Morning Coffee: Why Carlyle is a more exciting place to work than JPMorgan. Big beasts moving on everywhere

26 March 2014

3 minute read

Morning Coffee: Why Carlyle is a more exciting place to work than JPMorgan. Big beasts moving on everywhere

On the move

And then there was one. - JPMorgan has lost the co-head of its investment bank, 48 year-old Michael J. Cavanagh. As widely reported yesterday, Cavanagh is off to become co-president at private equity firm the Carlyle Group. He said he left after a lot of, "soul searching". Jamie Dimon said Cavanagh is a "special person." For all the pathos, Cavanagh is going anyway.

Why is Cavanagh leaving? He was, after all one of Jamie Dimon's preferred people and was widely seen as a possible successor to JPMorgan's lustrous-haired leader. JPMorgan is one of the world's leading investment banks. - It doesn't get much better than that. Or does it?

There's clearly the issue of pay. The Financial Times points out that private equity is far more generous and far less regulated than investment banking. Cavanagh earned $17m at JPMorgan last year. The top three people at Carlyle shared $750m between them.

But there may be more to it than that. Private equity funds are widely seen as being more interesting employers than investment banks - they offer an opportunity to invest rather than simply to advise. At Carlyle, Bloomberg says that Cavanagh will be charged with expansion and diversification. The private equity firm has been far slower than rivals to increase its assets and over the past year it's been hiring a lot of fund raising specialists and looking at new sectors that will increase returns. Carlyle offers a challenge. Equally importantly from Cavanagh's point of view, Bloomberg reports that Carlyle's founders want to step back and to give more daily responsibilities to their deputies. Along with co-president Glenn Youngkin, Cavanagh will have real responsibility for running Carlyle. Was that kind of autonomy lacking at Jamie Dimon's JPMorgan?

Separately, more big-name bankers who've spent decades in one place are on the move. Following this week's defection of Phil Allison, its head of cash equities (to KCG Group?), UBS has lost another equities lifer - Matt Foulds is leaving the Swiss bank to become global head of equity distribution at Jefferies. Foulds' departure comes despite UBS's claim to have increased its bonuses to market-competitive levels for 2013. Elsewhere, Deutsche Bank also lost a longstanding employee in the form of Kevin Sherlock, its head of U.S. loans and high yield capital markets. After 15 years at Deutsche, Sherlock is off to Bank of America Merrill Lynch.

Meanwhile:

Daniel Pinto now has sole control of JPMorgan's corporate and investment bank. (Financial News)

JPMorgan just lost one of the last people who could take over from Jamie Dimon. (Quartz)

UBS plans to establish a US equity solutions team and will probably be hiring. (Financial News)

Nathaniel Rothschild engages in Twitter argument. (Bloomberg)

Swiss banker becomes organic trout farmer. (Blausee)

The longer a company’s annual report, the more volatile its share price. (The Times)

Equities broker Panmure Gordon reflects upon the good times: “For four years we’ve been waiting for this environment. This is where you want to be right now, in equity.” (Financial Times)

Life as a bond trader in the Ukraine: “There were days of trading all day in a market in free-fall, and then heading out to Maidan to show solidarity with the protesters at night.” (Bloomberg)