Royal Bank of Canada's high-yield credit desk has experienced significant staff attrition in recent weeks, with at least five analysts and traders departing the bank. This exodus follows losses incurred by RBC linked to the dramatic collapse of First Brands Group, an auto-parts manufacturer that filed for bankruptcy with over US$10 billion in debt.
Key Departures to Rival Financial Institutions
According to sources familiar with the matter, the departures include several high-profile moves to competing firms. Desk analysts Srihari Rajagopalan, Sydney Ferrigan, and Akshay Nagia have left RBC for positions at Morgan Stanley, Banco Santander SA, and Capital Group, respectively. Meanwhile, high-yield traders Christian Sady and Sameena Asija have departed for UBS Group AG and Bank of America Corp.
Separately, Fred Schmidt, a director for credit-derivative trading, has also exited the Canadian lender, adding to the talent drain from RBC's fixed income operations. Representatives for RBC, Capital Group, Morgan Stanley, Santander, and UBS declined to comment on these personnel changes, while Bank of America was unavailable for comment.
First Brands Collapse Impacts Multiple Creditors
Canada's largest financial institution finds itself among numerous creditors affected by the First Brands Group implosion. The Cleveland-based company filed for Chapter 11 bankruptcy protection in September after questions emerged about its borrowing practices and accounting methods. Other financial institutions with exposure to First Brands include UBS, Santander, and Jefferies Financial Group Inc.
The situation has escalated with federal prosecutors accusing First Brands founder Patrick James of fraud, charges he denies and is contesting. The company has already placed some business units into liquidation while attempting to sell others as part of its restructuring process.
RBC's Broader Performance Context
These personnel losses occur despite RBC posting strong financial results across multiple business segments last quarter. The bank exceeded consensus profit forecasts with robust performance in retail banking, capital markets, and other divisions. RBC's high-yield team continues under the leadership of Adam Savarese, who serves as head of global leverage finance and U.S. structured credit trading.
Interestingly, while experiencing departures in fixed income, RBC has been actively expanding its equities trading division. The bank has recently recruited senior traders and sales staff from prominent firms including UBS, Societe Generale SA, Barclays PLC, and HSBC Holdings PLC, indicating a strategic reallocation of resources within its capital markets operations.
The staff attrition at RBC's high-yield desk highlights the ongoing repercussions from the First Brands collapse within the financial sector. As creditors continue to assess their exposure and implement risk management adjustments, further personnel movements may occur across affected institutions in the coming months.
