HSBC Holdings, which has struggled to build its investment banking franchise, said on Wednesday that its head of global capital markets, Danny Palmer, was leaving after less than three years with the firm.
HSBC made waves when it hired Palmer from U.S. rival Morgan Stanley in September 2004 with a reported pay package of up to $15 million over three years, part of an expansion under then investment banking co-head John Studzinski.
But the London-based bank has been criticized by analysts for spending too much money on high-priced bankers and failing to break into the top ranks of equity underwriting and M&A advisory with the likes of Morgan Stanley, Goldman Sachs and UBS .
HSBC is Europe's biggest bank but ranks number 18 in global equity underwriting this year, according to data from Dealogic, after finishing at 20 in 2006 and 16 in 2005.
Palmer was originally hired as global head of equity capital markets, which was his specialty at Morgan Stanley, and he was promoted to also oversee the debt capital markets team in February 2006.
"He's leaving with immediate effect," an HSBC spokeswoman in Hong Kong said, declining to comment on the reason or if Palmer was moving to another organization.
HSBC's equity capital markets group will now be headed by Paul Hand and Robin Phillips, while Spencer Lake will run debt capital markets, the spokeswoman said.
Studzinski, himself a Morgan Stanley alum, was considered the man behind Palmer's hiring in 2004, as he was leading a push to boost the British lender's investment banking operations.
Palmer's pay package was worth up to $5 million annually over three years, according to a report in the South China Morning Post at the time of his hiring. The well-connected Studzinski was hired in 2003 to lead a five-year program alongside Stuart Gulliver to build a world-class investment bank within HSBC, which was considered a better alternative than an expensive
acquisition of a firm like Lehman Brothers or Merrill Lynch .
The bank is a long-time heavyweight in the corporate loan and debt space, given its broad range of business relationships and huge balance sheet, but it has been less successful cultivating ties within the highly competitive IPO and M&A worlds.
Studzinski left HSBC in May 2006 to join private equity house Blackstone Group, and HSBC has recently signaled it was focusing mainly on emerging markets and financing over the next few years, paring back its banking ambitions.