CHICAGO - Jim Hargrove, the head of Chicago-based Banc One Capital Markets Inc.'s smallyet profitable derivatives desk, left the firm last week to take a job with Bank ofAmerica's municipal derivatives team based at the firm's Charlotte, N.C., headquarters.
Bank of America spokeswoman Shirley Norton said Hargrove started this week.
Hargrove's departure from Banc One comes less than a month after Neal DeBonte, managerof municipal trading, exited the firm to work in the hedge fund business. Both men heldsenior management positions and were well respected by colleagues and competitors.
Hargrove, who joined Banc One two years ago, was the only remaining senior derivativesspecialist at Banc One at a time when more issuers are turning to hedge products. PeterOrr, another senior derivatives specialist, left last spring to join J.P. MorganSecurities Inc.
Hargrove, 36, joins a desk of seven other derivative marketers. He leaves a firm thatwas ranked 22nd nationally last year to join the firm ranked 10th by Thomson Financial.He previously worked at A.G. Edwards & Sons Inc. and at J.C. Bradford & Co.
The departures mark a setback in the advances made by Banc One over the last eight tonine months in rebuilding its municipal investment banking staff and the infrastructurethat supports it, after a series of high-profile departures. Public finance sources saidDeBonte and Hargrove's decisions to leave show that Banc One has yet to halt thehemorrhage, which began in 2001, of professionals on the bank's various desks supportingits banking staff.
Sources said both DeBonte and Hargrove were being actively recruited by the bank'scompetitors on a national level - as are other members of Banc One's capital marketsstaff. The two were lured by the opportunity provided by the new positions, but theirwillingness to make the leap was strengthened by their frustration with what they feelis Banc One's lack of commitment to the public finance business and the commercialbank's dominance in business strategies, sources said.
The reasons are similar to those cited by previous professionals who were among a waveof departures in 2001 and early 2002. Sources also said that many staffers' financialbonuses, which were handed out earlier this year, fell short of expectations.
"There's a lack of commitment and support. I think a lot of people feel angry andfrustrated and question the direction of where the group is headed," said one localmarket participant close to both men.
Bank officials stressed their continuing commitment to maintaining and growing theirpublic finance business, pointing out staff additions - including veteran investmentbanker Jon Savage as head of the local and state governments group. They also have plansto add about seven more professionals in various positions over the next several months.
"We are absolutely committed to the public finance business and we are activelyrecruiting," said Christine Cole, Banc One's head of originations, which includes publicfinance. Two new derivatives specialists will be hired, she said. With Hargrove gone,the derivatives desk now has two junior professionals only.
Since the merger of First Chicago NBD and Bank One in 1998, staffers' complaints havefocused on the superseding role the commercial bank plays in managing clientrelationships, despite the fact that it is often the public finance banker who has theties that open the doors to local issuers.
When the struggling parent bank's board hired former investment banking executive JamesDimon as president in 2000, public finance officials were promised that structuralchanges were in the works. Market participants said the bank has been slow to adopt newpolicies.
| Gene Saffold |
Gene Saffold, who was hired last spring as national head of municipals after BarrySmitherman was forced out of that post, has begun to repair the banking infrastructurewith the hiring of a handful of professionals. The firm also has in the pipeline or hasrecently completed a handful of senior-managed deals in the $100 million range thatshould help give its rankings a boost.Banc One fell to 22nd nationally last year from 16th in 2001, while in the Midwest itdropped to 12th last year from ninth in 2001.
