Hey, it’s OK. The bottom is not falling out of the banking business as U.S. elections approach. Intimations that revenues might suffer in the second half of the year aren’t coming to pass. Things are even looking up.
This was the message from Citi yesterday and from Bank of America earlier this week. Both banks sent executives to the Barclays Financial Services conference; both executives said things aren’t going too badly – albeit with different nuances.
Citi CFO John Gerspach said on Wednesday that the bank’s trading revenues are up year-on-year in the third quarter, driven by strength in rates and FX. BofA’s head of global and corporate banking, Christian Meissner, said on Monday that the bank’s M&A and DCM divisions are doing well in the third quarter. M&A is “picking up steam” as deals accelerate “a little bit” after the summer and high yield and leveraged finance have made “significant improvements”, Meissner said.
It may not be time to celebrate just yet, but the implication appears to be that the so-called Brexit-bounce that boosted trading activity after the EU referendum is more a prolonged levitation. Fears that Brexit and election-related uncertainty would scupper dealmaking in the second half of the year appear to have been overdone.
And yet, things may not be that straightforward. It’s telling that Citi and BofA experienced growth in different areas of the market – with Citi specifically singling out investment banking revenues as “lighter than expected” (without saying why) even while BAML said they’re growing. BAML might be anomaly. So might Citi. We’ll know more in October when third quarter results are out, but for the moment things look better than expected.
Separately, Fox News has published a profile of Michael Kramer, who seems like the sort of M&A banker other people might aspire to become. Kramer runs boutique U.S. M&A firm Ducera Partners and is advising Monsanto following Bayer’s $66bn takeover bid. Fox points out that Kramer made a messy exit from Perella Weinberg in February 2015 (the firm ousted him after claiming he was setting up his own firm and Kramer is suing for improper dismissal, defamation and deferred compensation.) Since then, he’s joined Ducera and clients have followed him. Kramer has propelled his new firm to 21 in the U.S. M&A league table while Perella has lost out on key deals because of his absence.
What not to do when you receive a report from the regulator highlighting failings in your division, (FCA)
Valdis Dombrovskis, the European commissioner in charge of financial services policy, says the European capital markets union is now more important than ever. (Financial Times)
Emboldened by the success of others, another FX trader is suing his employer for unfair dismissal. This time, Barclays. (Reuters)
Automating M&A due diligence. (Financial Times)
Why banks might want to move jobs out of NYC: the expense. (Bloomberg)
Elite men in the U.S. are the world’s chief workaholics. They work longer hours than poorer men in the U.S. and rich men in other advanced countries. (Atlantic)
John Stumpf, CEO of Wells Fargo, in denial. (WSJ)
A bank responds to David Cameron’s (imagined) job application. (Breaking views)