Chairman, Deutsche Bank
Is Josef Ackermann Americanizing Deutsche Bank? The 54-year-old Swiss-born executive, who took over as chairman last month (Germans still don't like CEOs), is already shaking things up at Germany's largest bank. Ackermann gives all due respect to German political sensibilities, but he is also taking management power over Deutsche away from the company's supervisory board and putting it squarely on executive front lines. Increasingly, that will mean more emphasis on the securities trading/underwriting and asset-management businesses the company has acquired rather than on commercial and retail banking in Germany. Industry watchers expect Deutsche to make another acquisition in either the United Kingdom or the United States to compete more broadly with Citigroup and J.P. Morgan Chase.
FleetBoston's influence stems from its decisions "not [to] invest any new capital in Latin America" and to "reduce its overall exposure" in the region. That left firms wondering if other foreign banks would leap at the opening, or follow Fleet's lead. In business in Argentina since 1917, Fleet has announced cumulative losses there of $1.3 billion. Most other foreign banks seem to be standing pat despite Standard & Poor's warnings that their Argentine subsidiaries put them at risk. But expect them to be hypercautious lenders. Spain's Banco Santander Central Hispano, which owns Argentina's Banco Rio, has already set aside $1.1 billion to cover losses — more than Banco Rio's book value.
CEO, J.P. Morgan Chase
The urge to merge can be hard to resist. When William B. Harrison Jr., 58, became CEO of Chase Manhattan in 1999, he was determined to keep up with Citigroup, which acquired Salomon Smith Barney and then Travelers Group in 1998. Harrison's aim, like Citigroup's, was to get into more-lucrative investment-banking services. To that end, he purchased Hambrecht & Quist in 1999, before the tech collapse, and then pulled off a megamerger with J.P. Morgan. Postmerger performance has suffered — earnings were down by 70 percent last year. The bank also has more than $2 billion in exposure to Enron, and its dealings with Enron are being investigated by the SEC and the Federal Reserve. Nonetheless, J.P. Morgan is the second-largest bank in the country, with a huge syndicated lending operation and a growing presence in investment banking.
HSBC Holdings Plc
Bank of China
Outside Hongkong and Shanghai Bank in Hong Kong, two bronze lions stand guard; passersby rub the paws for good luck. And why not? The bank is part of London-based HSBC, one of the world's largest banks and the most powerful financial institution in Asia, outside of Japan. But HSBC's presence in China is currently limited, and its strong ties to the colonial past may handicap it in establishing a stakehold in the Middle Kingdom. Indeed, some observers think the future belongs to Bank of China. That's something of a long shot; BOC has been rocked by revelations of massive theft, and concern over the solvency of China's banking system is mounting. Still, China wants to show that it's serious about cleaning up the system — and BOC is its strongest financial arm.
John J. Mack
CEO, Credit Suisse First Boston
He's called "Mack the Knife." Since jumping from Morgan Stanley last year, the CEO of CSFB has cut some 3,000 jobs, and the severance costs contributed to a billion-dollar loss in the fourth quarter. Mack has also been busy with damage control. In January, he paid a $100 million fine to settle SEC allegations that the firm charged investors outsized trading commissions in return for initial public offering allocations. And CSFB is one of the firms New York attorney general Eliot Spitzer is investigating for conflicts of interest. Still, it is one of the strongest franchises on Wall Street. It was the leading underwriter of junk bonds in the first quarter, topped the list of global M&A advisers, and is actively seeking to increase its presence in Europe and Asia.
Henry Paulson Jr.
CEO, Goldman Sachs
When markets go south, Wall Street investment houses go with them — even Goldman Sachs, the bluest chip in the investment-banking industry. Since Hank Paulson, 55, ushered the company through its public offering in mid-1999, however, Goldman has continued to outperform its peers. In one of the most difficult years in a decade, its revenues slipped by just under 6 percent last year, compared with a drop of 14 percent at Merrill Lynch.
Its premier franchises in M&A advisory services and securities underwriting are extraordinarily attractive assets to megabanks like Citigroup and J.P. Morgan Chase, which both sport market caps far larger than Goldman's. Paulson is determined to keep Goldman independent, but with its stock down 40 percent from a peak of $130 in 2000, that could be difficult.
CEO, BNP Paribas
With total assets of $735.8 billion on December 31, 2001, Paris-based BNP Paribas has grown through acquisitions into one of the world's largest banks and the second-largest in the euro zone. The self-styled "bank for a changing world" has offices in 87 countries and a finger in every retail- and investment-banking pie.
Ambitious and micromanaging, 60-year-old CEO Pébereau reportedly seeks a cross-border merger of equals with a European peer. Such a transaction, which would have been unthinkable a few years ago, could turn BNP Paribas into the world's largest bank. A former French Finance Ministry official, Pébereau may describe himself as risk averse, but he's not afraid to put his money down on a deal.
Robert E. Rubin
Chairman of the Executive Committee, Citigroup
Rubin hasn't been U.S. Treasury Secretary since 1999, but he still wields considerable influence. Last fall, when the Senate Finance Committee convened to discuss post-September 11 economic policy, it was Rubin, not incumbent Treasury Secretary Paul O'Neill, who was invited to appear alongside Alan Greenspan. Indeed, Rubin, 63, is frequently mentioned as a possible successor to the Fed chairman.
He's an economic guru for Senate Majority Leader Tom Daschle, and when he pays a courtesy call to Japanese Prime Minister Junichiro Koizumi, his advice on righting Japan's economy makes headlines. Rubin's star was tarnished a little when it was revealed that he called a Treasury official to discuss the possibility of helping Enron — Citigroup was one of Enron's lead bankers — but his public comments can still send ripples through markets.
Managing Director, UBS Warburg
Every investment bank on Wall Street has been reducing head counts to weather the fall in market activities. Some, however, are taking the opportunity to upgrade their investment-banking teams. UBS Warburg, for example, snared Sine from Morgan Stanley to head up its technology, media, and telecom division.
Sine, 47, a major figure at Morgan Stanley Dean Witter, advised on such deals as AOL-Time Warner and Viacom-CBS. Since coming to UBS Warburg in February 2001, he has helped lure still more experienced bankers from both Goldman Sachs and CSFB. The massive reshuffling could herald a shift in the balance of power in investment banking.
Managing Partner, J.P. Morgan Partners
Jeff Walker is feeling the heat. The managing partner of J.P. Morgan Partners presides over the largest private-equity operation in the country. With more than $30 billion in assets under management, JPMP has investments in more than 1,200 private and public firms.
Thanks to big investments in the technology and telecommunications sectors, the division has taken massive write-downs to its portfolio, and contributed losses of $1.2 billion to parent J.P. Morgan Chase last year. Walker, 46, who apparently has the support of CEO William Harrison, is now angling toward life sciences and industrial-growth companies. With the IPO market still in disarray, JPMP may continue to show losses, but it has a lead position in taking the next best risk.
When Sandy Weill and John Reed announced the merger of Citicorp and Travelers Group four years ago, they spoke of making the one-stop financial-services shop a reality. Pipe dreams, it turns out. Reed is long gone, and Weill intends to spin off Travelers Insurance Group when conditions permit. Still, he now sits at the helm of the largest, most globally diversified financial-services firm in the world, with a range of services no competitor can match. Not everything is coming up roses, however. Citigroup has taken losses of $2.2 billion on loans to Argentina so far, and has an estimated exposure of $1 billion to Enron. But in many parts of the world, Citi is the only bank.
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