Morning Coffee: Morgan Stanley bonuses disappoint as Goldman and JPMorgan prepare to announce. Ex-Credit Suisse banker owes fortuitous exit to wife
It's a curious foible of investment bank bonus season that Morgan Stanley announces its bonuses internally before other banks, even though it announces its fourth quarter results last. Goldman Sachs and JPMorgan announce bonuses shortly after their results are out. And BofA and Citi announce a week or so later, with this year's Citi delay down to the bank's $900m loss on Argentina and $400m reserve build for Russia.
While everyone's wondering how bad bonuses will be at Citi and waiting to hear this week's news at Goldman Sachs and JPMorgan, we therefore already know a bit about how things went at Morgan Stanley. And the answer seems to be not so good.
After speaking to bankers at Morgan Stanley, Financial News says there's "widespread disappointment" there, that zero bonuses have been deployed and that juniors seem to have been squeezed more than the rest. The bonus pool for Morgan Stanley's investment bankers is apparently down 10%-15%. There's no mention of markets professionals.
Our pre-Christmas bonus survey suggested that Morgan Stanley employees were expecting a 12% rise in their bonuses this year, so you can see why all this might have been a blow. However, given that M&A revenues per head were down around 12% across the industry in the first nine months of 2023, the decline wasn't exactly out of line for Morgan Stanley's M&A bankers. Equity and debt capital markets can be more justifiably disappointed if their bonuses fell too.
Goldman Sachs begins announcing its bonuses tomorrow, along with its fourth quarter results. JPMorgan announces tomorrow too. Today is Martin Luther King day in the US, giving US bankers a moment to pause and consider racial and social inequalities, before focusing on whether they've been paid fairly relative to their peers when those numbers are revealed tomorrow.
Separately, if your spouse tells you to stop complaining about your job or to find another one, it might help to pay attention.
The Financial Times reports that Adebayo Ogunlesi's wife spoke a few words to this effect when he was a banker at Credit Suisse and that this impetus prompted him to leave banking and raise an infrastructure fund. 17 years later, that fund - GIP - has $105bn in assets under management and has just been bought by BlackRock, giving Ogunlesi a net worth estimated at $2.3bn. It would not have been this way if he'd ignored his wife and stayed at CS.
Goldman Sachs' asset management head Marc Nachmann says it's time for private equity to make returns the hard way. "Over the past 10 years you could rely on lots of leverage, cheap cost of capital and multiple expansion, and you made your returns that way. That will be harder to do going forward...This goes back to the old days when people targeted undermanaged divisions of large companies or private companies that could be improved. A lot of the returns will come from sourcing really good opportunities and then the operational improvements.” (Financial Times)
Goldman Sachs may not be lending to consumers, but it's lending to everyone else. It's more making loans to private-wealth clients, individuals and families who on average have $60 million with the bank and to institutional clients, like private equity funds and hedge funds which want to borrow for stock purchases. (WSJ)
Centerview Partners paid its UK staff an average of £413k last year. (Financial News)
Morgan Stanley is paying $249m to settle US block trading probes. Pawan Passi, the former head of its US equity syndicate desk, has been charged with fraud and given a $250k civil penalty. (Financial Times)
One investor told Passi that his tip-offs put him "in the game” and that he (the investor) “would be at the kiddie table” if it weren't for Passi. “I know who my daddy is.” (Bloomberg)
Ted Pick is doing Morgan Stanley's first results call on Tuesday. Then he's going straight to Davos. (The Times)
JPMorgan made a record $49.6bn in net income last year, which was more than its previous $48.3bn record from 2021. (Bloomberg)
London police arrested six people over plans to target the London Stock Exchange. (Bloomberg)
Deutsche Bank is strategising takeovers of Commerzbank AG and ABN Amro Bank NV. (Bloomberg)
Profits at Brevan Howard were £147m, which is now being shared between staff. (Telegraph)
Sean Gambino left Eisler to found Baypointe Partners with Eisler backing. (Bloomberg)
Matthew Carter-Tracy, who was an energy portfolio manager at Citadel’s fundamental equities business Surveyor Capital, and Joseph DiGiacomo have departed. (Yahoo)
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