In a move that suggests HSBC has finally got serious about upgrading its Asian equity capital markets operations, the firm has hired one of the top ECM bankers in the region.
To the surprise of many, HSBC has poached Morgan Stanley's co-head of global capital markets for Asia, Danny Palmer. The British banker left Morgan Stanley on Friday and will take on the role of global head of ECM and equity-linked product for HSBC. And in a sign that HSBC sees its greatest ECM opportunity here in Asia, he will be based in Hong Kong - making him the only global head of ECM to be based in the region.
Palmer was highly regarded at Morgan Stanley, and is a perfect fit for HSBC. Indeed, his skills in execution and his background in the equity-linked business are just what HSBC needs. Likewise, his experience in successfully executing China equity deals fit with HSBC's ECM business plan.
Palmer started his career as an accountant with Pricewaterhouse, before joining SG's corporate finance team. In 1994 he came to Asia with SG Warburg, but in late 1995 joined Deutsche Bank in London as part of the team that defected with Maurice Thompson. His role was in equity execution.
He later moved to Morgan Stanley where he later became the head of the convertible bond origination business in Europe. After a successful stint in Europe he was moved to Asia in the Summer of 2002 to take control of Morgan Stanley's regional ECM and convertible bond business. The firm's convertible bond business had been patchy and Palmer moved into top gear, focusing primarily on business from Taiwan. In an early statement of intent, the firm stole Far EasTone $100 million convertible from under the nose of arch-rival Goldman Sachs and turned it round in four hours.
In 2003 Morgan Stanley had a stellar year in the convertible bond business (eventually winning our award for Best Equity Linked House) and towards the second half of the year Palmer began to focus more on straight equity. The success of Morgan Stanley's IPO for PICC put competitors on notice, and as 2004 began, Morgan Stanley unleashed deals for Ping An Insurance, Meng Niu Dairy, China Shipping, China Telecom, ONGC, Shinhan Financial and Sinopec (offloading BP's stake).
Ironically, Palmer's team also managed to resuscitate an IPO for Shanghai Forte after HSBC failed to execute it last year. Year-to-date Morgan Stanley ranks second in the Dealogic ECM non-Japan league table by volume, and first by number of deals (26).
For HSBC, having Palmer on board will allow it to boost its ECM business in the region. The firm has deep client relationships, but has lacked the execution skills to crack the ECM business. Palmer brings much needed bulge bracket execution skills and credibility. As a banker who has worked extensively in London and Asia he will fit into the HSBC culture. Moreover, he will no doubt kickstart the firm's non-existent equity-linked business - an obvious gap in HSBC's platform given its strength in DCM.
Palmer's hire was orchestrated by John Studzinski, who co-heads CIBM at HSBC with Stuart Gulliver. Studzinski, who is ex-Morgan Stanley himself, has hired liberally from his former firm. Bringing Palmer on board so late in the year - particularly when the Morgan Stanley ECM bonus pool was looking so fecund - suggests that HSBC is making a serious investment in building its ECM operations this time around. With some key mandates in its pipeline, such as the IPO for Bank of Communications, the firm is clearly intent on movings its ECM and convertibles operations into the top ranks.
For Morgan Stanley it marks the loss of the second managing director from its Asian operations in as many weeks - with Zhizhong Yang departing to run Lehman's China business the week before.In the absence of an announced replacement for Palmer, his co-head Max Blandon holds the top spot, while Crawford Jamieson is the other GCM managing director in the region.