankers in over their heads. It can involve them in transactions beyond their capacities and the capacities of their employers.
Fame cannot guarantee that the transactions it generates are high-quality.
Star bankers are vulnerable to winning big deals that lose big money.
The moral? Finance as a branch of showbusiness doesn't work. As soon as a financier is better known for who he or she is rather than for what he or she does, that financier is courting disaster.
Bloomberg London newsroom
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