Cordeiro, one of the most well known faces in the Euromarkets and a Goldman partner since 1992 became a vice-Chairman of Asia last July. Over the course of his four year tenure, Goldman used its bulge bracket status to pursue the large sovereign mandates which dominated issuance from the region. It was an approach that resulted in deals for China, the Philippines and arguably most importantly of all the Republic of Korea, whose $4 billion global of April 1998 still ranks as Asia's largest bond offering and marked a key test of the region's ability to fund itself out of crisis.
By contrast, his replacements McCabe and Russo, both partners themselves, are derivatives experts who bring a much more structured approach at a time when more sophisticated and prudent liability management is being adopted by a smaller number of more demanding borrowers. Co-heads of FICC (Fixed Income, Currencies and Commodities,) they report to Tokyo-based head Thomas Montag and will continue to seek advice from Cordeiro, who remains keen to maintain a pro-active role.
McCabe, who previously ran Latin American derivative sales, says she was a rapid convert to the kinds of opportunities on offer in the region, moving to Hong Kong from New York last September. She and Russo then spent the next few months listening to clients and deciding how best to move the group forwards. "Our conclusion was that clients wanted to achieve a deeper level of intimacy," she says. "As they were venturing out into new areas of international finance, they wanted their relationship bankers to be much broader in reach as well.
"They wanted to talk to experts who are able to offer advice across the whole gamut of currencies, commodities, interest rates and other financing alternatives. What also came across particularly strongly was a desire to receive advice from a banker who would be indifferent to product and could put together a straight forward capital markets transaction, or a more complicated structure secured by say, commodities."
For Goldman, it is often said that being client-focused borders on a religion and McCabe adheres to the view that providing a rounded client service should be the group's most important objective. For the bank, there was also an acknowledgement that that with the potential number of clients getting smaller, it needed to become more innovative in its thinking.
Indeed, during 2000, total volume from Asia (ex Japan and Australia) stood at just $9.48 billion, with 12 houses lead managing only 20 international dollar deals.
The big international investment banks have typically been responding in one of two ways. Those with strong local roots - Deutsche, HSBC, Citigroup and increasingly JP Morgan - have used these franchises as a springboard into the increasingly vibrant domestic debt markets. For the others, the astronomical costs of setting up operations in individual countries, has limited appeal when potential profitability from the local debt markets remains a matter of some debate.
As a result, Goldman, Morgan, Merrill have all been moving towards a more intellectual and value-added approach. "We’ve bought liability management under DCM and want to show clients how they can use it in tandem with debt financing to achieve two goals at once," McCabe explains. "For example, the kinds of things we'll be looking to do will include examining a company's interest rate and foreign currency exposure within the context of its overall balance sheet. Looking at whether a company's hedging policy is giving it full value in terms of stock price etc."
McCabe, who has been at Goldman since 1992, has grown up in the derivatives business. Her partner, Russo a fellow American who joined Goldman in 1990, has a derivatives background as well, having run Asian equity derivatives for the past four years. The third managing director based in Singapore is Wassim Younan, who since arriving in Asia last April, has been transforming his 22-member team from a conventional bond sales force into a solutions-focused marketing and relationship management group with wider geographical focus and broader client coverage.
Under McCabe and Russo's leadership, regional teams have been set up within the liability management structure. Jovi Zalamea, a 12 year veteran who re-located from New York at the beginning of March, previously worked alongside McCabe and will now take responsibility for South East Asia and Hong Kong capital markets. Philip Tsao, another market veteran, will focus on Greater China, while Simon Rothery heads up Australia based in Sydney.
Providing leverage to these regional teams is a strategic transactions group led by Jeff Brown, an old Asia hand who has most recently worked on complex debt financings for both APP and Guangdong Enterprises.
Executive director Ron Lee, often in the press during the Cordeiro years, moved into the advisory group at the beginning of March. Now reporting to investment banking head Michael Carr, he will be hoping to broaden his experience beyond DCM where he has spent the past eight years, yet will continue to provide debt financing advice to key clients. The popular Korean American, whose youthful good looks belie his real age, also earned himself the tag "Dr Feelgood," for a ceaseless ability to remain calm and level headed during periods of high stress.
Some of Lee's spokesman's duties will be undertaken by Harvey Lee, another DCM stalwart who is taking on the official role of syndicate head. Like the rest of the team, Lee also has a derivatives background, having come to Goldman from Bankers Trust in 1997 to co-head the derivatives and marketing group.
McCabe believes that the new team will give Goldman a strong platform across the board. "We believe that a regional focus is better suited to us than a product focus," she states. "We want to encourage a next generation of leaders who are as capable from a country depth and cultural perspective as they are from a capital markets or derivatives perspective."
