Peter Orszag: the “scholar banker” named to restore Lazard’s fortunes

Lazard’s appointment of Peter Orszag as chief executive begins a major experiment for one of the world’s most venerable financial institutions, which is betting that a former academic and Washington insider can revive its fortunes.

Orszag made his name as an eccentric economist with degrees from Princeton and the London School of Economics before serving in Barack Obama’s cabinet and eventually making his way to Wall Street.

Now Lazard has named the 54-year-old to replace longtime chief executive Ken Jacobs in October, after a shock first-quarter loss and a drop in deal fees triggered a plan to cut a tenth of its workforce.

The challenge for Orszag is to build credibility amid a deep cold in M&A, at a moment when Lazard̵[ads1]7;s once prominent franchise in blockbuster deals has slowly eroded due to the rise of upstart copycats.

“I admire Peter for rolling up his sleeves,” said one Lazard executive of Orszag’s arrival at the firm in 2016. Between his time in the White House and attending Lazard, whose financial advisory business he now heads, Orszag cut his teeth as a financier at Citigroup.

With the diminutive Lazard, he got an even deeper immersion. Orszag, a mild mannered and cerebral marathon enthusiast, delved into the craft of revenue generation models and pitchbook slides. An expert in health insurance markets, he began with life sciences and healthcare clients.

His stature grew as he developed his chops, and in 2019 he was appointed to lead the firm’s overall financial advisory business, leaving him de facto heir apparent to Jacobs, the highly regarded Lazard veteran who has led the firm since 2010.

Lazard had traditionally been a freewheeling organization that let its stars ply their trade as they saw fit. Orszag, at his core, is a technocrat with strong views on how the firm can be managed more systematically.

He led investments in expanding data analytics and artificial intelligence for both the firm’s banking and asset management businesses. Other initiatives were as banal as embracing the benefits of flexible working, even as rivals insisted that all bankers return to the office every day.

Among his other efforts has been to push the company into a “think tank” – as an effort. Orszag has been a champion of the Lazard Climate Center, a repository for research on the energy transition and clean fuels. Another is the formation of a “geopolitical advisory” group that advises companies on responding to social and economic forces.

Several Lazard employees said Orszag had proved to be a breath of fresh air, bringing an analytical approach to a notoriously insular industry that hadn’t evolved much over decades. One said he was the epitome of a “scholarly banker”.

“Having not come up through the banking system, I give him credit for thinking hard about what issues will be most important to CEOs in 2025 rather than 1995,” said one CEO.

For others, however, there is a concern about mission creep and how his high-minded initiatives could drive the deal fees that are the lifeblood of the firm.

Peter Orszag, Barack Obama and Rob Nabors

Peter Orszag, then director of the Office of Management and Budget, stands next to President Barack Obama and Deputy OMB Director Rob Nabors at a press conference on the budget in May 2009 © AFP

“M&A is an episodic event for most companies. Boutique banks need something else to talk about in front of CEOs and boards,” said a longtime Lazard executive. “The question is how to use these extra courses for actual results.”

Investment banking remains a human endeavour, especially at Lazard, known for its roster of major figures on both sides of the Atlantic. Jacobs was with Lazard for two decades before taking the helm and had a deep understanding of the firm, which debuted in 1848 as a dry goods merchant in New Orleans.

A retired Lazard partner noted that the firm’s decades of success in major transactions rested on its ability to both cultivate internal stars and find interesting newcomers.

“We got people from different walks of life, for example lawyers or industrialists. There was this mystique of bringing in guys who were big hitters,” he said. “We gave them a great brand and support and treated them like big boys. They did the job their own way and were left alone to do it.”

In April, Lazard brought in as president Ray McGuire, the longtime Wall Street rainmaker who had most recently run for mayor of New York City. McGuire told the FT that Lazard’s global brand and Orszag’s management were what had appealed to him and that he was confident he would be the first of many A-list free agent signings.

“You mention the large audiences in New York, Washington and globally – Peter has made an impact across the board.”

Earlier this year, Orszag and Lazard worked with First Republic Bank and federal banking regulators as they raced to raise capital and eventually sell the institution to JPMorgan amid a bank run.

Orszag continues to sit at the intersection between high finance and politics. Just days after Lazard cut more than 300 jobs, Orszag was on a panel at the Milken Global Institute’s annual gathering in California, musing on the debt ceiling and deposit insurance.

Asked whether he was bullish or bearish on America given its endless political dysfunction, Orszag cited American leadership in AI, life sciences and clean energy as reasons to be optimistic.

“I didn’t want to short the US,” he said.

He brings a similar bemused optimism to Lazard leadership at a time of deep turmoil at the firm.

Source link

Back to top button

mahjong slot