Anthony Hilton: It's all change as Studz quits HSBC

Given that most people outside the City have never heard of investment banker John Studzinski, he got a huge amount of publicity last weekend when he left HSBC for private equity group Blackstone.

Worried the departure of the high-profile banker might dent the credibility of the investment banking division he built, HSBC’s PR machine went into overdrive to push the line that nothing had changed.

They would have done much better to shut up, because what Studzinski excelled at is not what the bank needs. Studz –  as he is known – is an expert corporate adviser, who deals with the high-profile mergers and acquisitions that journalists love. But that is not actually what investment banking is about. Even at banks with a reputation for M&A involvement – Goldman Sachs being the most extreme example –  such deals are not the major money-spinner. The income from advisory fees is dwarfed by that from trading and debt advisory work, which is rarely written about. 

M&A also ruffles corporate feathers. HSBC lives on its long-term client relationships, so it matters a lot if every client delighted by a successful deal is matched by one who is deeply irritated. M&A fees do not really compensate.
HSBC’s smaller rivals Royal Bank of Scotland and Barclays have worked this out and it is no coincidence that they now have investment banking businesses, neither of which get involved in high-profile equity-based bids and deals, but both of which make huge amounts of money.

Most of what they do is in the debt markets, but as the financial press is obsessed with equities, little of that is written about. Studz’s departure most likely means HSBC has decided to join them in this anonymous world below the parapet. Perhaps that explains last week’s coverage. HSBC wanted one last fling before becoming chaste.

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