Exclusive - UBS poaches Bank of Montreal oil banking team - sources

By Mike Stone and Euan Rocha

NEW YORK/TORONTO (Reuters) - UBS AG has poached a U.S. team of some 15 oil and gas investment bankers from Bank of Montreal (BMO), significantly weakening the energy dealmaking capacity at Canada's fourth-largest bank, people familiar with the matter said.

The moves come amid plummeting oil prices that have prompted banks to try to lure talented energy bankers with deep technical expertise. Such bankers can help them win new investment banking business from companies that want to shed assets.

The investment banking business in the oil and gas sector has shifted as lower oil prices weigh on the companies' growth prospects. The business is no longer focused on initial public offerings, and now primarily involves advising companies on deals to raise cash as their earnings dwindle.

Those leaving BMO are part of a specialist group dubbed Acquisitions & Divestitures (A&D), the people said this week. This group carries out the complex engineering and technical research needed to value oil and gas deposits far beneath the earth's surface.

The leader of that BMO team, Miles Redfield, is based in Houston, Texas, where he will remain as he also takes on a senior role at UBS, the people added.

UBS declined to comment. Redfield could not be reached for comment. The people asked not to be named as the discussions were not public.

In an emailed statement, BMO confirmed that there have been departures from the A&D group but did not provide any details.

BMO is a powerhouse in the global mining arena, but it advised on just a handful of oil and gas transactions in the U.S. market in 2013 and 2014, according to Thomson Reuters data. The data also shows that BMO's market share in the U.S. market in this sector is a fraction of that of its larger rivals.

A senior banker at a rival firm, who asked not to be named because he is not authorized to discuss the matter with the media, said BMO has had a mid-sized presence in Houston, compared with firms such as Citigroup Inc, Scotiabank, Jefferies LLC, JPMorgan Chase & Co and Barclays Plc that have larger teams based there.

Given the size of the A&D advisory team BMO had in Houston, the firm would have had to have consistently ranked in the top five in the U.S. oil and gas league tables in order for the team to have been profitable, the banker added.

Rivals including Barclays and Bank of America Corp have been bulking up their A&D teams in recent months, albeit in less spectacular fashion.

UBS ranked No. 10 in the league tables in the oil and gas sector in the United States in 2014 and advised on seven deals, according to Thomson Reuters data.

The Swiss bank has a reserve-based lending business in Dallas but has so far lacked a team of acquisition and divestiture bankers to provide the in-depth technical advice that clients now demand, according to the sources.

By having technical knowledge about oil beneath the ground in specific basins, UBS can support clients interested in building out pipeline assets. Its private wealth bankers will also be able to serve their clients better once the bank has a better grip on the value of their oil deposits.

"Having deep technical expertise is now not just a nice-to-have, it's a must-have, and without it you cannot be competitive in energy M&A," said Bobby Tudor, CEO of Tudor Pickering Holt & Co, a smaller competitor with a large A&D team.

Energy teams staffed with 20 acquisition and divestiture investment bankers or more have helped smaller firms such as Evercore Partners Inc, Jefferies LLC and Simmons & Co compete with larger peers. For example, Tudor's firm completed the most U.S. energy M&A transactions of any competitor in the 2010-2014 period, Tudor said.

The group of bankers leaving BMO will go on a standard "gardening leave" that lasts 90 days for managing directors, 60 days for directors and 30 for vice presidents, one of the sources said. About a dozen team members have already departed, with those remaining expected to submit their resignations to BMO imminently, the sources added.

One of the sources said BMO will have a small team of 4 to 6 people remaining to perform A&D work, so its U.S. capacity for such work will not be completely diminished.

BMO said it has a strong global energy platform and remains fully committed to its A&D practice, including in Houston.

(Reporting by Mike Stone in New York and Euan Rocha in Toronto; Editing by Greg Roumeliotis and Ken Wills)