Roberto Mendoza and Peter Hancock, who were prominent executives at the former J.P. Morgan & Co., are starting a company that will consult banks on managing risk in derivatives markets.
Mr. Mendoza, 54, is leaving Goldman Sachs Group after just eight months there as a senior investment banker based in London. He left his previous job, as a vice chairman at Morgan, last April.
Mr. Hancock, 42, resigned as Morgans chief financial officer in September, less than a week before the company announced its agreement to be acquired by Chase Manhattan Corp. This is his first venture since leaving Morgan.
The two have agreed to acquire a controlling stake in Gen Re Securities Holdings, the financial products division of General Re Corp., a subsidiary of Berkshire Hathaway Inc. Financial terms of the transaction, which is slated to close in the third quarter, were not disclosed.
General Re Corp. said it would retain a substantial minority equity position in the firm and be part of a consortium of financial guarantors.
In a news release, Mark Byrne, chairman and chief executive officer of Gen Re Securities, said the plan will let that company broaden its business plan and reach its targets sooner. Mr. Byrne, who is also based in London, did not return a phone call from American Banker Monday.
The new company will advise corporate, individual, and government clients on measuring and limiting risks in derivatives markets and will eventually take on some of its clients risks through its own trading operations.
A spokeswoman for General Re, of Stamford, Conn., said the firm ultimately will go beyond derivatives. She would not elaborate.
Mr. Hancock was global head of derivatives at Morgan from 1990 to 1995. The banking company developed a reputation as having a sophisticated approach to managing derivatives risks, analysts said. As derivatives grow in importance to risk management, other banking companies might be able to benefit from having outside objective advice on how to manage their portfolios, analysts said.
The venture teams Mr. Mendoza and Mr. Hancock with Warren Buffett, chairman and chief executive officer of Berkshire Hathaway, who said in a news release that the two are the kind of people I want to be in business with.
A spokeswoman for Goldman Sachs said the firm had been informed of the talks between Mr. Mendoza and Gen Re early on. Goldman, which has close ties to Mr. Buffett, is not participating in the venture.