Latin Finance - January/February 2010 - 22

Beacon of Stability by Staff Reporters J PMorgan has always drawn grudging respect from competitors, though some of its scrappier opponents criticize a reluctance to go too far down market or take much risk. This white shoe image fit perfectly with capricious 2009 capital markets, when clients craved stability and support. “We have a strong presence across the local countries and most of the clients that were active during the year were clients that traditionally have been very good clients of our firm,” says Nicolas Aguzin, CEO of Latin America at JPMorgan. “We had a very focused approach on the most relevant players of the region and that played in our favor quite well,” he adds. The numbers support the claim. For the first 11 months of 2009, JPMorgan was number one by M&A volume and top four in both DCM and ECM, according to Dealogic. In the more important fees ranking, the US house came top for investment banking overall. By December 2, JPMorgan had amassed $148 million in revenue from M&A, ECM, DCM and loans, or 12% of the $1.2 billion regional wallet, according to Dealogic. This was 40% more than in the previous year, when it ranked fourth with $107 million, or 8% of the $1.4 billion pool. Crucially, the bank came out of the investment banking meltdown stronger, with Bear Stearns under its belt and CEO Jamie Dimon on top of the financial world. This left it free to seize what it viewed as a sudden turnaround in the region when the stronger economies like Brazil quickly emerged from the rubble. Recuperating markets played to the strengths of JPMorgan, globally one of the few banks to emerge stronger from crisis. The shift to high yield presents a challenge. Investment Bank Equity House Bond House JPMorgan “We have a presence that is truly panLatin American,” says Aguzin. “Over the last couple of years we rose to the top of the rankings in most businesses,” he adds. Clients and competitors are generally full of praise for the region’s leading franchise. The only criticism of JPMorgan in the period was carping from other banks that it should have won much bigger with the sparkling hand it was dealt. Calling a Bottom “The improvement in sentiment was much faster than anyone anticipated. We read that quite well, but it wasn’t easy,” says Aguzin. A turning point for the veteran banker was getting equity placed for Cemex, which had emerged from a damaging $15 billion bank loan restructuring. JPMorgan prides itself in supporting a company that was in difficulty and placing a transaction that others said could not get done. “We had this conviction that this company is world class and the market seemed to have accepted that,” says Aguzin. Getting the mandate without being a major lender and landing on the left of documentation was a huge feather in JPMorgan’s hat. “The company just wanted to obtain the best execution,” says Aguzin, when asked why Cemex picked a bank outside the senior lending group. Presence on the only large nonBrazilian equity deal of the year underscored the benefits of longstanding regional presence. JPMorgan has offices in all countries, even hotspots like Argentina and Venezuela and the acquisition of Bear Stearns extended its reach to the Caribbean. It has recently addressed perceived weaknesses in Brazil. Repairing Credit As bankers hunkered down through the crisis, few predicted just how fast and furious credit would revive. But once the dust settled, the sell side was almost surgical about rebuilding, starting with high-grade sovereigns, then well known state entities, before cautious blue chip corporates led the way for a full-scale junk revival. The first act played directly to the strengths of JPMorgan. “We have a long-term model in the region, and are driven by long-term relationships,” says Roberto D’Avola, head of LatAm capital markets at JPMorgan. Having equity origination under the same umbrella as bonds and loans – D’Avola heads both debt and equity for LatAm – also helps. The origination structure is a result of a reorganization late 2008 that also saw the departures of veteran EM syndicate head Cynthia Powell and head of debt markets Mark Tuttle. The departures raised questions about JPMorgan’s fixed income future, but it swiftly laid those doubts to rest. 22 LatinFinance January/February 2010

Latin Finance - January/February 2010

Table of Contents for the Digital Edition of Latin Finance - January/February 2010