Morning Coffee: The secret most important person at Credit Suisse. Financial lookalikes and cybersquatters of social media
He doesn’t directly generate revenue. He doesn’t necessarily even save costs. When he appears in the headlines, it’s usually bad news for the bank. Nonetheless, a case could be made that Markus Diethelm is the most important hire Credit Suisse have made in the last twelve months.
Mr Diethelm is the Group General Counsel and an executive board member; he was recruited from the same role at UBS in June. Since then, he seems to have spent his time travelling round the globe performing a sort of triage function on scandals and court cases, deciding which ones CS should fight and which it ought to settle.
This is a tricky business, because the decision isn’t necessarily one to be made on the legal merits alone. It’s possible – even common – for an investment bank to be in a situation where it’s got what looks like a winnable case, but where the process of defending it and going to trial (and then dealing with all the subsidiary litigation) is going to take forever, suck up management time and leave a cloud hanging over the firm’s reputation and uncertainty over its share price for years. Under Diethelm’s predecessors, Credit Suisse seems to have built up something of an overhang of these sorts of cases.
Consequently, he’s been doing some things which have surprised a lot of people. This week he agreed to settle $495mn of claims relating to mortgage bonds from 2008, and last month he allowed a subsidiary of the bank to make a substantial admission in a long-running fraud case in Singapore. It’s not an across-the-board change in strategy – CS still appears to be ready to fight the Greensill litigation, for example – but Diethelm seems to have a mandate to clear the decks.
And it’s not hard to see why Credit Suisse want him to do this. The inventory of litigation is one of the biggest pieces of ballast weighing down the share price. Legal risk has horrible properties when you consider it from the point of view of an investor – it’s downside-only, and it’s extremely difficult to quantify in terms of probability, timing and even amount. Analysts are currently concerned about potential capital shortfalls at CS, and it’s extremely unhelpful for there to be a perception that a large proportion of the funds raised might just disappear on legacy issues.
So employees ought to be cheering on Markus Diethelm, even as he seems to spend his working days writing nine figure checks to other people’s lawyers. There are a variety of ways to add value at an investment bank. Generating revenue and reducing costs are the most normal ones, but it’s also important to do things that keep the franchise alive, move on from the mistakes and bad luck of the past and give the world something new to talk about when the company name is mentioned. It’s not a glamorous job, but somebody has to do it.
Elsewhere, according the Wall Street Journal, a good way to get to interact with one of your favourite celebrities is to steal their name for a social media identity. This might sound like a great way to get sued, but it seems that intellectual property law isn’t so developed in this area, and a lot of the time you can get a lunch out of it, or at least some playful online banter and a decent anecdote.
If this works in showbiz, might it work in finance? After all, there are plenty of bank CEOs and investors who it might be quite valuable to have a small favour in the bank from. And some of them haven’t been particularly quick to stake their claims – if you look for Citadel’s Ken Griffin on Twitter, you’ll find an unassuming golfer from Michigan, while the fact that @jamiedimon turns up a suspended account suggests that the JPMorgan boss didn’t get there before a prankster did.
Even the more social media-savvy financiers can’t always keep up with trends. Goldman Sachs' David Solomon and Jefferies’ Rich Handler are all over Twitter and Instagram, but at the time of writing, both of their names seem to be up for grabs on TikTok.
A warning might be appropriate. Impersonating people whose words move markets is neither big nor clever, and it could get you in a lot more trouble than pretending to be Ariana Grande’s brother. If you do decide to spend a coffee break looking for financial players to cyber-squat on, make sure that your content is legal and professional, and play nicely when their people get in touch to ask for it back.
Although techies and engineers have historically been protected from employment conditions in the banking industry by the existence of BigTech as an alternative well-paying career, that might not work so well in the current cycle. Microsoft is currently making layoffs, and won’t comment on whether these are additional to the “regular adjustment” of a couple of thousand staff which it announced in July. It’s not the only example of this trend – Twitter, Uber and Meta/Facebook have all introduced hiring freezes or slowdowns and the startup scene is not what it was. The root cause seems to be the same as for the problems in banking – there just isn’t as much cheap money available anymore. (WSJ)
Consolidation in the world of people who pronounce “finance” as “f’narnce”; Bob Diamond’s Panmure Gordon is in talks with UK smallcap specialist finnCap. (Bloomberg)
Snitching isn’t easy! Victor Hong, a former MD in Royal Bank of Scotland’s mortgage-backed securities business (this used to be a big thing, ask an old-timer) thinks he is due as much as $490m for the whistleblower information he provided to the SEC several years ago. The SEC say that they didn’t bring their own prosecution but passed the tips on to the Justice Department, so there’s no claim on their whistleblower fund. It’s now reached the Supreme Court in the USA (Reuters)
He has mostly avoided the limelight, but Carlos Hernandez, the executive chair of JPMorgan’s investment bank, is one of Jamie Dimon’s most trusted advisors. He’s now retiring. (Financial News)
The crackdown on “overemployment” has begun – credit scoring giants Equifax got the idea of checking 1,000 of its own staff against the employment data it collects, and found 24 cases of employees taking advantage of working from home to hold down a second job. (Business Insider)
Moelis continues to grow its healthcare franchise, taking MDs Arek Kurkciyan and Dennis Crandall from Morgan Stanley (Reuters)
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