UBS (>> UBS AG) has poached Bank of America Merrill Lynch's (>> Bank of America Corp) top European dealmaker Andrea Orcel, the architect of many of the region's biggest banking deals, to co-head its investment bank with Carsten Kengeter.
The Swiss bank said that Orcel will take up his new post on July 1, reuniting the Italian banker with UBS Chief Executive Sergio Ermotti, a former colleague at Merrill.
Losing Orcel, one of the driving forces behind the break-up of Dutch lender ABN Amro in 2007, is a blow for Bank of America, under pressure to fix its flagging performance.
It is equally a coup for the Swiss bank, which is fighting to restore its fortunes after a $2 billion trading scandal cost previous boss Oswald Gruebel his job last year.
At UBS, Asia-Pacific investment banking boss Alex Wilmot-Sitwell will become investment banking chairman, leaving Chi-Won Yoon the sole chief executive of that region.
Fluent in four European languages and in his late 40s, Orcel is a 20-year Merrill Lynch veteran and the banker of choice for clients like Spanish bank Santander (>> Banco Santander, S.A.) and Unicredit (>> UniCredit SpA), according to bankers at other firms.
At the height of the crisis in 2008, Merrill Lynch paid him close to $34 million in stock and cash for his services.
"He is effective, even ruthless, when it comes to getting things done. There is a good chance some of his clients will go with him (to UBS)," said a banker who has worked across from Orcel on several deals.
"He elicits a strong response from clients, they either love him or hate him."
Bank of America declined to comment.
"NOT GREAT FOR US"
Bank of America is also facing the departure of Jonathan Moulds, president of Europe and Canada, who will retire at the end of the second quarter, according to an internal memo to staff, obtained by Reuters.
In January, Bank of America shook up the leadership of its corporate and investment bank, promoting Christian Meissner to head of the unit. Meissner joined the bank in April 2010 from Nomura Holdings (>> Nomura Co Ltd).
Meissner was now also appointed interim president of Europe and Emerging Markets without Asia, the memo said.
The firm is under pressure from investors to improve performance after the bank lost money in four of the last six quarters and as its stock has halved this year.
In recent weeks, Bank of America has been cutting jobs in equities, mortgage-backed securities and equities, according to sources familiar with the situation.
Executives are also expected to reveal next month how a company-wide cost-cutting round will impact capital markets, wealth management and commercial banking operations.
Orcel had been offered the job that Jonathan Moulds was leaving, but had instead taken the position at UBS, according to a person familiar with the matter.
A Bank of America insider said it was not surprising to see senior people leaving, as the restructuring is enacted.
"Andrea is a very key person so it's not great for us," the person said.
Orcel helped steer Santander through the ill-fated split of ABN Amro, the largest banking transaction in history.
While the deal pushed Royal Bank of Scotland and Fortis to near collapse, Santander agreed to sell ABN's Italian business for a hefty $13.2 billion to Banca Monte dei Paschi before it had even taken control of the asset.
This year, Orcel sold Belgian lender KBC's (>> KBC) Polish unit to Santander for $1.37 billion and worked on a 7.5 billion euro capital hike for Unicredit <CDRI.MI>.
He had been touted as a candidate for Unicredit chief executive before the appointment of Federico Ghizzoni.
Brother Riccardo Orcel was a top executive at BAML until last year, when he left a job running investment banking for central and eastern Europe, the Middle East and Africa to join Russia's second biggest lender VTB (>> Bank VTB OAO).
Andrea Orcel worked on VTB's privatization last year, a deal worth $3.3 billion.
Sergio Ermotti, who worked at Merrill Lynch from 1987 to 2005, is overseeing the return of UBS to its Swiss roots, the comparatively conservative and stable-profit businesses related to private banking.
The future of Kengeter has been widely questioned since the trading scandal last year, which also claimed equities co-heads Francois Gouws and Yassine Bouhara.
"Sergio knows Orcel very well, it is normal for a new chief executive to want to bring in people he is close to and has worked with before," a second person said. "This is a great hire. Orcel is a relationship man, not a manager."
It is likely that UBS corporate finance bosses Simon Warshaw and Matthew Grounds will report into Orcel as well as Kengeter when he joins the bank.
"Carsten has a trading background and Andrea is focused on relationships with clients, there should be a natural fit," a third person said.
($1= 0.7582 euros)
(Additional reporting by Sarah White in London and Katharina Bart in Zurich; Editing by Steve Slater and Elaine Hardcastle)
By Sophie Sassard and Victoria Howley