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Morning Coffee: Citi bankers' big team move before bonuses. Why it's still ok to leave for private equity

Hiring a large team of bankers in December, a month before bonuses are paid, is an expensive undertaking and therefore not undertaken often. But Jefferies is keen to hire managing directors en masse and Citigroup is supposed to be keen to get rid of them, so this is presumably one reason why a team of 10 bankers have left Citi for Jefferies so late in the season.

Bloomberg reports that the 10 Citi bankers leaving as a team for Jefferies are public finance bankers focused on healthcare. They include Citi stalwarts like Brian Carstead, who'd been there 13 years and was co-head of not-for-profit healthcare banking based in Chicago, Ben Klemz, the other co-head and Katherine Meyers, an MD who'd been at Citi since 2008.

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Why leave now? It might have something to do with Citi's restructuring. In particular, it's the likely result of suggestions that Citi might cut its muni group, of which the team was a part, altogether. Bloomberg reported earlier this month that senior Citi executives had presented a proposal to close down the municipal bond group to Citi CEO Jane Fraser. No decision had been made. The group was considered insufficiently profitable. 

In the circumstances, the departures of Carsted, Klemz, Meyers and others look like a case of jumping before being pushed. The question now is whether other Citi muni people might do the same (and whether anyone wants them anyway). If Fraser does decide to close the business down, she should be pleased that people are taking the initiative: she's losing bankers (and co-heads to boot) for free without paying severance. Citi already closed its muni proprietary bond trading business last year and it paid more than a dozen muni people to go away by buying out their historic bonuses. This way, Jefferies bears all the cost; Citi just says goodbye.

Separately, if you're concerned that now is not a good time to move to private equity because private equity returns are poor and private equity firms are cutting costs, then maybe you haven't considered all the variables. Now may actually be the perfect time. 

Bloomberg reports that historically, some of the best returns for private equity firms come during or following recessions, when valuations are low and there's less competition to acquire assets. This might imply 2024, or the years to follow.

By comparison, anyone who moved to private equity in the past few years might have awhile to wait before they get paid any carried interest. The internal rate of return for the 2021 vintage is less than 5% so far, according to Bloomberg. Private equity firms overpaid for assets between 2020 and 2022 and will struggle to sell them at a profit. For the moment, asset prices are still high. That might change, soon.


Barclays has a plan called Minerva, to drop thousands of clients at its investment bank as part of a strategic overhaul that is meant to boost profits and cut £1bn of costs. The change might mean dropping 2,500 customers out of a total of more than 10,000. (Financial Times) 

The new 29 biggest banks to work for (Financial Stability Board) 

Steve Cohen’s New York Mets baseball team hired Bloomberg media's Chief Executive Officer M. Scott Havens as president of business operations. He will be responsible for everything, except actual baseball. (Bloomberg) 

Ronan McMahon left Morgan Stanley in Hong Kong in May. He's just joined CLSA as an algorithmic trader. (The Trade News) 

DWS Group, the asset management arm of Deutsche Bank, hired Dan Robinson from Man Group to lead its EMEA alternative credit business. (Bloomberg) 

What no one said about Bridgewater's radical transparency system: the internal rankings were weighted and only himself Ray Dalio got 100%; the more you acted like Ray, the higher you were weighted. It was mostly a system about behaving like Ray. (The Times) 

Participating in lectures or meetings online is exhausting. An experiment using electrocardiography (ECG) on students attending live lectures versus online sessions found that online sessions cause higher fatigue and may impact the nervous system. (The Register) 

I remembered telling myself then, "Oh my gosh, I'm living my life as a first-year analyst at JPMorgan." Then I found out that, "I also had to be constantly available to respond to senior bankers and clients, even after hours and on weekends."  (Business Insider)

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AUTHORSarah Butcher Global Editor

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