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Lazard CEO Ken Jacobs is leading the the firm's revival by ending the turmoil of the Wasserstein years and stressing growth areas like sovereign advisory and emerging markets.
Greece has been a nightmare for banks over the past year. The country's debt crisis has hammered the creditworthiness of European lenders, which hold large quantities of Greek government bonds. It has also roiled financial markets, hitting the trading operations of big international banks in London and New York and undermining their stock prices, as investors fear a default could be Europe's "Lehman moment."
For Lazard, however, the Greek crisis has presented nothing but opportunity. The investment bank has played a key role in helping to restructure the country's massive debts by serving as chief adviser to the Athens government. Matthieu Pigasse, who heads the bank's sovereign advisory business, counseled Finance Minister Evangelos Venizelos on a July agreement that would have banks and investors swap their bond holdings for new securities, with an average haircut of 21 percent. And in recent weeks Pigasse shuttled between his Paris base and Athens as part of the negotiations that produced a new restructuring plan late last month that will raise the haircut on Greek bonds to 50 percent. Such write-downs promise steeper losses for the banks but not for Lazard. Based on customary practice, the firm's advisory fee will be tied directly to the size of the haircut achieved.
For Pigasse, who advised Argentina on restructuring its debt after the country's 2002 default, the Greek deal is just the latest in what promises to be a thriving business of advising overstretched governments on how to reduce their debts. "In a nutshell, Lazard has become the worldwide leader in public debt restructuring," he says with French bravado.
The transformation of government advisory from a sleepy backwater largely confined to African and South American nations to a burgeoning first-world business is just one of the ways that CEO Kenneth Jacobs has been pursuing a subtle but profound makeover of storied Lazard since he was thrust into the job in 2009 following the sudden death of famed deal maker Bruce Wasserstein.
Jacobs has pushed to expand Lazard's business in emerging markets, an area where the firm has lagged many of its larger rivals....