Although uncertainty reigns at Deutsche Bank equities and its US operations, life has to go on, and that means that this week it was time for them to hold their annual Financial Services Conference in New York. The star guest was Jamie Dimon, so spare a thought for all the worried Deutsche Bankers who had to sit around in a conference room munching stale croissants and hearing about how totally awesome things were for one of their big competitors.
Generous guest that he is, according to the transcript Jamie seems to have tried to soften the blow a bit by saying that it’s just not true to say that JP Morgan is utterly dominant in practically every business line it has a presence in. Sure enough, of the 24 separate global wholesale investment banking markets they look at, JPM is number one in sixteen of them. And yes, they’re global top three in all of them except one (trade finance), and that’s a notoriously low-return business where they might have just drawn back intentionally. But what happens when you drill down?
It turns out that if you segment the market into more individual product categories, and then analyse it by geographical regions as well, then there are some super-local markets where JPM is hardly on the map at all! As Jamie Dimon says, “all of the sudden, we're number eight in this and 12 in this and 14 in this, we're doing a terrible job in this country and a terrible job in that country and we failed to capture this type of flow and customers aren't happy here.” So no need to feel bad! Obviously in the big markets and big categories, JPM are doing fine, otherwise they wouldn’t be number one so much. But there are places – say, equity-linked notes in Azerbaijan, or commodities finance in Liechtenstein maybe – where they’re no better than the competition.
Obviously the context here was that JD was answering a question about where the growth was going to come from and the answer was “Everywhere! And I mean literally everywhere!”. So it’s not meant to be reassuring to the competition at all; he’s saying that in all the niches where JPM is not currently eating their lunch, they aim to do so. Etiquette probably forbade him from noting that it might be easier to unseat the incumbents in some geographies than in others, but that must have been the message hanging in the air.
On the other hand, a falling tide will lower all the ships, even the fanciest and most expensive ones, and there is only a certain degree to which sheer bullish optimism can generate enough market share gains to offset that. Mr Dimon also took the opportunity of the conference to signal a roughly 10% fall in IBD revenue in the second quarter, despite the positive impact of the Lyft IPO. Maybe some of those bankers really aren’t all that good …
Elsewhere, it’s always been known that bankers can be subject to air rage – by popular acclaim of frequent fliers, the worst passenger ever was a bond manager at TCW. And although few have reached that peak since, air rage incidents have been on the rise for the last several years. Now some business school professors have analysed the data and noticed that passengers’ perception of inequality is part of the problem. You get worse behaviour on planes with a first class section, and even worse behaviour if the economy class passengers have to walk through that section, watching the bankers and gold card holders who boarded first sit back and sip champagne.
It might be safer for everyone to just take all the investment bankers and shove them on to private jets. That’s certainly what they want, according to some recent litigation which shows, among other things, that private equity bros can be quite the equal of FX and LIBOR traders when it comes to tasteless banter in private chat. The bankers at Sterling Partners are accused of getting an “obscene windfall” out of a bankrupt hospital chain, and appear to have done themselves no favours by sending emails talking about the transaction purely in terms of the brand of champagne they’ll serve on their private planes when it’s complete. And comparing their tax structuring to the TV series “Breaking Bad”. A sad footnote to the story, though is that the complaint “does not indicate the actual purchase of planes”.
Despite initial predictions that David Solomon would be downsizing the Goldman Sachs management committee, there have been three new appointments – James Paradise and Todd Leland from the Asian operations and treasurer Beth Hammack. (Bloomberg)
The latest Duff & Phelps survey has, possibly predictably, found that the majority of financial executives now see New York, rather than London, as the world’s top financial centre. (Reuters)
If you don’t have the Peter Thiel-level money to buy New Zealand citizenship for cash, they have a “Global Impact Visa” program, designed to attract entrepreneurs and world-changing startups of the future. The thinktank which is administering it and appointing “Edmund Hillary Fellows” seems a bit alarmingly keen on holding Davos-meets-Burning-Man conferences in its yurt complex, but the visa deal is free (Bloomberg)
Guidance from the psychologists on how to handle job-search depression. As well as the standard “treat job search like a job”, there are some more research-based and counterintuitive tips, mainly in the area of remembering that you’re not wholly defined by your career. (NYT)
So out that it’s in … Jeffries’ prime brokerage business is once more offering trading and execution services to its hedge fund clients on an outsourced basis, a service that just went out of fashion in the 00s. Other banks seem to be considering similar moves, which has to be good news for the market for buy-side trading staff. (Bloomberg)
The Norwegian local government pension fund announces that it will give up alcohol and gambling. (Financial News)
Temps and contractors now outnumber employees at Google, leading to pressure to improve their conditions (NYT)
Mohamed El-Erian has been named President of Queens’ College Cambridge, a job where one of the main responsibilities is to go around reminding people that it’s spelled “Queen’s” in Oxford but “Queens’” in Cambridge. (And Queens’ in Belfast and just Queens in New York). (Bloomberg)
And if you’re going to spend £30,000 on chocolate in one trip to Harrod’s, it’s a good idea to have an explanation for the money laundering authorities about why you’re so rich (Daily Telegraph)