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Morning Coffee: The easiest place to make MD at JPMorgan. UBS’s weird new hires

Any day now, JPMorgan will announce its new class managing directors. When it does, they will not all be equal.

In a detailed article on the process by which JPMorgan selects its elite, Financial News says the hurdles that have to be jumped to make MD at the bank are higher in some countries than others. 

In the US, FN says aspiring JPMorgan MDs must be 'personally responsible' for at least $30m in revenues over a two to three-year period to get a sniff of promotion. In EMEA, they need to generate at least $25m in revenues. But in Asia Pacific, the comparable figure is just $20m.

JPMorgan's APAC MDs are therefore a revenue-lite version of its MDs in the US, and it might be presumed that they have the advantage when it comes to getting promoted. But that would be wrong. Based on revenue-generating potential alone, JPMorgan's US MDs have it easiest. 

Information provider Dealogic, put investment banking fees earned across the market in North America at $8.1bn in the first quarter of 2023, versus $4.2m in EMEA and just $3.2m in APAC. For JPMorgan's fee hurdle to be fair, therefore, its EMEA bankers should only need to generate $16m in revenues, while its APAC bankers should have no need of generating more than $12m. JPMorgan's US bankers have the advantage.

The revenue hurdle is a necessary but not sufficient condition for making MD at JPMorgan. Financial News says aspiring MDs at the bank also need to get on the 'MD radar' and to put together a "massive self-assessment" petitioning their suitability.  They're then assigned a "handler" in the form of a senior banker who goes around speaking to people about whether they'd be a good MD and who puts their case to the 40-person JPMorgan managing director committee. They must also spend long years on conspicuous extracurricular activities like charity and diversity work.

None of this is easy. In the past, FN says it was common to spend five years as an executive director before being promoted to MD at JPMorgan, now it's more like seven to eight. 

Separately, while UBS is out there talking about its first quarter results this morning, elaborating on the extent to which Credit Suisse will 'enhance' its business, emphasising its lack of emotion and talking up its enthusiasm for the "best people to take UBS forward," there are signs that some of those best people might not come from Credit Suisse. 

Even though UBS now has a head-of-the-investment-bank-in-waiting in the form of David Miller who is still lurking around at Credit Suisse, yesterday it announced the addition of a new co-head of its investment banking division globally in the form of Marco Valla from Barclays, who is joining along with two other Barclays MDs - Jeff Hinton, the former co-head of Barclays Americas M&A, and Kurt Anthony, from Barclays' consumer retail group. 

UBS has said it wants to build up US investment banking, so the hires may have been in the pipeline already. Even so. Why recruit externally now when all the Credit Suisse US investment bankers are there for the picking? UBS's statement is a study in incongruous opacity: "“The acquisition of Credit Suisse, together with our previously approved investment plans, provides us with an unparalleled opportunity to expand the size and scope of our global-banking footprint, particularly in the Americas,” said Rob Karofsky, president of UBS’s investment bank. “I am convinced that Marco, Javier and Ros will partner successfully to take our global-banking business to the next level.” Right.

Meanwhile...

Goldman Sachs' CEO David Solomon has a tendency to use the company private jet to visit the Bahamas, where he has a home, and to do so after he's travelled for meetings. He left for the Bahamas on February 23rd, less than an hour after Goldman Sachs’s investor day in Manhattan wrapped up. (Business Insider)

Christian Bluhm retired as UBS's chief risk officer to pursue a life of photography. Now he's back in the saddle after being summoned to return to his old job. (Financial News) 

Bluhm was close to head of wealth Iqbal Khan, and was seen as opposing former UBS CEO Ralph Hamers about the future direction of the bank. (Bloomberg) 

The trouble at Credit Suisse was that revenues from the investment bank were nearly equal to revenues from wealth management. (Financial Times)

'Post acquisition, we see the Newco UBS becoming one of the most attractive business models in Global Banking with 60 per cent of Group PBT coming from Wealth Management and only 10 per cent from IB.' (Financial Times) 

After $69bn of outflows, there's not much left of Credit Suisse's business. “The revenue trajectory is so damaged that the deal could well remain a drag on UBS operating results unless a deeper restructuring plan is announced." (Bloomberg) 

Schroders cut its valuation of Revolut by 46%. (Bloomberg) 

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Photo by Andy Hermawan on Unsplash

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AUTHORSarah Butcher Global Editor
  • Pa
    Patrickthestar
    29 April 2023

    Is the 40 persons the size of the md committee or the size of the group of mds? Because 20musd each is like 800musd per annum, doesn’t even mention if the revenue is loan or profit requirements. I read somewhere that JP Morgan’s hr function is quite large I think it’s close to 300k staff, obviously the total salary bill would be much more considering the total company revenue and valuation. I should probably check my facts though. It’s so difficult to validate information these days, I just have to rely on the search engines, data security, data integrity.

  • Re
    Red
    25 April 2023

    Its heart breaking to see such a significant wealth gap in our society. while some people are struggling to afford basic necessities like food, others have the luxury of private jets. What a rotten system we are part.

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