Morning Coffee: Goldman Sachs' grave mistake. 29 year-old with best job in finance
When Goldman Sachs revealed much better than expected second quarter results back in July, its private equity professionals were feted for their contribution. If Goldman Sachs reveals much worse than expected third quarter results come the end of October, its private equity professionals - or close colleagues of theirs, will be to blame. Goldman's Investing and Lending division appears to have made a mistake that could cost it up to $835m, but will hopefully cost it somewhat less.
First identified by the Wall Street Journal yesterday, Goldman's error was to lend the struggling Portuguese Bank Espírito Santo $835m just one month before Espirito Santo's shares plunged by 80% and the bank was bailed out by the European Union via the Bank of Portugal. Goldman is still said to be holding some of Espírito Santo's debt, which is now nearly worthless, but has also offloaded some of it (at a loss) to distressed debt hedge funds. At worst, Goldman's mistake could wipe 20% off its first half profits for this year. At best, it will mean that the firm thinks very hard about making opaque loans using off-balance sheet vehicles to companies in a precarious state in future.
Separately, Financial News has identified a 29 year-old fund manager who beat 400 people to his job and appears to be having a fun time. Aged 27, Erik Landgraf, a former McKinsey & Co associate, was the first ever junior fund manager hired by Skagen Funds in Norway. Within a mere 11 months, Landgraf was reportedly made a 'full manager' on Skagen Kon-Tiki - Skagen's £5.3 billion flagship emerging market equity fund. Another 12 months later, and Landgraf is still at Skagen and has time for some hobbies - at weekends he reportedly enjoys 'sailing his new boat around the fjords of Norway's West Coast," starting from the Stavenger region where Skagen is based. Try telling that to overworked analysts and associates in London or New York.
John Phizackerley, the ex-Nomura banker at Tullett Prebon, probably wants to hire people who know about electronic trading. (Financial Times)
Buying Julius Baer and increasing its market share on the low-margin onshore business makes no sense for Credit Suisse. It should be growing its wealth management activities in emerging markets. (Reuters)
Russia's sovereign wealth fund, managed by an ex-Goldman Sachs banker, will soon be owned by the country's central bank in an effort to avoid Western sanctions. (Bloomberg)
Mizuho thinks equity researchers might make good M&A bankers, what with their deep industry knowledge. (Bloomberg)
Almost a third of fund managers in the City are graduates of five universities: Oxford, Cambridge, Edinburgh, Durham and Bristol. (Financial News)
Make a humorous vine and earn thousands of pounds per second. Allegedly. (Telegraph)
Why are there so many women in sales and so few women in trading? (Wall Street Oasis)
Goldman Sachs, Barclays and Bank of America all had larger intern classes this year than in 2013. (Wall Street Journal)
So you thought you wanted to be an organic farmer? (Modern Farmer)