Investors nervously greeted the next chief executive of Macquarie Group yesterday even as the leading investor in British infrastructure outgunned its international investment banking peers with the promise of a 23 per cent rise in net profits.
Allan Moss, who will turn 60 next year, surprised the market with the timing of his retirement after 15 years in charge of the investment bank, contributing to a 10 per cent slump in Macquarie’s shares amid heavy broader falls.
Australia’s highest-paid executive, whose A$33.5 million (£15 million) pay packet last year scandalised Australia, will hand over in May to Nicholas Moore, the powerful head of the investment banking division and the country’s second-highest-paid executive.
Mr Moore, who banked A$32.9 million and could rake in A$40 million this year, is a 22-year veteran of Macquarie and for a third of that time has led a division that will contribute more than half of this year’s profit of A$1.8 billion. The 49-year-old, regarded as an aggressive dealmaker, has long been considered the leading contender for the top job at a bank that prides itself on cultivating internal talent.
Observers said that the market was mourning the highly regarded Mr Moss, who has cultivated a 30-fold increase in profits – and a A$200 million personal fortune - during his tenure.
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“Nicholas Moore has grown up in Macquarie as a deal-maker so I suspect that people do view him as more of a risk taker,” one analyst said. “Alan Moss is viewed as a very safe pair of hands so no matter who was stepping into the position, his retirement is incrementally a negative to Macquarie.”
Mr Moore asserted that he would not tamper with the lucrative “Macquarie model” – making lucrative fees through buying assets from toll roads to bowling alleys and selling them into separate trusts that the bank controls while taking little risk on to the balance sheet.
Peter Rice of BBY, a leading stockbroker, said that Mr Moore had been an architect, rather than simply a builder, of the model.
“Alan comes across as probably the most conservative looking guy you’d ever meet and by contrast, Nick is a bit more of a snappy dresser, a full head of hair and looks like a slightly more outgoing kind of guy,” Mr Rice said. “But the reality is that Nick . . . has had a very high degree of autonomy anyway and that’s easily the biggest operation within Macquarie, so it’s not like we’re going to see any sort of substantial shift one way or another.”
It emerged yesterday that the group could be facing write-downs of as much as A$230 million on some of its listed specialist funds, particularly in Real Estate Investment Trusts where market prices were below net asset values. That may reduce net profits by as much as A$70 million.
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But Macquarie’s overall position is stellar in comparison with many of its global competitors, which have taken multibillion-dollar write-downs as a result of the credit crisis. It has no exposure to US subprime mortgages nor to any off-balance sheet structured vehicles that have trapped many Wall Street banks.
Conversely, the bank said yesterday that it remained well positioned to exploit strategic opportunities, with A$9 billion of net capital - against a regulatory requirement of A$5.5 billion - and a further A$9 billion of funding, raised last year before the markets tanked.
Mr Moore, who trained as an accountant, said that Macquarie had traditionally taken advantage of turmoil in markets to make acquisitions and that the demand for infrastructure assets remained strong.
“The group has never been in as strong as a position, in terms of capital, in terms of funding available, and in terms of people, so we are more than capable to take on an acquisition today, should opportunities arise,” he said.