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June 28, 2019  

Citi Seeks Reversal of Trading Brain Drain

Under pressure from issuers, Citigroup is acting urgently to fill a senior post on its U.S. asset-backed securities trading desk.

The position has been vacant since April, when Citi laid off Christopher Dunne. The bank then assigned his accounts to colleague Andrew Preiser, who departed soon after for Guggenheim’s investment arm.

That left Citi’s asset-backed bond trading work in the hands of a few less-experienced traders, including some who are new to structured products. Issuers that previously hired the bank to underwrite their asset-backed bonds, in turn, complained that it no longer was supplying enough market-making support for those instruments. “Citi is getting calls from clients demanding they start trading their products better. They’re getting hit on the head, as they say,” one source said.

The result has been a hunt for someone to replace Dunne. As part of the search, Citi has asked investors to suggest candidates, another source said.

He added that Citi has offered the job to two traders, with neither accepting. There’s no word on whether the bank has considered bringing Dunne back, or if he has lined up another job.

Dunne had arrived in Citi’s New York office in 2010, following stops at J.P. Morgan and Bear Stearns. Sources described him as a point man for the bank’s secondary-market and market-making activities across a range of asset-backed securities, including those underpinned by auto loans and credit-card receivables.

At the time of his exit, industry participants suggested that Citi was seeking to cut costs while reallocating resources to its collateralized loan obligation trading desk.

Citi has seen a number of personnel shifts in the past two years. Most recently, Bloomberg reported on June 25 that the bank is combining its warehouse-financing and securitization-banking operations under the name of global spread products financing and securitization, with that group working alongside a team known as global spread products sales and trading.

Mickey Bhatia and Joe Geraci are leading both units. That would seem to place them a layer above top structured-product traders including Ted Counihan, Dunne’s former boss.

Ted Yarbrough, who had been co-heading securitization underwriting with Bhatia, is becoming chief investment officer for the new financing and securitization unit.