Morning Coffee: Banker loses the job of a lifetime but wins at golf. The traders with an average bonus of $2.5m
You’ve missed out on the biggest deal of your life, and through no fault of your own you’re out of the job you wanted – what else would a senior advisory banker do, but hit the golf course? That seems to be what Michael Klein did after the failure of Credit Suisse led to the collapse of the $210m deal that would have bought out his boutique firm and put him in charge of the now sadly never-to-be First Boston investment banking franchise. And it’s hard to say it hasn’t worked out for him – he’s already bounced back as one of the key advisors on the deal to merge the PGA Tour with LIV Golf.
Joking aside, the deal has come at a great time for Klein, demonstrating that he’s still got what it takes, and importantly that his contacts in Saudi Arabia haven’t suffered too badly from whatever blame exercise took place over the $1.5bn investment that went into Credit Suisse and came back greatly diminished. And although there’s no real evidence that the deal was itself put together on a golf course, it’s certainly not unlikely. Yasir Al Rumayyan, the chairman of the Saudi Public Investment Fund is known to be “golf crazy”, he’s President of the Arab Golf Federation and has apparently “spearheaded the development of golf” in a region that had previously been seen as one massive bunker.
Basically, bankers still do like their golf. It might have been seen as a bit of a dated cliché, in an age where electronic dance music or mixed martial arts are more on trend for your average MD, but there are plenty of senior bankers like Greg Lemkau who still swear by eighteen holes and an Arnold Palmer in the clubhouse. Quite apart from anything, very few clients will agree to spend four hours in a banker’s company in any other context, and as Lemkau says, “you can figure out a lot about a person in four hours on a golf course”. Specifically, it seems, you can find out if their human rights concerns are as serious as they seemed or not.
So, junior bankers should consider buying a set of clubs, apparently particularly if they’re in equity capital markets, according to the author of the “Sell-Side Handbook”. If for some reason this doesn’t appeal, there are other equally valid rich person hobbies that you can substitute; the other key advisor on the deal was Amanda Staveley, who originally made her Gulf State contacts through her connections in the world of horse racing. Falconry or supercars might also be worth looking into. Whatever you choose, the secret is apparently to always let the client win, but let them think that they won fair and square. Which, in many ways, is a large part of the trick when it comes to investment banking, too.
Elsewhere, some people say that it’s an ill wind that blows nobody any good, and some people say that it never rains unless it pours. The chief executive of commodity trading firm Trafigura is warning that global economic and geopolitical conditions can’t stay as terrible – and therefore, from the point of view of energy traders, as fantastic – as they have been in 2022 and the first half of 2023. He reported this in the context of a third successive half year of record earnings, with profits more than doubling in the six months to March to $5.5bn (despite having had $500m stolen from them by a fraudster). Trafigura paid out $3bn of that as a dividend, and since the company is wholly owned by 1200 employees, that means an average payout of $2.5m. Plus whatever they got paid for actually working there.
This kind of money is being made across the commodities sector, and is one of the reasons why hedge funds and banks are finding it very difficult to recruit and retain. Perhaps this will change when the wind turns and conditions settle down, but the memories of the last couple of years might linger.
Meanwhile …
In other sporting/banking related news, a profile of Qatar’s Sheikh Jassim bin Hamad Al-Thani, who is trying to buy Manchester United. It doesn’t say who his advisors are, but does summarise his unusual career trajectory – as a member of the royal family, he began as a board member of Credit Suisse, before deciding to become a banker himself. (Daily Mail)
According to the Markets Live Pulse survey, roughly half of financial professionals would try to change job if they were required to spend more time in the office. The trigger point seems to be at three days – a four-day office week would be intolerable to many surveyed, and a considerable further fraction would tend to resist any move away from two-day requirements, on the basis that “if they give an inch, the employer might keep pulling”. (Bloomberg)
Barclays departures continue, with Robyn Underwood and Jason Kivert from the Houston office are going to Pickering Energy Partners... (Bloomberg)
… while John Plaster from the power and utilities team leaves to Guggenheim and Mark Hudson from the industrials team to Jefferies. The company is not commenting on specific departures and says that it always plans for “natural attrition when changes occur”. It’s probably too early to say whether Venkat’s virtual town hall last week might have had any effect. (Reuters)
He’ll always be a local lad to us; from the point of view of the Lancashire Evening Post, the most important thing about Mike Platt’s latest placing in the billionaire rankings is that he’s from Preston. Coincidentally, the most recent estimate of the BlueCrest founder’s wealth is £11.5bn, the average house price in Preston is £168,050 and there are 68,500 houses in the town. That means that Mike Platt could now actually buy Preston if he wanted to. (Lancashire Evening Post)
Increasingly, young people applying for minimum wage and entry-level jobs are bringing their parents along to the interviews, and then getting mum or dad to advocate for them when they are involved in disciplinary disputes or want pay rises. That’s rarely seen in banking these days, even when the parents in question are government officials. (WSJ)
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