There is, as they say, no “I” in “Team”. But as bankers at Lazard Paris will tell you, the French word for team is “Equipe” and there’s a great big I right in the middle of that. Up until last month, their big moi-même was Matthieu Pigasse, the ENA graduate, media mogul (he co-owns the Le Monde newspaper), punk rocker and former global head of both Sovereign Advisory and M&A for the Lazard group. Now he’s gone to pursue “a new entrepreneurial project”, and the new CEO of Lazard France, Jean-Louis Girodolle, seems to have no particular ambition to grow his feet several sizes to fit Mr Pigasse’s shoes.
The cultural dilemma that always faces Lazard is perfectly summed up by the issues surrounding the Pigasse departure. It’s always been in an ambiguous position, a bit bigger than the biggest boutiques, but a bit smaller than the smallest bulge bracket investment banks. There’s always been a rainmaker culture; from André Meyer to Felix Rohatyn to Bruce Wasserstein to Marcus Agius, it’s generally been expected that the top figures at Lazard should be capable of delivering big deals themselves as well as managing the business. But on the other hand, it’s not a boutique and it’s not a partnership. While the clients may appreciate being personally served by the top people, the relationships ought to belong to the company, and there’s a responsibility on the part of the top bankers to bring through the next generation.
That’s the bit which people quoted in the Reuters piece question whether Mr Pigasse ever got to grips with. It’s noticeable that over the last two years, Lazard made six MD-level hires from other banks but only promoted two from within. It’s also notable that the first move that Lazard group CEO Ken Jacobs made in the wake of Pigasse’s departure was to broaden the leadership structure, appointing two new co-chairmen of investment banking in France. It seems unlikely that the three roles of sovereign advisory, M&A and CEO France are going to be combined in a single person for a while.
It is, to put it bluntly, frustrating to work for a boss like Matthieu Pigasse. It’s like working with someone like Prince or Orson Welles – you can respect them as a star, but if they also want to write the script, direct, play the guitar solo and design the posters, then everyone else is going to feel like a support act. Worse, they can be tetchy about protecting their position. Retired Morgan Stanley banker Xavier Mayer tells Reuters Pigasse, “used to centralise the coverage of France’s biggest clients and personally handle these relationships.”
In a situation like that, everyone knows that if you ever want a chance at the spotlight, you need to go somewhere else and it seems like this is what’s happened at Lazard. Mr Girodolle says that “My intention is not to run alone. I will make sure that everyone feels included, listened to and part of the game”.
If Lazard-style investment banking is at one end of the spectrum, where the valuable intangible assets of the firm are all under the control of individual bankers, quant investors have traditionally tried to assert corporate ownership of all the intellectual property, enforcing it through draconian non-competes, nondisclosure agreements and even software patents. Rennaissance Technologies apparently used to have a pretty unique method of getting employees to sign their rights away. - A recently published book about the firm says they simply didn’t mention them and slipped the noncompete contract into the middle of a pile of other documents to be signed.
Not completely unnaturally, two mathematicians called Pavel Volfbeyn and Alexander Belopolsky regarded this as a bit sneaky and refused to comply. So when Izzy Englander wanted to open up a quant capability at Millennium, they were able to go to work for him, and did. But then another huge can of worms opened up – since quants are only as good as their models, a nondisclosure agreement on proprietary systems can potentially be as effective as the noncompete agreement. After a lot of back and forth (during which the quant pair didn’t help themselves by calling one of their trading systems “Henry’s signal” when it bore a strong relationship to something invented by a Rennaissance quant called Henry), Millennium agreed to pay the two guys $20m and fire them. These days, Volfbeyn appears to run a hedge fund called Pacad Investment, while Belopolsky runs Enlightenment Research LLC, so they’re still in the quant game, but the book extract seems to suggest that Renaissance gets really aggressive in defending its turf.
Amos Benaroch, the former AIG trader who has been suing the company to get his deferred bonus paid, has won again in the Cour de Cassation, which confirmed decisions made by lower courts that the 2008 losses didn’t get AIG out of its compensation liabilities. This means €8.3m for Mr Benaroch and might read through to a similar lawsuit brought in London by other AIG employees for a total of $100m (Bloomberg)
Probably a sound business strategy, although not necessarily the most tasteful one – Citigroup is encouraging its youngest private bankers to get close to teenagers and young adults who might become rich through inheritance at some point in the future. (Business Insider)
To avoid awkward conversations over the breakfast table, Crispin Odey has closed out his short position in the stock of asset manager Jupiter plc, because Nicola Pease, another fund manager who is married to him, has been appointed Chair of its board. Food for thought for future activist defence teams at investment banks? (Guardian)
In laboratory studies, people were more likely to regard female executives as dishonest and recommend that they were fired if the photos attached to the articles were “highly attractive” (Harvard Business Review)
Iqbal Khan has sent out an all-hands memo to his new employees at UBS about “quick wins” to improve divisional profitability and people are noticing that the ideas – lend more to rich people, integrate with the investment bank and participate in private equity deals – have a certain degree of Credit-Suisseishness to them (Bloomberg)
According to Goldman Sachs’ Dane Holmes, if you don’t wake up every morning and worry about losing talent, you’re probably not a very good manager. (Business Insider)
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