November 30, 2011, Bloomberg Businessweek
Cantor Fitzgerald & Co. plans to add at least 200 people next year in an expansion that defies a wave of layoffs at the investment bank’s competitors.
“There are unbelievable opportunities as the financial industry is deleveraging from the very large debt and real estate bubbles,” Chief Executive Officer Shawn Matthews said in a telephone interview.
The firm expanded 20 percent this year, boosting headcount in areas including credit trading, leveraged loans and fixed- income sales by more than 200. Wall Street banks are firing staff after a combined 41 percent decline in investment-banking revenue in the third quarter at JPMorgan Chase & Co., Bank of America Corp., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley. The cull has claimed 200,000 jobs this year.
“We are looking to build out our sales and trading businesses in both debt and equity,” said Matthews, who is based in New York. “There are a lot of qualified people looking for an alternative to the traditional financial services model that has made many banks act more like massive hedge funds.”
U.S. lawmakers passed the Volcker rule last year as part of the Dodd-Frank Act to restrict banks from making bets with shareholder money. In Europe, banks are unloading real-estate and infrastructure loans to meet regulators’ requirement for a 9 percent core capital ratio earlier than planned. Lenders have pledged to cut assets by more than $1 trillion within two years.
The capital rules, designed to prevent a rerun of the 2008 financial crisis, are being adopted as banks struggle to contain losses on sovereign debt that dim the prospect of an economic recovery. The Organization for Economic Cooperation and Development cut its 2012 global growth forecast to 1.6 percent from 2.8 percent on Nov. 28.
“The European Union will have a hard time to remain intact,” Matthews said. “A few countries will need to drop out of the EU for it to be long-term viable. The repercussions of this will affect us for at least a decade.”
The firm, majority owned by its staff, is interested in “bolt-on” acquisitions from banks looking to reduce their overseas and non-core businesses, Matthews said.
“We haven’t seen significant sales yet as people are still trying to work out where we stand in the macro environment,” he said. “Banks will start selling a lot more assets next year, including some of their units.”
Cantor Fitzgerald lost 658 of its 960 New York staff in the Sept. 11 terrorist attack. It now employees about 1,400 people worldwide.
The firm, founded in 1945 by Bernie Cantor and John Fitzgerald, hired David Pichler this month in New York from Gleacher & Co. as co-head of credit fixed-income. Jason King and Jason Caamano joined from UBS AG in June as managing directors for the risk arbitrage and relative value team.