Morning Coffee: 56-year old hard-driving banker with an analyst daughter is changed man. JPMorgan juniors not the only ones waiting to join Apollo
When a banker reaches the top of the tree, they sometimes get a sense that the qualities which got them there are not the ones that they now need. In extreme cases, they might need to formally acknowledge their transition from “sharp elbowed mean machine” to “beloved leader and culture carrier”.
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56-year-old Navid Mahmoodzadegan appears to be doing this as he prepares to take over as CEO of boutique firm Moelis & Co.. He’s commented that “There was some personal growth that happened there over the years”, and promises that as CEO he will “try to not be a total control freak”. This is apparently by way of reassurance, given a history of “pushing colleagues to the point of resentment” in the sports industry deals that he’s made his name with.
Mahmoodzadegan also admits to having seen “a little bit of a hazing mentality to some of the work” in the past treatment of junior bankers. As a bank, Moelis has developed a bit of a reputation for long hours and high pressure, and occasionally for senior bankers who aren’t quite as tactful as they should be.
Mahmoodzadegan is pledging to take some of that hazing out of the experience. At present, junior Moelis bankers have to be in the office five days a week, and have eight whole protected weekends per year. In the current deals environment, it might be considered comparatively cheap to allow them nine or even ten.
One reason why the welfare of junior bankers might be on Mahmoodzadegan’s mind is that he happens to have reached his leadership position just at the point when his own daughter is starting out as an analyst (at a different bank). He would hardly be the first or only investment bank CEO to have a child in the industry, but it is likely to give him a particularly sharp perspective on the human costs of industry practices when some of the family events being sacrificed to “pls fix” and all-night modelling sessions are his own.
In many ways, it’s highly significant that he’s used the word “hazing” at all. In the senior ranks of the banking industry, it’s much more common to view the long hours worked by juniors as essential training, or the result of client demand, or a weeding-out process to ensure that only the truly committed progress. If Navid Mahmoodzadegan genuinely believes that a lot of it is simply ritual cruelty, passed on from one generation to the next in the name of tradition, that might make a lot of difference. Like the top athletes that he apparently often compares his team to, bankers are capable of bearing a lot of pain and exhaustion if they can see that there’s a point to it. The elements of the junior banker lifestyle which are resented tend to be the ones that seem to have just been inflicted on them for no reason.
Elsewhere, one of the most glittering prizes for junior investment bankers has, of course, been a job in private equity. But it looks like the rules of the game have changed for one of the most prestigious employers in that space. Marc Rowan of Apollo apparently read Jamie Dimon’s letter to analysts last week, and decided that “When someone says something that is just plainly true, I feel compelled to agree with it”.
So Apollo will not be taking part in this year’s “on cycle” recruiting interviews, and will be filling its class of 2027 at a later date, with young people who have a little more experience and are more sure that they want to do the job. It might be missing out on “top talent” this way, but is prepared to take that risk.
And it’s not such a huge risk anyway. For one thing, lots of young bankers have been passing up on-cycle interviews anyway for a few years, simply because it’s weird and awkward to interview for a job you don’t know anything about. And for another, the whole concept of “top talent” is meaningless when you’re talking about utterly unproven and untrained fresh graduates. Apollo may not be missing out on anything at all.
Meanwhile …
Although they are still hiring and still optimistic for the medium to long term, Todd Tuckner of UBS has confirmed that the bank expects dealmaking revenues to fall “mid to high teens” in the second quarter, and thinks this will be in line with the rest of the industry (Financial News
Bank of America's investment banking revenues will fall 25% year-on-year in the second quarter. (Bloomberg)
Chinese bankers are still suffering cuts to their travel and accommodation budgets, as they try to cut costs in line with falling revenues. But some of them are finding that they prefer the food at mid-range local chains to the offerings from premium global brands. (Bloomberg)
During 2022 and 2023, when banks were paying huge fines for illicit WhatsApp use, four staff at the UK’s financial regulator had to be disciplined for sending confidential information to their personal email addresses. (Financial News)
Hedge funds are still expanding in the Middle East, as Hudson Bay has added an Abu Dhabi office to its Dubai presence, and King Street is applying for a licence in Saudi Arabia. (Bloomberg, Bloomberg)
In the last five years, Deutsche Bank has paid €11m in a single employee’s severance package on two separate occasions. In aggregate, European banks spent more than €1bn in making “material risk takers” redundant, according to analysis of regulatory filings. (FT)
When an investment banking market recovers after years in the doldrums, the few remaining experienced staff can find themselves in sudden demand. Japanese bankers are now telling stories of employers refusing to let them resign, being stuck in hotel rooms for two hours of pitches by Wall Street banks and parties thrown to let them know how much they’re appreciated. (Bloomberg)
Andy Westbrook is “one of the undisputed big beasts” of corporate finance in Manchester, although it’s hard to be a rainmaker when it’s raining all the time anyway. (The Business Desk)
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