John P. Costas (business)
Encyclopedia
John P. Costas is an American businessman, banker and trader. He is the former Chairman and CEO of UBS Investment Bank where he oversaw the growth of the Swiss bank's investment banking franchise in the U.S.from 2000 to 2005. From 2005 through 2007, Costas was the Chairman and CEO of Dillon Read Capital Management, a UBS proprietary trading unit and alternatives management company.
Today, Costas is the Chairman and of PrinceRidge Group, a boutique securities firm he founded in 2009.
in 1979 with a degree political science and received his MBA from the Tuck School of Business
at Dartmouth College
in 1981 with a concentration in finance.
Costas began his career in 1981 as a fixed income sales person at First Boston Corporation, later Credit Suisse First Boston
. Having joined as an trainee, Costas rose through the ranks and eventually became Co-Global Head of Fixed Income and a member of the Investment Bank's Executive Committee.
to join the Union Bank of Switzerland
as head of North American fixed income. A year later, Costas was named head of Global Fixed Income Trading at Union Bank of Switzerland, a position he held first at Warburg Dillon Read
(later UBS Warburg then UBS Investment Bank) after the bank's merger with Swiss Bank Corporation
created UBS in 1998.
In December 2001, Costas was appointed CEO of UBS's investment banking division, at the time known as UBS Warburg. Costas' mandate was to turn UBS Warburg into a major Wall Street investment banking firm in the U.S. and compete with the largest bulge bracket American firms.
As UBS had already tried to build a business through takeovers, Costas shifted the growth strategy from acquiring entire firms toward hiring individual investment bankers or teams of bankers from rival firms. Costas had followed a similar approach in building out the UBS fixed Income business hiring over 500 sales and trading personnel and increasing revenues from $300 million in 1998 to over $3 billion by 2001. SBC had built up its investment banking operations through the £860 million ($1.6 billion) acquisition of S.G. Warburg in 1995 and the $600 million purchase of Dillon, Read & Co.
in 1997. Costas hired more than 30 senior U.S. bankers from 2001 through 2004 to jump start the growth of the bank as UBS was looking to UBS take business from incumbent U.S. firms in their own market. It was estimated that UBS spent as much as $600 million to $700 million hiring top bankers in the U.S. during this three-year period.
Costas pulled off a major coup by recruiting former Drexel Burnham Lambert
investment banker, Ken Moelis
. The hire of Moelis drew focus on UBS's efforts to increase its presence in investment banking. Moelis joined UBS from Donaldson Lufkin & Jenrette in 2001, shortly after that firm had been acquired by Credit Suisse First Boston
. In his six years at UBS, Moelis ultimately assumed the role of Costas' lieutenant as president of UBS Investment Bank and was credited, along with Costas, with the build-out of UBS's investment banking operation in the United States. Among the bank's other major recruits during this period were Olivier Sarkozy
, Ben Lorello and Jeff McDermott.
From 2002 to 2004, when Mr. Costas took over as Chief Executive of the global investment bank, pretax profits surged 47 percent, to $3.6 billion.
, the former head of the Equities division.
Costas was offered the opportunity to start a new hedge fund
within UBS. The hedge fund, named Dillon Read Capital Management, recruited a team of 120 trading and support professionals that were formerly involved in the proprietary trading businesses within the Investment Bank.
Dillon Read Capital Management, after having posted profits of $1.2 billion annually in both 2005 and 2006(30% annual returns), was closed in May 2007 after losing 3% in the UBS proprietary accounts in that year’s first quarter created friction within UBS. (the outside fund was profitable throughout the period) Costas has said that Dillon Read’s hedge fund, which was capped at $1.1 billion, delivered a six-month net return of 16% after fees.
PrinceRidge has since grown to over 90 employees by August 2010. The firm's main lines of business are structured and credit sales and trading. PrinceRidge also employs approximately 25 investment bankers providing advisory and capital raising services to over 200 middle market clients. Lastly, PrinceRidge provides secondary market making support to over 500 fixed income securities via a proprietary electronic trading platform. On April 19, PrinceRidge Holdings LP announced a merger with Institutional Financial Markets Inc. (IFMI) where IFMI invested $45 million in PrinceRidge Holdings LP in return for a majority ownership stake. IFMI will also contribute over 60 sales, trading and banking professionals to the new PrinceRidge.
Today, Costas is the Chairman and of PrinceRidge Group, a boutique securities firm he founded in 2009.
Early career
John Costas graduated from the University of DelawareUniversity of Delaware
The university is organized into seven colleges:* College of Agriculture and Natural Resources* College of Arts and Sciences* Alfred Lerner College of Business and Economics* College of Earth, Ocean and Environment* College of Education and Human Development...
in 1979 with a degree political science and received his MBA from the Tuck School of Business
Tuck School of Business
The Amos Tuck School of Business Administration is the graduate business school of Dartmouth College in Hanover, New Hampshire, in the United States...
at Dartmouth College
Dartmouth College
Dartmouth College is a private, Ivy League university in Hanover, New Hampshire, United States. The institution comprises a liberal arts college, Dartmouth Medical School, Thayer School of Engineering, and the Tuck School of Business, as well as 19 graduate programs in the arts and sciences...
in 1981 with a concentration in finance.
Costas began his career in 1981 as a fixed income sales person at First Boston Corporation, later Credit Suisse First Boston
Credit Suisse First Boston
Credit Suisse First Boston was the former name of the banking firm Credit Suisse.-History:In 1978, Credit Suisse and First Boston Corporation formed a London-based 50-50 investment banking joint venture called the Financière Crédit Suisse-First Boston...
. Having joined as an trainee, Costas rose through the ranks and eventually became Co-Global Head of Fixed Income and a member of the Investment Bank's Executive Committee.
UBS Investment Bank
In 1996, Costas left Credit Suisse First BostonCredit Suisse First Boston
Credit Suisse First Boston was the former name of the banking firm Credit Suisse.-History:In 1978, Credit Suisse and First Boston Corporation formed a London-based 50-50 investment banking joint venture called the Financière Crédit Suisse-First Boston...
to join the Union Bank of Switzerland
Union Bank of Switzerland
Union Bank of Switzerland was a large integrated financial services company located in Switzerland. The bank, which at the time was the second largest bank in Switzerland, merged with Swiss Bank Corporation in 1998, to become UBS to form what was then the largest bank in Europe and the second...
as head of North American fixed income. A year later, Costas was named head of Global Fixed Income Trading at Union Bank of Switzerland, a position he held first at Warburg Dillon Read
Warburg Dillon Read
Warburg Dillon Read was an investment bank created by the Swiss Bank Corporation , following its 1997 acquisition of S. G. Warburg & Co. which it merged with Dillon, Read & Co., a firm it had acquired in 1995. SBC itself merged with the Union Bank of Switzerland in 1998, creating UBS AG...
(later UBS Warburg then UBS Investment Bank) after the bank's merger with Swiss Bank Corporation
Swiss Bank Corporation
Swiss Bank Corporation was a large integrated financial services company located in Switzerland...
created UBS in 1998.
In December 2001, Costas was appointed CEO of UBS's investment banking division, at the time known as UBS Warburg. Costas' mandate was to turn UBS Warburg into a major Wall Street investment banking firm in the U.S. and compete with the largest bulge bracket American firms.
As UBS had already tried to build a business through takeovers, Costas shifted the growth strategy from acquiring entire firms toward hiring individual investment bankers or teams of bankers from rival firms. Costas had followed a similar approach in building out the UBS fixed Income business hiring over 500 sales and trading personnel and increasing revenues from $300 million in 1998 to over $3 billion by 2001. SBC had built up its investment banking operations through the £860 million ($1.6 billion) acquisition of S.G. Warburg in 1995 and the $600 million purchase of Dillon, Read & Co.
Dillon, Read & Co.
Dillon, Read & Co. was a prominent American investment bank from the 1920s into the 1960s.-Origins:Dillon Read traces its roots to 1832 with the founding of the Wall Street brokerage firm Carpenter & Vermilye. This firm was succeeded by Read & Company in which chief principal was William A. Read. ...
in 1997. Costas hired more than 30 senior U.S. bankers from 2001 through 2004 to jump start the growth of the bank as UBS was looking to UBS take business from incumbent U.S. firms in their own market. It was estimated that UBS spent as much as $600 million to $700 million hiring top bankers in the U.S. during this three-year period.
Costas pulled off a major coup by recruiting former Drexel Burnham Lambert
Drexel Burnham Lambert
Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
investment banker, Ken Moelis
Ken Moelis
Ken Moelis is an investment banker and founder of Moelis & Company, an independent investment banking firm.-Education:Ken Moelis holds a Bachelor in Business Administration and a Masters of Business Administration from the Wharton School of the University of Pennsylvania.-Career:Moelis began his...
. The hire of Moelis drew focus on UBS's efforts to increase its presence in investment banking. Moelis joined UBS from Donaldson Lufkin & Jenrette in 2001, shortly after that firm had been acquired by Credit Suisse First Boston
Credit Suisse First Boston
Credit Suisse First Boston was the former name of the banking firm Credit Suisse.-History:In 1978, Credit Suisse and First Boston Corporation formed a London-based 50-50 investment banking joint venture called the Financière Crédit Suisse-First Boston...
. In his six years at UBS, Moelis ultimately assumed the role of Costas' lieutenant as president of UBS Investment Bank and was credited, along with Costas, with the build-out of UBS's investment banking operation in the United States. Among the bank's other major recruits during this period were Olivier Sarkozy
Olivier Sarkozy
Olivier Sarkozy is a French-American businessman and the half-brother of French President Nicolas Sarkozy.-Early life:Olivier Sarkozy was born to Pal Sarkozy de Nagy-Bocsa and Christine de Ganay. His father was previously married to Andrée Mallah and had three children with her, including Nicolas...
, Ben Lorello and Jeff McDermott.
From 2002 to 2004, when Mr. Costas took over as Chief Executive of the global investment bank, pretax profits surged 47 percent, to $3.6 billion.
Dillon Read Capital Management
In 2005, Costas was succeeded as CEO of UBS Investment Bank by Huw JenkinsHuw Jenkins
Huw Jenkins, 52, is the former CEO of UBS Investment Bank. He is currently a managing partner for BTG Pactual.-Education:Jenkins graduated from the University of Liverpool and gained an MBA from the London Business School.-Professional life:...
, the former head of the Equities division.
Costas was offered the opportunity to start a new hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
within UBS. The hedge fund, named Dillon Read Capital Management, recruited a team of 120 trading and support professionals that were formerly involved in the proprietary trading businesses within the Investment Bank.
Dillon Read Capital Management, after having posted profits of $1.2 billion annually in both 2005 and 2006(30% annual returns), was closed in May 2007 after losing 3% in the UBS proprietary accounts in that year’s first quarter created friction within UBS. (the outside fund was profitable throughout the period) Costas has said that Dillon Read’s hedge fund, which was capped at $1.1 billion, delivered a six-month net return of 16% after fees.
PrinceRidge
Costas' next venture would be a start-up securities firm, The PrinceRidge Group LLC, he founded with former DRCM executive Michael Hutchins. Costas launched PrinceRidge with $25 million in working capital and 50 employees in 2009.PrinceRidge has since grown to over 90 employees by August 2010. The firm's main lines of business are structured and credit sales and trading. PrinceRidge also employs approximately 25 investment bankers providing advisory and capital raising services to over 200 middle market clients. Lastly, PrinceRidge provides secondary market making support to over 500 fixed income securities via a proprietary electronic trading platform. On April 19, PrinceRidge Holdings LP announced a merger with Institutional Financial Markets Inc. (IFMI) where IFMI invested $45 million in PrinceRidge Holdings LP in return for a majority ownership stake. IFMI will also contribute over 60 sales, trading and banking professionals to the new PrinceRidge.