I-bankers see opportunity in downturn

The churn in the banking sector has led many senior executives to call time on their careers. For many, it is a chance to venture into unknown fields

Two months ago, the chief executive of one of the leading investment banks, Lazard India, called it a day after nine years with the company. K Balakrishnan, or Bala as he was known among colleagues, had joined Lazard in 2004 from Hongkong and Shanghai Bank Corporation where he was heading the investment banking division.

Two senior people from Morgan Stanley's India office-Chief Executive Officer and Country Head Jayendra Nayak and Managing Director Sudhir Bass-also quit last month to pursue other interests. Bassi has joined law firm Khaitan & Co, while Balakrishnan could not be reached for comments.

As the investment banking sector goes through a churn in the downturn, redundancies and job losses are becoming the norm. Several banks have pared their business, bringing down the curtains on the career of many. Morgan Stanley, for instance, has cut down its India business and sold off its wealth management arm to Standard Chartered.

Things are particularly fluid at the top. Nikhil Nath, Nomura's former head of merger and acquisitions (M&A) for Asia ex-Japan, joined Macquarie Group as a general industry banker in March, while Brijesh Koshal, managing director & head (i-banking), Daiwa Capital Markets India, quit the Japanese Bank in January.

Among others who have joined the bandwagon are Prahlad Shantigram, who quit Standard Chartered Bank as global M&A head last April, and Falguni Nayar, who was the managing director at investment bank Kotak Mahindra Capital. Nayar, who has over two decades of experience in the industry, left the familiar turf to start her own e-commerce venture, Nykaa.com, a beauty and wellness portal for women. Shantigram and Bala are yet to find new postings while Khoshal seems to have taken a long break from the industry.

Finding a suitable role for seniors in investment banking is especially difficult as there are only a few slots in which they can be fitted. "As people become senior in large institutions, they get into jobs that are more management and less deal-oriented. Many people do not care for this. Hence, the move to boutiques where you can spend most of your time working on what you enjoy - deals," says Shantigram.

The seniors sometimes also find it hard to keep pace with the industry's changing trends. Says Suresh R, chief executive of Stanton Chase, "Investment banking is becoming a specialised sector. Compared to the previous decades, when one senior banker used to do deals across sectors, specialised i-bankers are ruling the industry today. Doing micro analysis, knowledge on sub-sectors like healthcare, technology, etc give the young talent an edge over the veterans." At present, young i-bankers who are specialists in core areas are preferred to the one-in-all industry veterans, he adds.

The decline in M&As, and initial public offering are only making things tougher. "The global downturn and collapse of leading foreign banks have its own reflections in the Indian investment banking space. Lack of IPOs and M&A deals force i-banks to cut down their strength and the moves affect even experienced hands," says Khosahl,

According to a report of financial research company, VCCedge, M&A deal size has fallen 45 per cent in 2012 to $18 billion from $35 billion in 2011. This year is proving to be no better. In April, M&A deal size stood at $1.66 billion as against $1.9 billion in April 2012 , according to a report by Grant Thornton. In all, the deal size has fallen 78 per cent in the last three years.

With business shrinking, some industry veterans are reinventing themselves to make the most of the exodus. Ashok Wadhwa, chief executive officer of Ambit Holdings, says i-banking veterans often shift their focus to a different life once they reach the saturation point in their career. " At some point, veterans feel work remains monotonous and want to break away from it," he says.

Many of them are dabbling in new businesses. Nayar says she decided not to launch a boutique bank as the i-banking space was crowded with several big brands. "I was always fascinated and motivated by the operation of Sephora, the well-known French brand and chain of cosmetics stores. Later, I decided to launch the e-commerce venture in line with Sephora," she adds.

A few top bankers have also tried their luck in the private equity industry. Rajeev Gupta of DSP Merryl Lynch and Devinjit Singh of Citi have joined Carlyle, while Promeet Ghosh of Bank of America Merrill Lynch has joined Temasek. "When these veterans find limited expansion in their business prospectus, they try different areas such as private equity to explore new opportunities," says Wadhwa.

At the junior level, meanwhile, things are not all that bad. Global investment banks such as Bank of America Merrill Lynch, Barclays, Citibank, Deutsche Bank, Goldman Sachs and HSBC, have adhered to their hiring plans for 2012-13. Many of them have hired several students from IIM Ahmedabad this year.