Morning Coffee: JPMorgan's newest employee has impeccable connections. Ex-BofA banker not at all optimistic about ECM
What's more important when you're trying to get a job in finance? What you know, or who you know? Or is it down to a complex (or not) interaction of the two?
In the case of Lili Buffett, who's just joined JPMorgan's wealth management unit in New York City, it seems hard to conceive that who she knows didn't have at least some consequence for her employability. Lili Buffett is married to Howard W. Buffett, the grandson of Warren Buffett, who is, needless to say, one of the world's richest people with a net worth somewhere in the vicinity of $100bn.
While Warren is unfeasibly wealthy, his heirs aren't being gifted his wealth. He's promised to give away 99% of his fortune, with much of it going to the Bill and Melinda Gates Foundation (where Lili was coincidentally a board member for nearly four years). In 2012, Buffett also gave each of his children $2.5bn to start charitable foundations.Howard's father (also Howard), used some of his to buy a 400 acre farm in Nebraska and to research the impact of climate change and denuded soil on crop yields. Howard W. worked for his father's foundation for some time, but is now an adjunct associate professor of international and public affairs at Columbia University, where Lili studied economics and philosophy.
Lili's excitement at getting her first job outside a not-for-profit board since leaving Columbia at least five years ago, is evident on her Instagram account. She won't be the last new recruit to JPMorgan's wealth management business - Bloomberg notes that the bank plans to hire 1,300 advisers to the division in the next three years - and she helpfully clarifies the sort of profile JPMorgan is looking for. If your LinkedIn-declared passion is for travel and working for not-for-profits, and you have a qualification from a top school, plus a family connection to some of the most financially-endowed people in the world, JPM would probably like to receive your application.
Separately, Bank of America's investment banking business isn't looking too unhealthy this year - its revenues are down by only 39% compared to the 56% decline over at Credit Suisse. But Craig Coben, the former co-head of global capital markets for the Asia-Pacific region at BofA, isn't convinced that the rout is over.
Writing for the FT's Alphaville site, Coben cautions against presuming that a successful Porsche IPO will herald a revival in the IPO market. It won't. "The Porsche IPO will be a milestone for Volkswagen and Porsche, but it is hard to see much “read-across” to the broader IPO pipeline," says Coben. "Porsche is in some ways a straightforward company to take public. It has a long and storied history, it has been listed before, and investors are familiar with the business, its competitors and its market positioning. The listing is not introducing a new company so much as bringing back an old friend."
Porsche is more of a carve-out than an IPO and most of the stock will go to cornerstone investors, says Coben. It says, "little about the appetite for the kinds of small- and medium-sized growth companies that make up the bulk of the IPO pipeline," he adds. For those companies, IPOs are still unlikely. Worse, says Coben, their managements are starting to get tired for preparing for the next market window, only be told to delay, while also trying to steer their companies through difficult times. He says many are concluding that it's, "better to down pens and see if one can launch an IPO in spring or summer 2023 on the back of audited 2022 full-year results." This being the case, it could be a long time before the IPO market comes back: we're looking at mid-2023, at least.
Meanwhile...
Goldman Sachs is expanding its transaction banking business, TxB, in Europe and has hired a team in Frankfurt. (Financial Times)
It's not easy being a middle manager now. Catherine in Zurich is trying to navigate a stiffening in senior leadership’s tone, pushback against demands for higher wages and hybrid work plans. “In the past two years, the company gave a lot of support. The sense is, that’s done. We’re entering a different chapter, a different economic context and a push to get people back into the office.” (Financial Times)
Business class flights have become an unaffordable luxury. Fares have risen 45% this year. A return between New York and Sydney is now $20k. (Bloomberg)
Barclays is back to issuing the ETNs that it mistakenly oversold for a year and had to buy back, incurring a loss of over £500m. (Businesswire)
Santander investigated employees' trip to the Nags Head lap dancing establishment, and concluded that juniors were under no pressure to attend. (Financial Times)
A Stanford University professor studying the return to the office says it's not happening. “The last two big pushes after Labor Day in 2020 and 2021 were complete failures with no impact at all, and so I was not expecting anything different this time around.” (Marketwatch)
The SEC could force staff back to the office by taking a hard line on inspections. (Capitol Account)
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