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Morning Coffee: Fintech is the new hedge funds. Why Deutsche Bank won’t become Goldman Sachs

Fintech

Hedge funds look dead compared to Fintech

Back in the day (2010), the road to glory involved leaving an investment bank and setting up your own a hedge fund – preferably with your previous employer as the main investor. Today, giving birth to your own hedge fund is too painful. If you want to leave a bank and go it alone now, you’re better off quitting to form a financial technology (Fintech) firm.

As was once the case with hedge funds, banks are going out of their way to sponsor Fintech firms. Financial News‘s (free) Tally blog highlights ten Fintech firms that have just been sponsored by Barclays. Goldman Sachs, J.P. Morgan, Morgan Stanley, Lloyds, Rabobank and Intesa Sanpaolo are also sponsoring Fintech accelerator programmes as are UBS, HSBC and Credit Suisse. Done right, Fintech has the potential to make those involved very rich. – Goldman Sachs thinks $4690bn of profits are at stake. Who’d set up a hedge fund now?

Separately, much is being made of Deutsche Bank’s proposal to drop its retail banking business and become some kind of Teutonic Goldman Sachs. This is unlikely. BreakingViews points out that Deutsche’s history as a ‘distinguished servant of the German economy’ has long been ill at ease with its urge to become an aggressive trading house. Bloomberg points out that whatever happens, Deutsche will shrink its investment bank. And the latest report from Greenwich Associates says that while Deutsche has done well at attracting fixed income trading volumes, it’s been less successful at attracting fixed income trading revenues.

Meanwhile:

Meet the baby hedge funds with billions under management. (CNBC) 

Ex-LTCM quant now working remotely on a diminutive hedge fund from London. (Bloomberg) 

Capital World Markets, a City forex trader based in the prestigious Heron Tower in the heart of the City of London, has been raided over suspected fraud and money laundering and 13 staff arrested. (The Times) 

Collateralized debt obligations reborn as ‘synthetic bespoke tranches’. (Euromoney) 

Must you inform your boss when your co-worker is slacking? (Inc) 

So, who will replace James Gorman at Morgan Stanley? (Reuters) 

How it is before you start your MBA: “I had visions of study group sessions locked in stuffy seminar rooms hunched over Excel models at 3am.’ (LBS) 

George Osborne says the bank levy is here to stay. (NYT) 

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