U.S. Bancorp Piper Jaffray said Friday that it had started up a New York fixed-income sales and trading desk that is focusing on mortgage-backed securities.
The investment banking arm of Minneapolis-based U.S. Bancorp last month opened a New York equity sales and trading operation; both it and the fixed-income group now have offices in Manhattan's Chrysler Building.
In an interview Friday, Michael Effron, the manager of long-term taxable trading at Piper Jaffray in Minneapolis, said "it is our intention to grow" the fixed-income office by making selective hires, particularly on the sales side.
Piper Jaffray now has two fixed-income specialists for tax-exempt securities. It added another three executives in recent weeks - two mortgage securities traders from J.P. Morgan Securities and one investment banker already employed by the firm who will move to taxable sales, Mr. Effron said.
Strengthening the firm's mortgage talent complements its corporate debt and agency debt capabilities - two areas in which Piper is already strong, Mr. Effron said.
Piper had noted more demand for its mortgage product from New York clients, he said. Moreover, "there has been some shifting around of mortgage talent in the Street, and a majority of the mortgage talent is in New York City."
"When you take the combination of the three factors - the increased demand we see from our client base, the fact that we didn't have a taxable fixed-income presence in New York City, and the availability of talent - it all made sense to expand into that market," Mr. Effron said.
Stephen Biggar, an analyst at Standard & Poor's, said Piper's fixed-income expansion makes sense in a market that favors banks with less-risky businesses and more-predictable earnings streams. But "clearly equity trading is on the other end of the spectrum in terms of volatility."
Still, Mr. Biggar said, "Maybe" having a New York office "will make them be perceived as a larger player."
Piper said that on May 14 it hired trading veteran Jim Perillo as senior a collateralized mortgage obligation trader and team leader for the mortgage structured products trading group. He had been a vice president and senior trader with J.P. Morgan Chase's securities unit. And last week it hired Andrew Collins as a senior trader specializing in structured products, away from J.P. Morgan Securities, the company said. (Mr. Collins is not to be confused with the firm's commercial banking analyst who goes by the same name.)
Mr. Effron said the expansion has been in the works since October, and is unrelated to the firm's announcement two months ago that its parent had granted it some autonomy in exchange for a percentage of its revenues.
In the third quarter Piper will be restructured so that it remains a subsidiary of U.S. Bancorp, but with the freedom to decide its own compensation, benefit, and retirement plans. It would also have its own human resources, legal, and compliance departments, and would have spending autonomy in areas such as marketing and technology.
