Top Barclays Capital Executive Quits Amid Credit Turmoil


The head of a key European structured finance division at Barclays Capital has quit this week, sources familiar with the matter said, as market turmoil battered the investment structures that his team helped arrange.

Edward Cahill, who had led the European collateralized debt obligations (CDO) division, left on Monday after returning from holiday, the sources said, confirming reports on Friday.

Demand for CDOs, portfolios of debt securities divided and sold in pieces based on their relative exposure to default risk, has boomed as investors have demanded high yields.

But recent turmoil in the market for U.S. subprime mortgages, many of them packaged into CDOs to make them attractive to investors, has focused regulatory and market concern onto the structures.

Cahill's team at BarCap have been among the most innovative in the market, embracing highly leveraged structured investment vehicles known as SIV-lites, which combine traditional SIV and CDO technologies and have been more profitable.

Standard & Poor's cut ratings on two SIV-lite investment vehicles by up to 17 notches on Wednesday after the U.S. mortgage market crisis hit the value of securities they bought and their short-term funding dried up.

SIV-lites can be more than four times more leveraged than traditional SIVs and invest in portfolios that have less sector diversity. With short-term funding disrupted and prices for their assets dropping, some are now being forced to sell assets at a loss.

A spokesman at Barclays Capital said the bank did not comment on executive hires or departures.

Cahill had joined the investment banking arm of Barclays in 2004 from JP Morgan, where he did CDO trading and later CDO structuring, an area he used as a springboard to later develop SIVs at BarCap, the sources said.

Cahill's move echoes other departures in the debt market, with ABN Amro's head of leveraged loan syndications, Arjan van Rijn, resigning this week. ABN said Van Rijn's move was a personal career decision unrelated to problems in the credit markets.

Related Tags