Some remodelling is going on in the London offices of several investment banks to try to present a friendlier face to the world. But one bank is at a severe disadvantage in this effort to persuade corporate clients that they will be treasured. It is Lazard, the house that has itself been riven by a power struggle for the past year.
Bruce Wasserstein could not be taken for warm and friendly, even if he sat on a chintzy armchair stroking a cat. The man famed for being one of Wall Street's toughest deal-doers is now head of Lazard and the battle that he has been fighting with the group's chairman, Michel David-Weill, has been an un-edifying public spat. Clients seeking the discreet and polished service that used to be associated with the City's banking houses must be aghast to see the bank handling its affairs so messily.
Wasserstein's insistence that Lazard should be floated on the New York Stock Exchange this year seems to have pushed David-Weill into capitulating. However, those who have watched the tussle at close quarters do not take the prospect of a successful IPO for granted.
The wily Parisian, aware that Lazard needed a shake-up, invited Wasserstein into the firm in 2002, but has not been happy about the way he has run the bank. To recruit his chosen team, 'Bid 'em up Bruce', as he is known, promised huge guaranteed bonuses, which ate into the dividends that David-Weill and fellow shareholders believed to be their due.
Wasserstein's game plan had been to sell the business and make himself a high return on the capital he had invested, but he needed David-Weill's co-operation to make a flotation work. That has been dangled tantalisingly in front of him, withdrawn and dangled again as negotiations have progressed. There are those who suspect that it could be withdrawn yet again. What, they wonder, would an angry Wasserstein do then? While the question is an interesting one for City gossips, rivals may be thinking of the opportunities to poach Lazard's clients.
A further hunting ground is detected at Cazenove, that most establishment of City firms. Now that it has conceded that it cannot have an independent future and is joining forces with JP Morgan, rivals believe that client conflicts are inevitable. Cazenove chairman David Mayhew is the quintessential relationship banker, someone whose clients put him near the top of their Christmas card list. But not even the old Etonian Mayhew is likely to be able to smooth the feathers that may be ruffled by the joint venture. This thought has encouraged rival bankers to work on their relationship skills before they go a-courting.
HSBC has been carefully creating a new investment bank based squarely on the philosophy of fostering relationships rather than being deal-driven, as powerhouses such as Goldman Sachs so often appear to be. HSBC chairman Sir John Bond took the banking world by surprise when he recruited John Studzinski, one of the best known players at Morgan Stanley, to build up HSBC's investment banking side. American-born Studzinski had forged one of the strongest client bases among FTSE chiefs of any banker, and Bond has backed him to recruit about 200 bankers to help build the business. The hope is that Studzinski will be the attraction that persuades clients to change their investment bank.
But in the meantime, HSBC is of a scale where it already has relationships of some sort with probably every FTSE 100 company. The new investment banking drive should encourage those companies to buy more services from the bank, even if they also continue to do business with more established investment banks.
If the projected wave of takeover activity for 2005 materialises, there should be plenty of fees around to keep most of the banks well fed. But it is always worth trying to widen the potential fee net. Studzinski's old house has been trying to position itself to be first in the queue for a potentially lucrative extra stream of income.
Under the UK leadership of Simon Robey, a former Lazard man himself, Morgan Stanley made a couple of notable hirings last year. Jeremy Heywood was a former private secretary to Tony Blair, and David Miles was recruited by the Government to produce a report on mortgages. Robey intends that Morgan Stanley should sidle up a little closer to the public sector and these two appointments should help.
Relationships are, after all, about people.