Apparently it pays to be a small fish in a big pond.
Cantor Fitzgerald, a smallish investment bank that's private, still plans to hire 1,000 people in the next several years, said Chief Executive Officer Shawn Matthews, expanding the investment bank's head count from 1,600. Including its affiliates such as BGC Partners, a brokerage operation, Cantor employs 8,000 people.
A combination of having smallish clients that generate revenue of less than $1 billion, being small itself with assets below $50 billion and being private and able to invest when others must pull back puts Cantor in a sunnier position than the big investment banks. During the last downturn a decade ago, the firm struggled after it lost 658 people during 9/11 when its offices on the 105th floor of One World Trade Center were destroyed.
Cantor has hired almost half of the 200 people it said in January it would recruit in 2012 and will "probably hire more [this year] depending on what opportunities are out there," said Matthews, 45, in an interview. "Our plans are still intact. We're aggressively hiring people and continuing to forge ahead. We are clearly in full growth mode."
We are clearly in full growth mode”
Cantor caters to the middle-market, or companies with annual revenue between $50 million and $1 billion, offering sales and trading capabilities on behalf of clients, commercial real estate financing, prime brokerage, and advisory and capital raising services. It competes mainly with New York-based bank Jefferies, which has been hiring aggressively and now is only making selective hires, bank officials said. Jefferies had 3,809 employees as of the second quarter 2012.
No Basel for Cantor
Matthews said Cantor can expand while big banks contract because of the "structural change in the financial landscape" that will affect other banks but not his. New regulations such as Basel III, a set of regulations among G-20 countries that will go into effect in January 2013, will force large banks, or those with at least $50 billion in assets, to set aside more capital. As a result, "they'll pull back and ultimately lay off employees," Matthews said.
Cantor doesn't have to implement Basel III regulations because it doesn't meet the $50 billion minimum for assets, according to the company.
As a private partnership, Cantor also is able to shield its financial results from view and doesn't have to report to public shareholders, enabling it to aggressively invest during down times in the industry.
European institutions may not be able to afford to be in capital markets, Matthews said, due to shrinking revenue and increasingly tough regulatory environments. "We're seeing them pull back and I think they'll continue to do that or close their capital markets operations as they get back to the core competency of being commercial banks," he said.
Growth Amid Layoffs
Royal Bank of Scotland, for example, recently announced around 600 layoffs, taking the total headcount reduction at the bank to 36,000 since it was bailed out by the U.K. government in 2008. Societe Generale is in the processing of shedding nearly 1,600 jobs in its worldwide investment banking units, while Credit Agricole is cutting 2,350 jobs in its investment bank and consumer finance divisions.
Cantor Fitzgerald is growing particularly in sales and trading and asset management. Cantor employs approximately 750 salespeople around the world. "I think I can significantly grow that number and continue to build out," Matthews said. In recent weeks it announced seven hires for its emerging markets fixed income sales and trading group from banks including Macquarie, HSBC, ABN Amro and Barclays Capital.
The firm is planning to "aggressively grow" asset management, both by hiring and buying asset management companies, Matthews said.
Recent hires have had at least 10 years experience. "Especially since there's a dislocation of the marketplace, we're typically doing seasoned hiring," Matthews said. "You can hire very talented people with excellent experience. There's not much reason to hire people who don't have experience at this point in time."
"Our biggest negative is we don't have enough time," Matthews said. "Certainly we are working as fast as we can to grow. We are clearly in a position to take advantage of what's going on. I'm not saying we need to do it by next Thursday, but we want to take advantage of a lot of opportunities. We don't see any end to them."
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