High-profile banker keeps his head down

PUBLISHED : Monday, 26 September, 2005, 12:00am
UPDATED : Monday, 26 September, 2005, 12:00am

Having survived a flurry of mergers, UBS chairman Rory Tapner is focused on Asia expansion

ASKED THE SECRET of how he survived and prospered in the famously competitive world of investment banking, Rory Tapner, chairman and chief executive of UBS for the Asia-Pacific region, permits himself an ironical smile.

'By keeping my head down,' he replies.

Mr Tapner's modesty belies his professional reputation of a consummate dealmaker. In a long career, he has been credited as the brains behind some of the biggest and trickiest transactions in financial history.

During the 1990s in Europe, he worked closely on a clutch of the era's giant privatisations: the second round of British Telecom, the initial public offering for Deutsche Telekom, and the sale of Railtrack - Britain's crumbling railway network. More recently, and closer to home, he also played a crucial role in the 2000 acquisition of Hongkong Telecom by PCCW.

He hopes that rich experience and deep deal-making savvy will help land UBS big business in Asia. In particular, he is eyeing a leading role in some of the international stock issues set to emerge soon from the mainland, like the expected initial public offering for the Bank of China (BOC) for which UBS won the joint mandate last month.

Mr Tapner, 46, has worked for a series of companies in his 22-year financial career without ever once hopping from one employer to another. He started out in 1983 by joining London-based stock broker Rowe and Pitman.

Two years later, the so-called 'Big Bang' financial reforms swept away the old regulatory barriers between merchant banks and brokers. Rowe and Pitman was soon snapped up by merchant bank SG Warburg to form one of a new league of investment banks then taking shape in the City.

In the early 1990s, as head of British corporate finance at Warburg, Mr Tapner oversaw a string of seminal transactions that defined the changing corporate landscape of Britain. At Warburg, he was responsible for introducing new financial techniques to the City such as book-building, now used almost universally to gauge demand for stock issues and set their price.

But despite an illustrious past and a string of big deals to its name, Warburg simply did not have the financial heft or the international reach to survive in the rapidly globalising financial markets. The pride of British investment banking was bought in 1995 by Swiss bank SBC.

The acquisition was followed by a bloodletting of unprecedented ferocity. As dozens of senior Warburg colleagues either jumped ship to other City houses or were eased out by their new masters in Zurich, Mr Tapner survived - as he would have it - by keeping a low profile. When the dust settled, he was appointed head of equity capital markets at the newly renamed SBC Warburg.

Although by his own admission, Mr Tapner found the demands of running an international business a 'large shock' after the more parochial world of British investment banking, once again he thrived.

With the undoubted corporate financial record of the old Warburg bolstered by SBC's strengths in derivatives and block trading, SBC Warburg and Mr Tapner enjoyed 'a hell of a run' through the late 1990s, acquiring the venerable Wall Street house Dillon Read to become Warburg Dillon Read.

But consolidation to compete was the order of the day and in 1997 SBC merged with its larger Swiss competitor UBS. Although it was the UBS name that survived, in the investment banking departments the merger was more of a reverse takeover by the smaller Warburg. Yet again, Mr Tapner survived and prospered, becoming co-head of investment banking at the once more renamed UBS Warburg.

'I've stayed with the same firm for over 20 years,' he muses, 'but boy, has it changed.'

Mr Tapner took his next step up the ladder in May last year when he accepted the top job at UBS in Asia. In addition to running the investment bank, his role involves overseeing UBS's large regional private banking and asset management units. Despite the broader responsibilities, Mr Tapner says the job is essentially similar to his old one in investment banking, only now the clients include governments, institutions, rich private banking customers and corporations.

He aims to spend a third of his time dealing with clients, a third on internal matters 'looking after people and setting the culture', and a third working on strategy.

'It's easy to budget time. The difficult thing is sticking to that budget.'

Like any executive with regional responsibilities, Mr Tapner finds that one of his biggest problems is the amount of downtime spent on airliners, both within Asia and on frequent trips to Europe and America. Not for him, however, is the credit card-operated telephone in the armrest or the airline internet link.

'I spend so much time on the ground in conversation - either direct or on the phone - that time on aeroplanes is thought time. I find planes very helpful for that.'

Occupying his thoughts at the moment is how he can successfully grow UBS's business in Asia. The bank already claims the No1 slot in wealth management, although Mr Tapner is coy about revealing exactly how much money the bank manages on behalf of its rich Asian customers.

Privately, other UBS executives are less shy, citing that the assets UBS had under management at the end of last year is substantially greater than the US$61 billion closest rival Citigroup claimed at the time.

And new money is flowing in fast. The double-digit growth rate UBS claims for its assets under management would scarcely be credible were it not that other private banks say they are experiencing similar expansion as rich Asians demand better returns from more active management of their capital.

Despite being the biggest private bank in the region, UBS has captured a market share of only about 3 per cent, estimates Mr Tapner, which he says shows the scope for consolidation in the sector. But rather than acquiring other private banking operations, he is focusing on recruiting the right people. At the moment, UBS is hiring as many as 50 client advisers a month.

On the investment banking side, UBS has an established place in equity sales and trading with a string of brokerage offices across the region and the leading position among the qualified foreign institutional investors (QFII) permitted to deal in yuan-denominated securities in China on behalf of offshore clients.

Mr Tapner plans to put more resources into his debt team in order to build up the bank's presence in the region's bond markets.

In equity capital markets, UBS has landed some lucrative deals in Australia and the smaller markets of Southeast Asia and North Asia.

These days, however, an investment bank's success is increasingly judged by its ability to win big initial public offering mandates in China. There, Mr Tapner scored one notable success last month when UBS was chosen, alongside Goldman Sachs, to handle BOC's multibillion dollar IPO, which is expected next year. Rival bidders Merrill Lynch and Deutsche Bank were squeezed out.

BOC said the winning investment houses owed their victory to their 'close long-time association with Bank of China'. Mr Tapner agrees, saying that in China, deals are won only after a long period of courtship. 'You have to get in early; you have to help companies and get to know them. A lot of the early groundwork is done for no fees but bit by bit you earn their trust that you can deliver.'

UBS's case cannot have been hurt by the bank's pledge in June to buy a US$500 million stake in BOC. But even that did not guarantee success. Merrill Lynch invested about US$750 million in the Chinese bank as a member of a consortium lead by Royal Bank of Scotland but still failed to win a share of the mandate.

In the long run, Mr Tapner is hoping UBS's links with Bank of China will open doors for its bankers at BOC's domestic clients. That will place UBS in an enviable position to provide growing Chinese companies with international investment banking services as they expand beyond their domestic market.

'We are growing our footprint. It is like research and development for a factory. We are not going to get rich out of China in the next two or three years; there is not enough business. But we absolutely have to lay down a platform for the future.'

Mr Tapner is busy laying foundations in other areas, too. Earlier this year UBS bought a 49 per cent stake in a Chinese asset management company and it is currently expanding its role as a QFII.

He denies, however, that UBS was pipped to the post last year when Goldman Sachs was granted approval to set up a investment banking joint venture on the mainland with Gao Hua Securities.

For the time being, says Mr Tapner, with mainland markets moribund, there is little advantage to having a domestic stock underwriting licence. At some point, however, stitching together a QFII business, research, underwriting and asset management could bring significant opportunities.

'The trick is to make moves at the right time - when you are comfortable. At the moment we are sitting back and watching things develop. When the time is right, we will push ahead.'

In the long run, says Mr Tapner, his time in Asia will be judged by whether UBS took advantage of all the opportunities on offer. In monetary terms, that means growing Asia's relevance to the global company by 50 per cent from 10 per cent of revenues today to at least 15 per cent by the time he relinquishes the job.

He is unlikely to do that by keeping his head down.


Rory Tapner was appointed chairman and chief executive at UBS in Asia last year. Before that he was co-head of global corporate finance at Warburg Dillon Read, a post he had held since 1999.

Mr Tapner was previously head of UK corporate finance, a post he held from 1993 to 1995, and then head of equity capital from 1995 to 1999, at SG Warburg, before the firm was taken over by SBC, which itself merged with UBS in 1997.

He came to SG Warburg via stockbroker Rowe and Pitman, which he joined three years before its acquisition by SG Warburg in 1986.