ABN Abn Amro Holding N.V.

   By Julie Steinberg 
 

Apparently it pays to be a small fish in a big pond.

Cantor Fitzgerald & Co., a smallish investment bank that is private, still plans to hire 1,000 people in the next several years, said Shawn Matthews, chief executive of the unit of Cantor Fitzgerald LP, expanding the firm's head count by 20% from the 5,000 it currently employs.

A combination of having smallish clients that generate revenue of less than $1 billion, being smallish itself with assets below $50 billion and being private and able to invest when others must pull back puts Cantor in a sunnier position than the big investment banks. During the last downturn a decade ago, the firm struggled after it lost 658 people on 9/11 when its offices on the 105th floor of One World Trade Center were destroyed.

Cantor has hired almost half of the 200 people it said in January it would recruit in 2012 and will "probably hire more [this year] depending on what opportunities are out there," said Matthews, 45, in an interview. "Our plans are still intact. We're aggressively hiring people and continuing to forge ahead. We are clearly in full growth mode."

Cantor caters to the middle-market, or companies with annual revenue of between $50 million and $1 billion, offering sales and trading capabilities on behalf of clients, commercial real-estate financing, prime brokerage, and advisory and capital-raising services. It competes mainly with New York-based bank Jefferies Group Inc. (JEF), which has been hiring aggressively and now is making only selective hires, bank officials said. Jefferies had 3,809 employees as of the second quarter 2012.

Matthews said Cantor can expand while big banks are contracting because of the "structural change in the financial landscape" that will affect other banks but that won't affect his. New regulations such as Basel III, a set of regulations among Group of 20 industrial and developing nations that will go into effect in January 2013, will force large banks--those with at least $50 billion in assets--to set aside more capital. As a result, "they'll pull back and ultimately lay off employees," Matthews said.

Cantor doesn't have to implement Basel III regulations because it doesn't meet the $50 billion minimum for assets, according to the company.

As a private partnership, Cantor also is able to shield its financial results from view and doesn't have to report to public shareholders, enabling it to invest aggressively during down times in the industry.

European institutions may not be able to afford to be in capital markets, Matthews said, due to shrinking revenue and increasingly tough regulatory environments. "We're seeing them pull back and I think they'll continue to do that or close their capital-markets operations as they get back to the core competency of being commercial banks," he said.

Royal Bank of Scotland Group PLC (RBS, RBSS.LN), for example, recently disclosed around 600 layoffs, taking the total headcount reduction at the bank to 36,000 since it was bailed out by the U.K. government in 2008. Societe Generale SA (GLE.FR, SCGLY) is in the processing of shedding nearly 1,600 jobs in its worldwide investment banking units, while Credit Agricole SA (ACA.FR, CRARY) is cutting 2,350 jobs in its investment-bank and consumer-finance divisions.

Cantor Fitzgerald is growing particularly in sales and trading and asset management. Cantor employs approximately 750 salespeople around the world. "I think I can significantly grow that number and continue to build out," Matthews said. In recent weeks, Cantor disclosed seven hires for its emerging-markets fixed-income sales and trading group from banks including Macquarie Group Ltd. (MQG.AU, MQBKY), HSBC Holdings PLC (HSBA.LN, HBC), ABN Amro Holding NV and Barclays PLC's (BARC.LN, BCS) Barclays Capital unit.

Cantor is planning to "aggressively grow" asset management, both by hiring and buying asset-management companies, Matthews said.

Recent hires have had at least 10 years of experience. "Especially since there's a dislocation of the marketplace, we're typically doing seasoned hiring," Matthews said. "You can hire very-talented people with excellent experience. There's not much reason to hire people who don't have experience at this point in time."

"Our biggest negative is we don't have enough time," Matthews said. "Certainly we are working as fast as we can to grow. We are clearly in a position to take advantage of what's going on. I'm not saying we need to do it by next Thursday, but we want to take advantage of a lot of opportunities. We don't see any end to them."

Write to Julie Steinberg at julie.steinberg@dowjones.com.