Goldman Sachs fixed-income sales could see exodus to UBS

UBS is trying to beef up its fixed-income sales team at the expense of rival Goldman Sachs, with attempts to poach up to 12 people from the US investment bank in Hong Kong and Korea, according to sources.

Goldman could lose the majority of its fixed-income sales team in Korea and some people in fixed-income sales in Hong Kong, said a source at a rival investment bank. Up to four people in Goldman's fixed-income sales team in Korea are considering offers to leave, said another source. Goldman is still trying to convince the Korea team to stay so the outcome remains uncertain, the second source added.  

The fixed-income sales team in Korea is headed by Jae Hyuk Park, a managing director.

One of the senior-most people to depart Goldman in Hong Kong is Andrew Kleeger, who was head of credit sales. Kleeger had been a managing director at the US investment bank since 2006. He is currently said to be on gardening leave.

The threat of losing the fixed-income team coincides with a senior loss on the equities side as Gene Reilly has resigned from Goldman to join Bank of America Merrill Lynch in Hong Kong as head of equities trading, as reported today by AsianInvestor.net. Reilly was head of Asia equities trading at Goldman and is credited with building the firm's electronic trading franchise in Tokyo and other regional markets.

When it comes to the potential fixed-income hires, UBS investment banking head Carsten Kengeter is probably close to the development, said another source. Kengeter joined UBS in London in September 2008 as global head of fixed-income, currencies and commodities (FICC). He moved from Goldman Sachs in Hong Kong, where he was co-head of the securities division for Asia ex-Japan, responsible for all FICC products. Kengeter was a partner at Goldman and had been with the US investment bank since 1997. Less than a year after he joined UBS, an internal reshuffle saw Kengeter promoted to co-chief executive officer of the investment bank.

On Monday, UBS disclosed that Kengeter was the highest-paid member of the Swiss bank's group executive board in 2009, pocketing SFr13 million ($12.3 million), although much of this was paid in shares which vest over a three- to five-year period. It is likely that Kengeter agreed to resign as a partner from Goldman only on a guaranteed payout, so much of his salary may have been contractual.

"Kengeter's drive, leadership and impact have materially contributed to the turnaround in the FICC business, to the effective unwinding of a large portion of the legacy positions and to the overall effort to transform the investment bank as a whole," UBS said in its annual report. It went on to mention that Kengeter's pay is supported by his skills and experience, commitments made at his hiring in 2008 and the accomplishments achieved during 2009.

UBS's efforts to strengthen its fixed-income sales team follow the appointment of Roberto Hoornweg as global head of securities distribution at the Swiss bank in January 2010. Hoornweg joined from Morgan Stanley where he was head of global interest rates, credit and currencies (IRCC) and is based in London. Hoornweg spent 17 years at Morgan Stanley. He left in the middle of last year when the firm brought in Jack DiMaio as global head of IRCC.

Kengeter relinquished the additional role as joint global head of FICC that he had held since joining UBS to Rajeev Misra and Dimitri Psyllidis when Hoornweg joined, in order to focus on his head of investment banking responsibilities.

Bonus payouts at Goldman happened a few weeks ago, but UBS wants to bring the team on board en masse so negotiations have been ongoing over some time, said one of the sources.

The move comes within weeks of Citi's Asia-Pacific head of investor sales, Shahryar Mahbub putting in his papers. Mahbub's departure is attributable to an internal reorganisation at Citi, said sources, and speculation is that he too is joining UBS.

Goldman Sachs and UBS had no comment. 

Photo provided by AFP.