Morning Coffee: Former UBS bankers get into a big fight over talent. Singapore might offer an even sweeter tax deal than Hong Kong
There are few things more exciting in investment banking than a big talent raid. Even a lucrative IPO or merger deal doesn’t create quite the same atmosphere as a day on which half a dozen rainmakers tender their resignations at once. The gossip is immediate – where are they going? Who might get bid back? How will they be replaced? And, at the back of everyone’s minds, is this going to end up with a lawsuit?
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The expansion of Sydney-based boutique Barrenjoey into the small but surprisingly competitive New Zealand market seems like pure soap opera. A month ago, Dan Reynolds and Silvana Schenone, the co-CEO and a senior MD at the Kiwi investment bank Jarden left to set up the Auckland office of Barrenjoey. Fourteen Jarden staff have joined them so far, and litigation has begun in the Employment Court of New Zealand. Barrenjoey is being sued along with the departed bankers, and apparently a large number of Jarden staff are being asked to give evidence after having been approached but decided to stay.
Barrenjoey’s top management are no strangers to this game – Guy Fowler and Matthew Grounds left UBS in 2019 after a stellar career and became co-executive chairmen a couple of years later. There followed a period during which quite a few dozen employees of UBS’s highly successful Aussie business made the same move.
UBS didn’t exactly like this at the time, but seems to have viewed it as inevitable. Which is what usually happens in banking; most of the time, the feeling seems to be that banking is a contact sport, and that it’s difficult to get too outraged about a practice that you might want to engage in yourself one day. But it seems that Jarden are more inclined to put up a fight.
It is a complicated legal area, because there needs to be some balance between the employer’s right not to have their business disrupted and the employees’ right to accept a better job offer if they think that they have one. As a general principle, the more things look coordinated, the greater the legal danger. That’s why Jarden have apparently applied to the court to get access to cloned versions of Reynolds and Schenone’s laptops and mobile phones, and are making allegations that data has been erased from them.
The spectacle is entertaining for outsiders, if not exactly edifying; another reason why banks don’t often litigate over poaching is that it always involves a certain amount of washing the industry’s dirty linen in public. It also has the potential to create interpersonal bad blood, which is particularly troublesome in a small market like New Zealand where everyone is going to end up having to work on the same deals sooner or later, whoever wins. We often give the advice in Morning Coffee that it’s extremely rare for anyone to walk out of an employment court and genuinely feel like a winner; that’s just as true for employers as it is for bankers.
Elsewhere, it seems like the tax authorities of Asia are engaged in a game of high-stakes poker with respect to the incentives they can give to financial services employees. Hong Kong came out last week with a proposal which would extend a version of the “carried interest loophole” from private equity managers to hedge fund traders. But now Singapore seems to be ready to see that bet, and raise it.
As well as planning to “remove the tax paid by investment professionals relating to profits from fund management services”, the Monetary Authority of Singapore has announced plans to set up an investment program to provide capital to hedge funds based in the city, and to loosen the visa regime for senior fund management staff.
They have described the competition with Hong Kong as not being a “zero-sum” game, but in many ways, it feels like it is. While both financial centres are growing, any company or any employee which goes to one place is lost to the other, and so whenever Hong Kong or Singapore holds out a tax or other incentive, the other one has to reciprocate. It’s a bidding war that can’t last forever, but while it goes on the pot could get very large, and fund managers are the likely winners.
Meanwhile …
A big hire for Scotiabank, as they have recruited Richard Tory, a mining banker who was president of Morgan Stanley’s Canadian business. He will be head of the mining group and chair of investment banking, replacing Matthew Hind who is leaving the bank. (Bloomberg)
A former Bridgwater analyst has started a company which claims to be able to help long-short equity funds reproduce the investment process of their own staff. Multiplier apparently has six clients already, with AI agents “researching every stock on earth”. (Business Insider)
Nik Storonsky of Revolut is a billionaire on paper, but most of his wealth is tied up in a founder’s stake that’s hard to sell. So he’s asking the board for permission to increase the amount he’s allowed to borrow against his holdings, up to $250m so he can enjoy some of the luxuries fitting his success. (FT)
Bank of America is hiring technology bankers, possibly wanting to break into the JPM/GS duopoly that’s dominated big tech deals so far this year. They’ve hired Asad Mahmood from Barclays to cover semiconductor and quantum computing stocks, and Gregory Rieder from a VC firm to cover Latin American tech and fintech. (Bloomberg)
One in four people believe that if you spot someone on Tinder, it’s OK to increase your chances of getting them to notice you by sending a connection request on careers sites. (WSJ)
The curious case of Gregory Fenelon, who keeps on appearing in SEC filings as a major shareholder in companies. (FT Alphaville)
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