Morning Coffee: The most obnoxious man at Morgan Stanley. Goldman’s “fixer” gets a new thing to fix
The investment banking industry has its share of “larger than life characters”. Supremely self-confident types who take the biggest risks, drink the most martinis, know all the waiters and never lose at golf. “Incorrigible pranksters” who fill your desk drawer with sand or sneak into your bed in the middle of the night to give you a scare. Depending on whether you’re on the right side of them or not, they are either heroes to be followed to the ends of the earth, or a complete and utter pain in the neck.
Perhaps the best way to experience a larger-than-life banker is through a book, like the recently published memoir of former Morgan Stanley CEO John Mack. That way, you get all the great stories of pranks and escapades, without ever having to consider what it would actually be like to have your phone stuffed with salmon sushi. You can chuckle along at the idea of reporting someone to their boss for wearing denim shorts, or screaming at an employee for taking time off to dress as Santa Claus, then consider questions a leisure like “is this guy really as great as he says he is?” and “no matter who you are, is it OK to act like that?”
In many ways, the picture painted in Max Abelson’s review is of someone who could fairly be described as the Steve Jobs of banking. The parallels are quite striking – both men spent a period in the wilderness then came back to the firms which made their reputation, both were inveterate risk-takers and both of them had a “reality distortion field” of persuasiveness. (Possibly Mack’s most iconic moment was when he persuaded senior bankers at Credit Suisse to give up their guaranteed bonuses in order to allow juniors to be paid). And both of them seemingly inspired extremely deep loyalty, despite or even because of their regularly demonstrated dark side.
It seems from the review that the key to being like this is to possess an extraordinary degree of self-confidence, rooted in an almost total refusal to acknowledge bad news. As Abelson points out, Mack’s memoir basically ignores some of the things which readers might have been looking for alongside the many triumphs – his period on the board of Russian oil company Rosneft, or the fact that Pequot Capital closed down amid an insider trading probe a few years after his time as chairman of it.
The episodes that seem to stick in Mack’s memory also appear to be very much from the revenue-generating front office years, winning trades and client entertainment. The fact that his nickname, “Mack The Knife”, came from supervising a programme of more than 10,000 redundancies doesn’t seem to have anything like the same vividness. The cover of the book only describes him as “former Morgan Stanley CEO” – this might be on the advice of a publisher who doesn’t think “former Credit Suisse co-CEO” will sell many books, but it’s interesting that he doesn’t draw attention to the tough years which arguably did more to create the myth of Mack than either of his stints at MS.
The ability to disassociate oneself emotionally from a losing trade is, notoriously, one of the key characteristics of a great trader. And as John Mack’s career shows, someone who possesses that quality in large size, along with burning ambition and a head for figures, can become one of the legends of the investment banking industry. But reading between the lines, it also suggests that it doesn’t always make for the most comfortable character to be around.
Elsewhere, Marc Nachmann at Goldman Sachs doesn’t have a cool nickname like “the knife”, but he does have a reputation for fixing problems and cutting costs. In Goldman's new big reorganisation, he has been moved from being co-head of Global Markets to be put in sole charge of the asset management and wealth management business unit. Julian Salisbury, who has a reputation of his own and doesn’t like sharing drinking water, will move from a co-head position to being chief investment officer of the unit.
Cutting costs here won’t necessarily be easy. Asset and wealth management isn’t a sell-side sales and trading business, it contains the successors to the famous Special Situations and Merchant Banking groups, which used to be famous for high pay and aggressive bankers. Now they’ve got a new boss, and one inside says that “they are about to experience what it’s like to work with Marc, which they definitely have not experienced before”.
Schonfeld Strategic Advisors has decided to literally meet its staff half-way when it comes to working from home. It’s set up a new office in Summit, New Jersey, so that staff (including the head of trading) can have a shorter commute if they live in the suburbs. The new office seems to be a success – it has 33 full timers and is used by between 60 and 80 people a week. (Business Insider)
Dickon Pinner has been hired from McKinsey to lead the new “Transition Capital” unit at BlackRock, investing in clean technology and carbon reduction plays (Reuters)
The fun might have gone out of crypto day trading, but the retail investors are keeping their sense of community going by taking on new hobbies like trying to track down the fugitive TerraUSD founder, Do Kwon. (FT)
As always, look at what banks do, not what they say. Jamie Dimon referred to himself as a “major sceptic” of crypto, and that cryptocurrencies were “decentralised Ponzi schemes”. But yesterday, JP Morgan announced that it was appointing a new head of digital assets regulatory policy, having recruited Aaron Iovine from bankrupt crypto lender Celsius Networks. (Bloomberg)
Fidelity is also “cashing in on the crypto winter by acquiring new talent at a cut price rate” according to its European head of cryptoassets, Chris Tyrer. The new talent in question might have distinctly mixed emotions at being told this quite so blatantly. (Financial News)
Bankers behaving badly – Fredrik Blencke, until recently of Bell Potter Securities in Australia, has been convicted of assault and drunk driving, after an argument with a former partner over hiring a maid. (News.com.au)
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