Deutsche Bank released its two veteran co-heads of U.S. fixed-income credit research, Paul Tice and Mark Girolamo, late Wednesday. David Folkerts-Landau, Deutsche Bank's London-based global head of markets research, said "[Tice and Girolamo] are very nice guys, and they worked hard here, but we terminated them because we need truly strong leaders in all facets of research management, and they just didn't fit the bill."
Folkerts-Landau continued, "It's been clear to me and others here that U.S. credit research is not meeting the expectations we have for it. I mean we're spending a lot of money here on this department." He said he did not think Tice and Girolamo did an adequate job of combining management of the 10 analysts that report to them or in working with trading/sales, and investment banking.
Both Tice and Girolamo, reached at their homes, declined to respond to Folkert-Landau's comments.
Other investment-grade analysts were taken aback by the news. "You're kidding," said one Charlotte, N.C.-based rival. "Those guys were multiple-listed on II's team, had good reputations and DB was climbing through the league table in corporate [debt underwriting.] What more could any analysts do?" A New York-based analyst adds the only reason he can think of for Tice's dismissal was his bullish take on Enron through last summer.
Deutsche Bank has already narrowed its search for replacements to a handful of candidates, Folkerts-Landau says, adding that none of the candidates under consideration are internal. "We have no one currently on staff who met the need for strong leadership skills, deep customer relationships and original research capabilities."
Also let go wereWalter McGuire, a global high-yield strategist, and Robin Lochner, a high-yield wireless telecom analyst. Both Lochner and McGuire reported to David Bitterman and Andrew Van Houten, co-heads of high-yield research, who did not return calls. Lochner and McGuire could not be reached.
Tice and Girolamo have had long and high-profile runs on the sell-side. Tice, who covered the energy sector at Deutsche Bank, started his credit research career at Lehman Brothers in 1989. In 1997 he joined Deutsche Bank. He was ranked first in Institutional Investor's All-America Fixed-Income Research Team in energy at Deutsche Bank in 1998, a step up from second in 1997, and fourth last year. Girolamo, who came from Bear Stearns, where he worked from 1987 to 1998, covered finance companies, insurance and banks. He was II-ranked from 1991 through 2001, taking firsts in 1997-98, a third in 1999 and runner up slots in 2000 and 2001.