Like many in the municipal market, Terry Atkinson didn’t go to school to get into munis. When he graduated from the University of San Diego School of Law in the 1970s, Atkinson had offers to join several law firms. Before he accepted, however, Atkinson decided on a lark to take a friend’s advice and interview at Goldman, Sachs & Co. Atkinson, 59, now admits candidly that he bombed his interview at Goldman. He also says it ultimately led him into munis. He accepted a trading job with Shearson Hayden Stone in 1975, beginning a 32-year career that would see him in municipals management at Salomon Brothers during the bank’s heyday in the 1980s and then build one of Wall Street’s largest municipal broker-dealer operations. He has sat on boards for firms he has worked for and industry groups, such as the Securities Industry and Financial Markets Association and the Municipal Securities Rulemaking Board, of which he was chairman during the 1997-98 term. Atkinson retired from UBS Securities LLC on Friday, after spending 19 years atop the municipals group at UBS and at Paine, Webber & Co., which the Swiss bank acquired in 2000. Colleagues and competitors described Atkinson as plugged-in and personable. “Some people you compete with and then you don’t want to see them and you don’t want to deal with them — it carries over into other things,” said Dan Keating, head of public finance at Bear, Stearns & Co. “Terry is someone you can compete with — he’s a fierce competitor — and after it’s all over you can sit and have a drink with him.” He will spend the summer months selling his Connecticut house and wrapping up other details on the East Coast and will move back to the San Francisco Bay area toward the end of the summer, Atkinson said. Once there, he’ll likely take up a university teaching position, continue his fund-raising work for several nonprofits, and help UBS develop its public-private partnership business on the West Coast. From California to N.Y. During his two and half years in Shearson’s Los Angeles offices, Atkinson worked as a trader and then as an institutional salesman.He moved to Salomon Brothers in 1978 and worked there for just two years before he being offered the top job in the firm’s California muni practice. Atkinson says he remembers getting the call to go meet in New York with John Goodfriend, the Salomon executive later immortalized in Michael Lewis’ book “Liar’s Poker.” “Salomon was like the Godfather,” Atkinson said. “They made you a job offer you couldn’t refuse — or at least that was the feel of the thing. So I took it.” Having been mainly a trader and salesman, Atkinson said he read hundreds of official statements from new municipal deals during 1980 to familiarize himself with exactly how public finance banking worked. The studying paid off, Atkinson said, because his group won more and more deals with California issuers and built on its market share during the next seven years. By October 1987, though, Salomon was “getting butchered” in their sales and trading operations, Atkinson said. The firm had conducted a sweeping evaluation of its staffing and costs and had decided to make cuts. Atkinson said he was driving to work in the early morning hours of Oct. 12 when he found out that his job was being eliminated. “I’m cutting across the Golden Gate Bridge and this newscaster announces that Salomon was getting out of the muni business,” Atkinson said. Some of his Salomon muni colleagues were dozing in the back seat, he said. “One of them sat forward and said, 'Terry, is that guy talking about us?’ ”He immediately began looking for a new firm to take his group, and on Oct. 19 he was sitting in Bear Stearns’ New York offices, waiting to interview for a new job.
Atkinson said sat for nearly three hours, as the din of noise from Bear Stearns’ trading floor built. Eventually, an assistant informed him that the interview would have to be postponed.While he had been waiting, the stock market had been crashing. That day, now known as Black Monday, the Dow Jones industrial average dropped 22.6% and trading was either halted or delayed on dozens of stocks listed on the New York Stock Exchange. Bigger is Better Atkinson received offers from several banks interested in hiring his team and joined Paine Webber in November 1987. That year, the firm was the fourth busiest underwriter of municipal bonds with a 6.5% market share, according to Thomson Financial. A few months later he got another call to go meet with the brass in New York. They offered him the top municipals job in the firm and said that if he declined, then Paine Webber would shutter its muni business. Atkinson accepted, beginning his two decades in that post.During the early and mid-1990s, Atkinson focussed on growing the size of his business and was quoted on several occasions in The Bond Buyer as saying that bigger was nearly always better for muni bond groups. Even when other firms were laying off bankers or getting out of munis altogether, Atkinson’s group continued to grow. There were about 112 people in the municipals group when he took the helm at Paine Webber, Atkinson said, adding that there are now more than 400 in UBS’ group. “While Terry’s certainly wasn’t the most lucrative offer, we really thought it was the best place to be for the long run for our career,” said Mark Adler, a UBS managing director now in charge of the Western region. Adler worked in the municipals group at Drexel Burnham Lambert when the firm went bankrupt in the 1980s. He joined Paine Webber in 1990. Many of the professionals hired during this build up are still working for UBS, and competitors said this loyalty is a testament to Atkinson’s management abilities. “I’ve been trying for 20 years to hire people off from his shop and I still am,” Keating said.Jeff Scruggs, now head of municipal banking at UBS, attributed Atkinson’s management success to his willingness to connect with everyone on the staff.
“Every one of the junior professionals who has come in here has really liked him because he has personalized his management style,” said Scruggs, whose office is right next to Atkinson’s old corner office. “He’s always tried to make sure that the most junior people in the department — whether they are assistants or analysts right out of [college] — that they all know him, that they all call him by first name, and feel like they are fully contributing and equal members of the department.” From 1988 to 1996, Paine Webber bounced between fourth and sixth in Thomson’s ranking of top underwriters. In 1997, the firm was second and has finished every year since then as the second-busiest senior manager of municipal bonds. After UBS bought Paine Webber in 2000, Atkinson spent much of the following year getting his new Swiss superiors comfortable with the importance of a municipal bonds practice. The firm’s underwriting rankings remained constant, though. Then, at the beginning of last year, UBS moved its munis group from the asset management division to its investment banking division, saying it would look to boost revenues from the group. The firm named David Shulman the new head of its municipal securities group and announced that Atkinson would step down in early 2007. The Future for Muni Broker-Dealers While Paine Webber and UBS have built a reputation for their large public finance banking network, a lesser presence in the swaps, derivatives, and other structured muni products sectors gradually have become a weakness for the firm. “The Achilles heel was always capital markets,” Atkinson said. With the promotion of Shulman and a series high-profile derivative banker hires, UBS is attempting to change that, though. UBS is now making just the kinds of changes necessary for banks to stay competitive in the muni market, he said. While some banks will focus on the few blockbuster deals and others will scrap for every small deal they can win, developing a capital markets practice will be essential to remaining successful in the muni market in years to come, Atkinson said. The biggest threat to underwriters in the industry is a significant decline in new-issue volume — a risk that many have lost sight of during recent years that have consistently seen year-end volume of $380 billion or more. “Everybody right now is fat, dumb, and happy,” Atkinson said. “It’s been phenomenal. We’ve never seen five years like this in the history of the business.” He recommends that bankers remember 1994, when a string of interest rate hikes led to market panic. “No matter what you did, tax-exempt or taxable, any move you made was wrong,” he said. “It might be right at 9:01, but by 10:01 it was wrong. There was blood in the streets, without any question.”Diversifying the sources of underwriting business and developing a capital markets side could help make such potentially hard times a little easier, he said. The most exciting new developments in the coming years will be seeing how the debate on public-private partnerships develops and how the growth of international investors changes the market.UBS has already moved one muni derivatives specialist, Milton Brown, to London, and might move more by the beginning of 2008, he said.
