Morning Coffee: Ex-Goldman Sachs partner on the personal damage inflicted during his finance career. Bank of America's wild hiring spree

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Mike Novogratz

It’s difficult to reach the top in investment banking.  Everyone understands that, and we don’t necessarily need interviews with the extremely successful to tell us something so obvious.  What makes Mike Novogratz, ex-Goldman Sachs partner and CEO of Galaxy Digital, so unusual is that as well as the regular hard work and success story, he talks frankly about the effect that success had on his personality and relationships.  “Rarely do you leave Wall Street on a high”, he tells Financial News. “Most people leave having broken some glass, pissed off and cut up. I certainly left that way”.

Novogratz ran fixed income trading for Goldman Sachs in Hong Kong twenty years ago. He left the firm in 2000. The Financial News isn't the only one to write about his time there. In a long article in the New Yorker last April, author Gary Shteyngart noted that Novogratz' Goldman exit was down to, “lifestyle issues.” “We’re a family of near-alcoholics,” he told Shteyngart, who observed that he had been widely regarded as one of Wall Street's 'hardest charging party animals' and that his time at Goldman Sachs' Hong Kong office had been spent, “partying like a rock star.”

Novogratz married his wife Sukey Cáceres when he was 25. Four children later, they're still together. Sukey doesn't hold back on Novogratz' time in Hong Kong. It was, “very challenging for marriage,” she told Shteyngart. Her husband was: “Someone who was constantly hedging his bets, literally, in work and in life, like, eh, I can never fully commit, even though we were married.”

Novogratz' insalubrious Goldman exit was followed by a spell running the hedge fund business at Fortress. His downfall there came as a result of poor investment returns rather than hard parties, but by the end of 2015 he had burned his bridges at Fortress too and the fund was closed down.

Redemption came through an incongruous combination of yoga and cryptocurrency.  After leaving Goldman, Novogratz went to rehab in Arizona to work on himself and his marriage. He ran six marathons in the desert. He started a punishing regime of three hour vinapassana meditation sessions to calm down and focus. And he invested in a small Ethereum crypto platform. The latter gave Novogratz the inspiration to set up Galaxy Digital, with the aim of becoming “the Goldman Sachs of crypto”, and despite the disappointing performance of Bitcoin this year, his investments have so far made between $700m and $1bn.

Novogratz' story is of someone significantly larger than life. The biggest takeaway for the average reader is a warning that the kind of personal intensity which drives someone to that kind of success is not without cost.  Even now, despite the meditation, billions of dollars in the bank and the hard lessons learned from two career crises, Novogratz still feels “considerable pressure to make money”, partly because of a lifestyle which involves the ownership of private jets and celebrity restaurants.  And with his current status as a microcelebrity in the cryptocurrency world, it’s not as if the story is necessarily over yet.

Separately, following a 33% drop in its M&A revenues in the first nine months of this year compared to last and the ejection of the head of its investment bank, Bank of America is doing some very big hiring. The Financial Times Michael Koder, head of the corporate and investment bank, has been given permission to, 'recruit up to 50 managing directors, and a number of mid-level staff to support them.'

It may be a while before the new hires make much difference. Former head of the business, Christian Meissner, famously said that building an M&A business takes three to five years once the right people are in place.

Meanwhile ...

Presenting at a conference, Morgan Stanley's investment banking head Ted Pick said that fixed income trading was “a little quieter” in October than in Q3, with equities “holding up well” and capital markets activity very much subdued, particularly by Asian clients. (Financial Times)

Alexander Friedman has, after several months of pressure following the Tim Haywood scandal, resigned as CEO of GAM (Financial News)

As Davos draws near, the tricky issue of what to do with Russian industrialists subject to US sanctions raises its head.  Three prominent oligarchs (including Oleg Deripaska) have been gently told they aren’t invited (FT)

A somewhat inelegantly phrased letter from the European Parliament to Mario Draghi summarises their recommendations to be Europe’s top banking supervisor; the committee responsible praises the “experience” of Andrea Enria while noting “the importance of ensuring gender balance” as an advantage for Sharon Donnery. Ms Donnery also has experience; Mr Enria decided he would rather not comment. (Bloomberg)

JP Morgan’s philanthropic arm is attempting to replicate past successes in urban regeneration in Detroit by putting $30m into projects in the Greater Paris and Seine-Saint-Denis regions.  (Business Insider)

Credit Suisse’s quarterly reporting has been a consistent headache for analysts for years because of its policy of reporting the official numbers, then a set of “core” numbers for businesses it doesn’t want to close down, and then a set of “adjusted” numbers which take out restructuring and legal costs.  Starting next year, things get easier as the restructuring and legal expenses are now small enough to not need adjusting (Finews)

The corporate governance code for German-listed companies is getting significantly tougher on executive compensation.  This is unlikely to directly affect banks (who have their own even tougher Europe-wide compensation regulations) but it’s an indication of the climate in one of the largest markets (FT)

CME Group has confirmed that it will be moving BrokerTec, the repo trading platform it bought with its acquisition of Nex, to Amsterdam in order to be ready for Brexit. (Bloomberg)

The Bank of England has launched two challenges – one for people who generally use cash to try to live in the cashless economy for a week, and one for card payers to spend a week paying cash for everything.  They want consumers to keep diaries of how they cope, to get some insight into how people interact with the payment system. (Finextra)

And if you’re staying late at the office, things might be getting a bit more competitive for that takeaway order – Uber Eats intends to triple its workforce in Europe to compete with Deliveroo and Just Eat (Bloomberg)

Have a confidential story, tip, or comment you’d like to share? Contact: sbutcher@efinancialcareers.com in the first instance. Whatsapp/Signal/Telegram also available.

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