Natwest Aims for Investment Banking Elite

The man at the helm of Natwest Markets, Peter J. Hall, has his eyes fixed firmly on the top tier of global investment and corporate banking.

Mr. Hall, 47, joined Natwest, the corporate and investment banking arm of Natwest Group, in 1984 as the founding chief executive officer of its Australian investment banking business. Ten years later he took charge of its North American operations. And the subsidiary named him its president and chief operating officer in January.

During the past two years, Mr. Hall, who is based in London, was the driving force behind several acquisitions. Among them: a high-profile merger advisory boutique, Gleacher & Co., now Gleacher Natwest, and Greenwich Capital Holdings, formerly the section 20 securities subsidiary of Long-Term Credit Bank of Japan Ltd.

Tuesday, as Natwest Markets reported that its 1996 pretax profits were up 52%, to $762 million, Mr. Hall spoke with American Banker about his strategy.

What do your 1996 earnings figures tell you?

HALL: For us, 1996 has been a year of considerable change and investment. The trend is encouraging, but the actual absolute number is not as good as it should be. Our return on capital is not exciting. One of the reasons for that is, we are still going through the process of moving our business away from the traditional wholesale banking business, while at the same time we are investing heavily and continuing to develop the higher value-added businesses.

What are Natwest Markets' biggest challenges?

HALL: The integration of the acquisitions of Gleacher and Greenwich. We also brought on a pretty much completely new senior management team in the last 12 months. Another challenge is to focus on development of a very sound infrastructure and organization. But the key issue for us is Europe and to a degree Asia as well. We need to further develop our strategic thinking on Europe.

Who do you see as your primary competitors?

HALL: Looked at in a broad sense, we see our major competitors as the top tier of global investment banks, to which we aspire. There is no point in being in the second tier. The European universals (such as Deutsche Morgan Grenfell, Credit Suisse First Boston, and Barclays de Zoete Wedd) are the organizations against which we compete most heavily for one of those positions.

What are your expectations for Gleacher Natwest?

HALL: What Gleacher Natwest gives us is unquestioned execution credibility in that vital part of the product mix, the M&A business. It is arguably the highest-profile, highest-value-added end of the activities that we're involved in. We could have spent, quite easily, 10 years trying to build that business from a de novo base, only to find that after 10 years we've really gotten nowhere at all.

What are Natwest Markets' greatest strengths?

HALL: There is really developing a strong sense that we can emerge as a winner. Acquisitions and recruitments last year were very important in putting in place an absolutely first-class senior management team. Unless you've got that, you really don't have a lot in our business because all the other things tend to cascade from it. You start to get this cultural image, which is about winning. It's about confidence and self-belief. These are absolutely vital.

Do you foresee any acquisitions?

HALL: No. In a sense, we've done the easy part; we now have to deliver on those acquisitions. The real issue for us is not about making more acquisitions but about getting value from the ones we have made, integrating and building on them, leveraging on what we have acquired.

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