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Last updated: November 24, 2009 10:39 pm
JC Flowers, the US private equity group run by dealmaker Chris Flowers, has strengthened its London team after appointing Sir Callum McCarthy, former chairman of the UK’s Financial Services Authority, to the new position of European chairman.
The private equity group has also named David Morgan, the former chief executive of Australia’s Westpac bank, as managing director of Europe and Asia Pacific.
Mr Morgan on Tuesday said he had stood down from the board of BHP Billiton, the world’s biggest mining group, to focus on his work with JC Flowers, where he is already its Australian chairman.
The appointments underline the private equity industry’s continuing efforts to strengthen its ranks from the regulatory and business communities.
Mr Flowers said the pair would “form a formidable team” in the firm’s London office. “Sir Callum McCarthy has extensive banking and regulatory experience,” he said.
Mr Morgan, a one-time potential candidate to be the next BHP chairman before it was secured this year by Jac Nasser, the former chief executive of Ford Motor, worked in Australia’s treasury department before entering banking.
Mr Morgan said he looked forward to becoming a full-time executive again. “The events of the last two years are significantly reshaping financial services throughout the world,” he said. “An early [investment] focus will be on the UK, where the banking sector is undergoing a major restructuring.”
Sir Callum stepped down as FSA chairman a year ago.
Sir Callum said JC Flowers focused on the financial sector. “I look forward to … pursue the business opportunities created by the present far reaching changes in the sector,” he said.
Before joining the FSA, he headed Ofgem, the gas and electricity regulator, and held senior positions at Barclays, the UK bank.
The former FSA chairman became a non-executive board member of the Treasury and the Court of the Bank of England in 2008 . He is also a non-executive director of IntercontinentalExchange and an independent director of Industrial and Commercial Bank of China.
The shake-up follows a tough year for Mr Flowers, especially in Germany where he suffered heavy losses on Hypo Real Estate, the mortgage bank, and HSH Nordbank, the shipping lender, which were both bailed out by the public sector. Renate Krummer, JC Flowers’ head of Germany, left the company earlier this year.
Mr Flowers, a former Goldman Sachs banker, made his name as a private equity dealmaker in Japan, most notably because of his highly profitable first investment in Shinsei Bank in 2000. He has raised about $11bn to invest in the financial sector.
But the financial crisis has tarnished his record. First, a Flowers-led consortium pulled out of a $25bn takeover of Sallie Mae, the US student loans company, citing a material adverse change after the start of the financial crisis in 2007.
Meanwhile, shares in Shinsei, in which Mr Flowers made a second Y200bn ($2.26bn) investment in November 2007, have since fallen by three-quarters. As the credit crunch worsened, he made abortive bids for Bear Stearns, Lehman Brothers and AIG.
Last year, he advised Bank of America on its costly takeover of Merrill Lynch, for which he was paid a $20m personal fee, before having his due diligence criticised in a Congressional hearing.
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