Macquarie cuts both ways

As the worldwide economic crisis has grown in severity, politicians and businessmen alike have been busy preaching that a crisis is a terrible thing to waste. For Australia’s Macquarie Group – known for growing its business when others are downsizing – this philosophy cuts both ways.

The firm has a track record of hiring during times of crisis. After Russia’s debt crisis in 1999, it bought the Australian investment banking arm of Bankers Trust. In 2004, as Asia was recovering from its financial crisis, it scooped up ING’s cash equity business. Both were game-changing events for the firm.

But even Macquarie could not escape unscathed from this crisis. In February, the largest private manager of infrastructure assets worldwide made a second round of global staff cuts. The reductions are known to have hit its Sydney, London and New York offices.

They were heaviest in Macquarie’s advisory arm, but other divisions, including Macquarie Funds Group, were also impacted, according to industry sources. Macquarie made a previous round of staff reductions in November 2008 after it announced a 43 percent tumble in its 2008 half year profit – ending a 15-year streak of consecutively higher profits. About 1,000 jobs were slashed.

But as in previous crises, Macquarie is also hoping to scoop up talent from its competitors. Since the start of the year, it has tapped three former Lehman Brothers dealmakers, two former Citi executives, a Morgan Stanley alum and a former Barclays Capital executive, Robert Redmond who advised Blackstone on its initial public offering.

Its North American investment banking business made all of these hires in an effort to grow its business beyond infrastructure. Ironically, this was the division hardest hit by the brutal job cuts of recent months. Macquarie is bruised, but far from counting itself out.