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Greenwich's Walsh Takes Leap to Buyside
Asset Backed Alert, Harrison Scott Publications Inc. (March 21, 2008)

At least seven structured-product specialists have left RBS Greenwich for buyside roles this month, including securitization-underwriting co-head Joe Walsh.

Walsh is headed to Fortress Investment. The early word is that his assignment will be to build a team that would invest in structured products whose values have plunged during the credit crisis - placing New York-based Fortress among an ever-growing list of firms that have been launching such opportunistic initiatives in recent months (see listing on Page 7).

While details remain scarce, Fortress could bring tremendous buying power to the table, given the $40 billion of equity that the outfit already runs through its private equity funds, hedge funds and real estate vehicles.

As for Greenwich, Walsh's departure would appear to leave his co-head, John Anderson, in charge of the Royal Bank of Scotland unit's asset- and mortgage-backed securities underwriting area. That group, which derives the bulk of its business from home-loan securitizations, has seen its deal flow dry up since the market for those transactions imploded last summer.

Nonetheless, Greenwich's higher-ups tried to convince Walsh to stay. "[Fortress] just made him an offer he couldn't refuse," an insider at the bank said.

Walsh served two tours of duty with Greenwich over the last 13 years. The first began around 1995, when he took a job as a vice president in the home-loan securitization area of predecessor Natwest Capital. He then became part of the Greenwich team when Natwest parent National Westminster purchased the investment bank later that year.

In 1996, Walsh left Greenwich to join the former Donaldson, Lufkin & Jenrette, where he helped build a group that managed home-equity loan and credit-card securitizations. He returned to Greenwich in 1999, playing a key role in the development of the company's current securitization division.

Walsh's exit comes amid a string of departures from Greenwich, topped by chief executive Jay Levine. He officially departs at the end of this month, after announcing he was stepping down at the end of last year. Structured-product traders Don Devine, Johan Eveland, Stu Kronik, Jesse Litvack and Paul Yablon have also left the bank since the beginning of this month, as has senior proprietary trader Morris Sachs. Like Walsh, each of the traders appears to be switching to the buyside - a move that has become increasingly common as investment banks see their debt businesses dwindle.

Yablon, for example, is now on board at Moore Capital, the $15 billion hedge fund shop led by billionaire Louis Bacon. Elsewhere, Anushka Krishnakumar shifted from a CDO-banking role at Greenwich to the bank's asset-backed securities syndicate area.

And what of rumors that RBS is scaling back its U.S. operations? Not true, say insiders, insisting that the latest exodus is a temporary one coinciding with the distribution of annual bonus checks. Still credit-crunch-related pressures remain in the background.

Greenwich's mortgage-bond desk raked in huge amounts of business for the bank in recent years. In 2006, for instance, deals backed by home-equity loans and subprime mortgages propelled the shop to a third-place finish in the league table for underwriters of U.S. asset-backed bonds. It was also the third most active manager of bonds backed by prime-quality home loans, according to Asset-Backed Alert's ABS Database. As those deals vanished with the onset of the current credit crisis, so did RBS' business. It finished 2007 in fourth place among ABS underwriters after experiencing a 40% drop in deal volume. In the MBS sector, where its activity dropped by half, the bank fell to ninth place.

Unlike many of its peers, Greenwich hasn't seen its heavy involvement in mortgage-bond underwriting play out in widespread writedowns on holdings of those instruments. RBS has taken $3 billion of credit-product writedowns so far, of which $1.9 billion involved MBS and CDOs involving subprime collateral.

Another $500 million of the markdowns were tied to U.S. mortgage-related assets that RBS assumed as part of its October takeover of ABN Amro's wholesale-banking and Asia operations. The rest were linked to leveraged loans (a listing of writedowns of $500 million or more by financial institutions can be found in the "The Marketplace" section of by clicking "Writedowns"). v



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