Wall Street Folly

Tags: Autos, bailout, Barack Obama, Charlie Rangel, Citigroup, Ethlly challenged politicians, Fees, Goldman Sachs, JP Morgan, Nissan, Politics, recalls, TARP, Tim Geithner, U.S.. Treasury, Vikram Pandit

“Save the bankers and make the world a better place”

Tags: Humor, investment banking

And apparently lots of people have been (including a bunch of investment bankers and hedge funders that we know):

Growth Area: Beards on Laid-Off Executives – WSJ

Tags: Banking Culture, Fashion, Hedge funds, investment banking, Revolving Door

Lumps of coal: Bloomberg reports that after BNP Paribas' Q3 profit stumble, investment banking bonuses could drop 70% or more — and in more cases, to the dreaded bagel:

Read the rest of this entry »

Tags: Bonuses, investment banking

Fees generated by the big Wall Street banks and boutiques have dried up in a
big way and the Wall Street Journal’s Heard on the Street column suggests that there
may be more pain on the way.  And that could lead to consolidation.

Senior bankers warn that after a tough first half, the outlook has deteriorated further. Does the grim forecast mean that the long-rumored consolidation in investment banking will finally occur?

The damage caused by mortgage-backed securities remains the focus for investors. The investment banks might have taken most of the balance-sheet hits from their subprime problems, but other areas, in particular commercial real estate and higher-grade residential mortgages, have begun to show cracks. Continued credit-market weakness is likely to force further write-downs in the third quarter.

Bankers Face a Grim Fall
- Wall Street Journal

Tags: Fees, investment banking, M&A

Cool new site Cityfile.com has a great interactive 3D map where you can navigate around and see where the big money firms — like Icahn & Co, Paulson & Co, Och Ziff, Perry Capital, etc.–  are located around 59th Street and Fifth Avenue.   Above is a screen shot;  the interactive tool is here.

Tags: Hedge funds, investment banking, Law firms

According to this morning’s Wall Street Journal sources, Citigroup will be slashing 10% of its investment banking division  jobs with M&A bankers exspected to be hit hard….

"Citi indicated earlier this year that
it would be resizing this business in response to market conditions and as part
of our ongoing re-engineering efforts," spokesman Dan Noonan said, without
confirming specifics.

Citigroup to Cut 10% of Investment Banking Jobs – WSJ

Tags: Citigroup, Credit Crunch, investment banking, Revolving Door

At a meeting of 1000 employees — in JP Morgan’s cafeteria, CEO Jamie Dimon and investment banking co-heads Steve Black and Bill Winters admitted to the newly combined investment banking staff what the rest of the world pretty much knew already — that Bear Stearns is worth much more than the $10 bargain bin price that they stole it for.  Another 2,000 or so heard it via the phone. Other revelations that came out of the meeting according to a CNBC report by Charlie Gasparino is that the integration of the two firms is going "smoothly" and more layoffs could be on the way.  Gasparaino also told a Dimon anecdote during the CNBC segment: 

Dimon is notorious for cost-cutting; last
year when the subprime meltdown began, analysts in one of JPMorgan’s buildings
say, they received a memo stating that milk would no longer be available at
coffee pantries. After an uproar, the firm began serving milk again. During the
call, Dimon said "wasting money is a sin," and then quipped that
"It is not true that I ordered smaller hamburgers for the café, but if I
[had] thought about it, I would have done it."

Later, Dimon was asked by an employee if he could have "access to the Bear
cafeteria, because they serve bigger hamburgers there." Dimon did not
answer the question.

JP Morgan Chase: We Got Bear Stearns On The Cheap – CNBC

Tags: Bear Stearns, investment banking, Jamie Dimon, JPM Chase

"My mother called me up at the end of the equity bubble, and… you know I have been at the heart and seen some of the problems, and my mother said, ‘Hey how come you never go to jail?’ ,and I said ‘Gee, Thanks Mom’…The ‘everybody’s doing it’ excuse doesn’t hold when people are wondering how this happened, and they want to take action…Look at your practices."

Another clip is below

Read the rest of this entry »

Tags: investment banking, Kenny Moelis

The fee machine is breaking down: M&A bankers are bracing themselves for a scarcity of deals after the first quarter provided the biggest drop in dollar value of announced M&A deals in six years….

That is the message circulating through
Wall Street’s mergers-and-acquisitions departments following the biggest
quarterly decline in six years in the dollar value of deals announced.

It was clear by the end of last year that the merger business was in the midst
of a significant slowdown. The first quarter met the predictions of the most
pessimistic forecasters. The value of all global deals fell 24% from the first
quarter of 2007 to $736 billion. Many deal makers say 2008 is unlikely to get
much better, with some predicting declines of as much as 45%.

The number of deals globally continued to
rise in the first quarter, jumping 14% to 9,195.

There are "some bright spots," such as robust deal making in emerging
markets, but the merger business is likely in "for a tough time," says
Mark G. Shafir, chairman and global co-head of mergers and acquisitions at
Lehman Brothers Holdings Inc. "It’s a challenging environment right
now."

Deal Makers Brace For Even More Misery – Wall Street Journal

Tags: Fees, investment banking, M&A

Some Wall Street Banks were winners on Sunday night when the Oscars were handed out….

Take Morgan Stanley, which gets credit for
the two big Oscar winners, "There Will Be Blood" and "No Country
for Old Men," as well as another highly regarded picture, "Into the
Wild." "Blood" and "No Country" were co-produced by
Walt Disney Co.’s Miramax Films and Viacom Inc.’s Paramount Vantage. Morgan
Stanley was an early backer of Paramount Vantage — the art-house subsidiary of
Paramount — investing $150 million in the studio through a vehicle called
Marathon Funding. Paramount Vantage also produced Sean Penn’s "Into the
Wild" and "The Kite Runner." All told, its movies garnered 19
nominations and six Oscars.

Allianz AG’s Dresdner Kleinwort was a
winner, too. It invested $200 million in Focus Features, which had two pictures
earn nominations — "Atonement" and "Eastern Promises" –
and one statue. Then there is Goldman Sachs Group Inc., which helped get the
Weinstein brothers’ post-Miramax venture, Weinstein Co., off the ground;
Weinstein was behind the Bob Dylan bio-pic "I’m Not There" and
co-produced "Sicko." Each got one nomination.

Banks Picked Oscars, Too – Wall Street Journal

Tags: Dresdner, Film, Goldman Sachs, investment banking, Morgan Stanley

Do they call him "Jerk" for short? (har!): UBS announced a new investment bank head: Jerker M.Johansson who was formerly with Morgan Stanley:

Mr. Johansson has been with Morgan Stanley
for 22 years in a series of positions culminating in his role as global head of
institutional equities at the U.S. investment bank. He most recently served as
vice chairman, Europe, after being reassigned in an executive shake-up.

UBS had a hard time finding candidates for the investment-banking job in part
because of the unit’s uncertain future. UBS warned last month that it would
likely report fourth-quarter write-downs of some $14 billion on its holdings of
debt securities, contributing to a quarterly loss of more than $11 billion.

Read the rest of this entry »

Tags: investment banking, Morgan Stanley, Revolving Door

More pink slips are going out in investment banking at Bank of America;  they’re firing 650.  They’ve also announced plans to sell their prime broker business….

Read the rest of this entry »

Tags: Bank of America, investment banking, Revolving Door

Former UBS president Kenny Moelis, who now fronts his own namesake firm, is setting down some roots in New York City.  The long time California resident (originally a Long Island boy) dropped $11.05 million on an apartment in The Plaza.  According to the New York Observer:

Mr. Moelis, as a trustee of the Moelis
Family Trust, is listed on the deed as a buyer of the condo, along with wife
Julie Lynn Moelis, also listed as a trustee.

Former UBS Investment Bank President Buys in The Plaza for $11 M.- New York Observer

Tags: investment banking, Real Estate

It’s hard to believe that a whole year has passed since the world (literally) was introduced to Yale student Aleksey Vayner, the ballroom dancing, skiing, weight lifting, investment banker wannabe who created what is probably the most viewed and most ridiculed viral internet video resume ever. Here’s the video that started it all, "Impossible Is Nothing":

You can also take a walk down memory lane and read all of our other Aleksey posts here.

Tags: Aleksey Vayner, investment banking

The bloodletting isn’t yet over at Credit Suisse as the Wall Street Journal reported that 170 more are being axed in the fixed income area within its investment bank.  That’s over and above the 150 cuts that were announced last week.  Most of the pink slips will go to the commercial mortgage backed area, but some in other areas who have been underperforming will get the ax as well.

Credit Suisse Announces Additional Job Cuts – Wall Street Journal

Tags: Credit Crunch, Credit Suisse, investment banking, Revolving Door

UBS employees are the latest victims of the credit crunch where 1500 jobs will be cut.

UBS AG, Europe’s biggest bank, reported a
third-quarter loss, ousted two top executives and announced 1,500 job cuts after
writing down the value of fixed- income securities by more than 4 billion Swiss
francs ($3.4 billion).

The pretax loss, the first reported by any of the world’s largest banks for the
third quarter, totaled 600 million francs to 800 million francs, the
Zurich-based company said today. Huw Jenkins, the head of the investment bank,
will step down and become an adviser to Chief Executive Officer Marcel Rohner.
Chief Financial Officer Clive Standish will retire.

 

Read the rest of this entry »

Tags: Credit Crunch, investment banking, Revolving Door

Greg Calvino, a 45 year old trader formerly with RBC (and now with Thomas Weisel) is fighting with his ex-girlfriend, Elisa Kwon, in court over a $100,000 check he wrote to her early in their relationship that she cashed because she says he broke a no drugs, strippers and hookers promise that he made to her. She says that he agreed that she could cash the check if he misbehaved.  He filed suit in July alleging extortion, looking to get  his money back along with interest and damages.  He claims to have written the large check to protect his career and reputation, and that she cashed it for no reason. But according to Kwon there are instant messages where Calvino admitted to going to Flashdancers and he failed a drugstore drug test showing that he partook of the white stuff:

Read the rest of this entry »

Tags: Culture, Drugs, Hookers, investment banking, Lawsuit

In a sign of how quickly investment banks
are moving to scale back businesses hit by the turmoil, RBS said it had shed a
quarter of the just over 20 staff on its collateralised debt obligation team,
which repackages mortgage-backed securities and other instruments. Rick Caplan,
co-head of CDOs at RBS Greenwich Capital, the bank’s US capital markets
subsidiary, left two weeks ago as a result of the cutbacks.

The reductions at RBS mark a sharp reversal
from the expansion of recent years, when the bank beefed up its CDO team to take
advantage of demand from investors for new structures. CDO volumes jumped 134
per cent in 2006, according to RBS Greenwich’s annual review, and the bank
ranked in the top three underwriters of CDOs based on asset-backed securities.

RBS staff in US hit by subprime turmoil - Financial Times

Tags: CDO, investment banking, Revolving Door

After being a good boy for the year required by the government, all remaining charges against former Credit Suisse banker Frank Quattrone have been officially dismissed:

The decision today came four years after Quattrone was accused of obstructing
justice and 17 months after his conviction for the crime was reversed. Last
August, the government agreed to drop its case if Quattrone, 51, didn’t break
the law for a year.

“The fed’s criminal casebook is now closed,” said Jacob Frenkel, a former
federal prosecutor now in private practice in Rockville, Maryland. “With the
one-year clock having run, there is nothing left hanging over Mr. Quattrone’s
head.”

Frank Quattrone’s Criminal Case Is Formally Dismissed – Bloomberg

Tags: Credit Suisse, Frank Quattrone, investment banking, Legal

Here’s a round up of what the what the press is saying today about how bonuses are expected to come in…..

Read the rest of this entry »

Tags: Bonuses, Compensation, Hedge funds, investment banking, Real Estate, Revolving Door

Troubled Countrywide Financial has a new shareholder: Bank of America played cavalry and rode to CFC’s rescue by injecting $2 billion into the firm in exchange for a 7.25% nonvoting convertible preferred stock.  With an $18 conversion price, BAC got a pretty sweet deal that’s already way in the money.  CFC got stability although shareholders face significant dilution:

Read the rest of this entry »

Tags: Bank of America, investment banking

Incredible shrinking bonuses?: More predictions are emerging that bonuses will be at risk come December from banking firms to hedge funds.  There’s also increasing fear that many may lose their jobs.  Naturally, the mortgage area is seen as one of the biggest losers, where bonuses and jobs are seen as being slashed.

Not much of a surprise, but we’re seeing a lot of resumes crossing our desk already, both from people at hedge funds and banking firms.  And we’re not talking just lower level types, but some pretty senior people with meaningful experience who seem to be seeing the writing on the wall.  It’s certainly an interesting indication about which firms are having problems.  This is great news for those wanting to hire.  After a long period of a really tight job market for analysts and traders,  there may be some rationalization out there, with some great hires to be made at almost ‘reasonable’ prices.  The bubble seems to finally be bursting.

The Options Group, a New York-based firm
that has tracked pay and hiring trends for more than a decade, reckons that
hardest hit will be employees who structure and sell mortgage-backed securities.

These have been at the centre of a
confidence slump caused by soaring delinquency rates among US sub-prime mortgage
borrowers.

One in three people working in those
investments may lose their jobs unless business picks up by the end of the year,
the Options Group estimates. Bonuses may slump as much as 40 per cent.

Read the rest of this entry »

Tags: Bonuses, Compensation, Hedge funds, investment banking, Revolving Door

If you want a top job in investment banking in China, you might want to break out your copy of "Chinese For Dummies" or those Chinese Berlitz tapes and study, study, study.  Richard Ong, Goldman Sachs’ co-head of investment banking is Asia, is having trouble making the grade over there due to Chinese spoken and written language requirements imposed by the government on CEO’s, deputy CEO’s and locally incorporated securities firms’ supervisory board heads:

Goldman Sachs Group Inc., the world’s most profitable investment bank, couldn’t name the co-head of investment banking in Asia as chief executive officer of its Beijing joint venture because his knowledge of Chinese was too weak, three bankers at the firm said.

Richard Ong, an ethnic Chinese born in Malaysia, didn’t write Chinese well enough to take a mandatory test for senior managers, said the bankers, declining to be identified as the matter is private. New York-based Goldman instead promoted Zha
Xiangyang, deputy CEO of its China joint venture, Goldman Sachs Gao Hua Securities Co., in May.

Read the rest of this entry »

Tags: China, Goldman Sachs, investment banking

Private equity fees paid to Wall Street are on pace to set yet another record.  In the first half of this year, Blackstone Group  led the pack, spending $685.4 million, Apollo Management was #2 at $407.5 million, KKR was #3 at $334.8 million and CVC Capital Partners stood at #4 with a $309.1 million bill.  And with that kind of spending, private equity is looking for ways to keep more of those fees in house.  So they’re starting to imitate Goldman Sachs and its ability to play both sides.  That’s not good news for the Wall Street banks (or their bonus pools):

The windfall is occurring in a year when
private-equity firms announced about $670 billion of takeovers, more than double
the total at this time last year, according to Bloomberg data. Blackstone, the
New York-based firm founded by Stephen Schwarzman and Peter G. Peterson that
sold shares to the public last month, spent $685.4 million on financial advice
in the first half, Freeman & Co. said.

“They’re paying these fees because business is very good,” said Matthew
Rhodes-Kropf, a finance professor at Columbia University’s Columbia Business
School in New York. “Paying the fees gets you better deal flow. Everyone wants
to be the first call” when a company goes up for sale, he said.

Read the rest of this entry »

Tags: Apollo, Blackstone, Bonuses, Fees, Goldman Sachs, investment banking, KKR