Peter Orszag: the ‘scholar-banker’ named to restore Lazard’s fortunes

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

Orszag made his name as a wunderkind 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 longstanding chief executive Ken Jacobs in October, following a shock first-quarter loss and deal fee plunge that triggered a plan to slash a 10th of its workforce.

The challenge for Orszag is to build credibility amid a deep chill in M&A, at a moment when Lazard’s once pre-eminent franchise in blockbuster deals has slowly eroded owing 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 stint in the White House and turning up at Lazard, whose financial advisory business he now heads, Orszag cut his teeth as a financier at Citigroup. 

At the diminutive Lazard, he got an even deeper immersion. Orszag, a mild-mannered and cerebral marathon enthusiast, dived into the craft of earnings accretion models and pitchbook slides. An expert in health insurance markets, he began with life science and healthcare clients.

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

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

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

Among his other bets has been pushing the firm into “think-tank” — like efforts. Orszag has been the champion of the Lazard Climate Center, a repository of research about the energy transition and clean fuels. Another is the formation of a “geopolitical advisory” group that counsels companies on responding to social and economic forces. 

Several Lazard employees said Orszag had proved a breath of fresh air, bringing an analytical approach to a notoriously insular industry that had not evolved much over decades. One said he was the very image of a “scholar-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 instead of 1995,” said one managing director.

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

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

Investment banking also remains a human endeavour, particularly at Lazard, known for its roster of larger-than-life personalities 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 New Orleans dry goods merchant.

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

“We got people from different walks of life, say, 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 in their own way and were left alone to do it.”

In April, Lazard brought on 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 leadership were what had appealed to him, and that he was confident he would be the first of many A-list free agent signings.

“You name the big audiences in New York, Washington, and globally — Peter’s made an impact across the board.”

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

Orszag continues to sit at the intersection of 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 pondering debt ceilings and deposit insurance.

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

“I would not short the United States,” he said.

He brings a similar wonkish optimism to the management of Lazard at a time of deep unease at the firm.