Morning Coffee: JPMorgan employees began spending huge amounts of money. How to behave when you didn't win a place on the big IPOs

Some bankers have always seen their expense account as part of their compensation; others have made it a matter of honour to do more client entertainment than anyone else.  But even the most profligate and high-rolling Managing Director would have to be impressed by the employees at JPMorgan who are running up company tabs that exceed their own salary.

💥Follow us on WhatsApp for news alerts.💥

They’re not spending it on food, drink, golf or any other kind of entertainment, though – these are middle office professionals working in the Payments division, and they are spending the money on AI tokens.  Zachary Anderson, the division’s chief data and analytics officer, told Semafor it's already having a noticeable effect on his budget.

Several companies appear to be running into trouble from “tokenmaxxing” at the moment. The problem seems to be that lots of employees perceive a need to demonstrate their talents with AI technology, before cost controls have been put in place.  Anderson claims that JPM “isn’t the type” of company that has AI leaderboards to encourage maxxers, but it does monitor usage, and that might be all that’s needed to create an incentive not to end up on the “naughty list” of sceptics and refusers.

At the other end of the scale, there is considerable demand from the AI true believers.  Writing code yourself can be demanding and boring.  And while honing prompts isn’t necessarily thrilling, it’s at least a novel way to work, and one which lets you feel that you’re on the cutting edge of something.  It also, potentially, gives you an extra excuse if there’s an error, which is always a useful thing to have.

So although Anderson says that there is no company-wide effort to ration the use of CoPilot, Claude and the rest, one might become necessary before long.  The implementation of AI was meant to replace employees and reduce costs, not give them a new way to waste money.

It's conceivable that AI tokens might end up subject to the same level of scrutiny as any other kind of expenses claim.  You’ll need to demonstrate that it was for a valid business purpose, and be restricted to a relatively measly stipend for most applications.  If that doesn’t work, then AI coding tools for techies could become the equivalent of Bloomberg Terminal subscriptions for front office bankers – extremely expensive status symbols that are only handed out to a small number of elite managers, who hardly use them but would cut throats and start wars rather than be deprived.  The ordinary employees may end up being reduced to having to queue up to use the department’s single Claude subscription.

Elsewhere, Goldman Sachs and Morgan Stanley seem to be setting up a fantastic revenue quarter courtesy of the Big Tech industry.  They are leading the SpaceX IPO, leading the Anthropic IPO and they’re bookrunners for the $85bn secondary issue from Alphabet.  But what about the banks that didn’t get into the elite syndicate?

Jefferies, for example, might have reasonably felt disappointed that they weren’t in the SpaceX deal at all, not even in a lowly role.  They are a top ten firm for global equity IPOs, after all, and have hired good tech bankers like Becky Steinthal and Stefani Silverstein.  Ironically, this might have been the reason for their exclusion; bulge bracket banks don’t always like to give their near competitors a chance to show what they can do, and often prefer to be in a syndicate with regional and second tier players, so that there’s not so much overlap in the clients they’re talking to.

But there’s no use crying over spilt milk, and sometimes there is good business to be written by outsiders to a big deal.  Although the company is diplomatic, saying that it is “not promoting any shorting activity regarding SpaceX or any IPO”, Jefferies’ traders will be keenly aware that if someone were to want to bet against Elon Musk, they aren’t conflicted out. They will also be able to deal with investors who want to “flip” their shares immediately when SpaceX starts trading.

Schadenfreude is not an attractive emotion.  Although there is a little bit of every banker that wants to see a competitor’s deal fail, it would be quite bad for the overall market if the tech mega-deals were to faceplant.  But, in that unfortunate occurrence, some traders might reflect that there’s good wine that can be made out of sour grapes.

Meanwhile …

“We are blown away about the junior talent we can hire. They are so AI native, they use these tools as if the world had never existed without them. So perhaps a bit counter to many narratives out there, we have not reduced our junior intake, and we are very happy with that”.  The CEO of BCG is feeling bullish – revenue was up 7% last year and the demand for AI consulting is “insatiable”. (WSJ)

Bank of America isn’t quite so effusive about this year’s crop of university students (“we need young people”, says Brian Moynihan), but it is also still recruiting – a class of 2,000 summer interns and 2,000 graduate recruits are set to join. (Bloomberg)

How big is the private credit market?  It depends on whether you include the entire banking industry, mortgages and trade finance. (FT Alphaville)

Fully one third of the employees at Revolut work on fraud prevention, and that is with the assistance of an AI-powered tool that can process money-laundering queries twelve times faster than a human. (Bloomberg)

The Financial Conduct Authority has warned EPL clubs that they aren’t exempt from the rules on financial promotion, as a surprising number of them have shirt sponsorship from crypto and trading firms. (Financial News)

Some bankers want “to feel that their outward appearance reflects their capability and energy”, others are concerned about “feeling overlooked in environments where youth is often associated with innovation, productivity and adaptability”.  Or just possibly, they are going for lunchtime Botox appointments because they want to look good? (FT)

Follow me on X. Follow me on LinkedIn. 

Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, Whatsapp or voicemail). Telegram: @SarahButcher. Signal: sarahbutcher.22  Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. 

Bear with us if you leave a comment at the bottom of this article: comments are moderated intermittently by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. You must take sole responsibility for comments you post on this site. We will take reasonable steps to weed out anything that we consider to be offensive or inappropriate.