Morning Coffee: The technology bankers who are loyal to their clan. Traders will go to absurd lengths to keep their Bloombergs
It’s an ill wind that blows nobody any good, and it’s increasingly looking like Silicon Valley Bank’s misfortune was Moelis’ opportunity. After picking up Jason Auerbach and six other senior MDs in the immediate aftermath of the collapse, Moelis have come back for another four. This takes their total technology team to 25 Managing Directors, doubling its size. As well as being the biggest old-fashioned banker poaching expedition in recent memory, it tells us a lot about how careers are made and franchises are built.
To start with, this was never really “the SVB Securities tech banking team” in any meaningful sense. It might have made more sense to call it “the former UBS tech banking team, temporarily working at Silicon Valley Bank”. All seven of the first tranche of Moelis hires had previously been at UBS; SVB took them as a team move back in 2021. Of the latest four, one (Raymond Wu) was also a UBS guy, while the other three (Roger Knight, Xiaoying Zhong and Georgi Balinov) had reached Silicon Valley by other paths.
And as that shows, it wasn’t really ever a “UBS tech team” either. What we’re looking at here is a small syndicate of bankers, led by Jason Auerbach, who are prepared to take their collective and personal franchises from bank to bank, depending on market conditions. It’s more like a kind of “virtual boutique”, which picks up employees as it moves around, generating revenue and collecting payment, using established names as service providers to furnish it with office space, compliance and a system for billing its clients.
In other parts of the industry, this is a much more normal phenomenon. The big hedge funds like Citadel and Millennium are “pod shops”, which can just as well be analysed as platforms providing capital-raising and administrative services to smaller independent investment managers. In the world of wealth management, the arrangement is even more formalized; there are plenty of people out in the MidWest who work for Morgan Stanley or JPMorgan, but whose business cards read “Bob Roberts Advisory” or something similar.
But it doesn’t happen as much in investment banking. Why not? Partly because bankers are more integrated into the overall franchise, particularly if they want to get involved in transactions which require a balance sheet. But also because it’s more unusual to have the sort of esprit de corps which persuades people to move as a single unit from bank to bank. It’s probably not coincidental that the Auerbach team formed on the West Coast, far from New York and even further from UBS head office in Zurich.
Of course, the question arises – why not just set up a boutique? But that’s getting harder and harder to do with increasing overhead and compliance costs. It’s been noted that boutique launches are getting rarer and more difficult. Perhaps this is the way of the future; if you want to go places in advisory banking, learn to like your colleagues because you might be stuck with them for life.
Elsewhere, the four most feared words you will ever hear on a trading floor are “we’re reviewing our feeds”. This phrase usually means that somebody is going to be losing their Bloomberg terminal, and with it, an incalculable amount of status. As well as a source of vital market data, it’s the trader equivalent of SnapChat, WhatsApp and SMS all rolled into one; when your green dot disappears from the network, you’ve suffered a kind of little social death.
Which means that traders will do almost anything to keep one. Even if the reason that they’re being deprived of it is that their country is subject to international sanctions due to its illegal invasion of Ukraine. Apparently, an entrepreneur has set up an office with dozens of terminals in Armenia, and is charging a hefty markup to Moscow bankers who can access them remotely by concealing their IP address.
This is of course illegal, and presumably extremely expensive, but Russian financial CEOs are apparently willing to pay up. According to one trader quoted, “someone who used to have a terminal in his corporate office … [was] clearly suffering withdrawal symptoms”. The Moscow Stock Exchange is apparently launching a competitor terminal called Moex, but it’s unlikely to be the same.
Meanwhile…
There might be something about UBS people that makes them instinctively want to work with fellow UBS alumni. Salvatore “Chicco” Di Stasi is the latest UBS banker to head for Andrea Orcel’s Unicredit to be head of equity and credit sales and trading. He’ll be joining Sam Kendall, the former UBS head of ECM. (Financial News)
Bringing new meaning to the phrase “lifestyle flex”, Rebecca Anderton-Davies combines a career as an MD in Goldman Sachs’ ETF business with a side hustle as a yoga influencer. (Daily Telegraph)
No matter how overcrowded and competitive the Australian investment banking market gets, people can’t seem to resist trying to enter it. The latest foreign firm to arrive and help maintain labour market tension is Lincoln International, a mid-market firm based in Chicago (AFR)
Santander has serious ambitions to hire bankers from Credit Suisse, particularly in the USA. But “characterising it as a lift-out or a group thing would be incorrect”. (IFR)
Nobody’s commenting about anything – and they might be well advised to keep it that way – but police were in the Shanghai offices of Bain & Co, and they have removed phones and computers. It’s not clear whether this is aimed at the firm itself or one of its clients. (FT)
Post-lockdown economic recovery, political stability and plenty of deals in the pipeline from financial sponsors. Those are among the reasons given by Nomura’s Italian M&A team for predicting a sharp recovery in transactions in the second half of the year. Another reason why they’re making this prediction, of course, is that pessimistic bankers don’t win mandates. (The Banker)
A motion to appoint an independent chair to oversee David Solomon at Goldman Sachs was accompanied by quite a lot of barracking about private jets, banker burnout and lawsuits, but ultimately failed with only 16% of the votes. (Reuters)
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