Morning Coffee: Banks are making quiet pre-bonus cuts, but not many. Private credit CLO job delayering

The colder it gets in the Northern Hemisphere, the chillier the conditions for jobs in investment banks. It's an unfortunate feature of the season that winter is a time for cost-cutting, because winter is also the time when bonuses are paid and no one wants to spread them too thinly.

Get Morning Coffee ☕ in your inbox. Sign up here.

It's not clear whether this is why Global Capital is reporting that BNP Paribas has cut Andrew Templeton, a London financial institutions group (FIG) originator who'd worked there for 15 years, but Templeton's exit is a reminder that no one is safe. Even at friendly French banks. 

As we reported last week, Goldman Sachs' job cuts, which had been cancelled earlier this year but were reinvigorated in the spirit of AI, are also underway and are expected to effect up to 1,800 people globally. Goldman isn't commenting, but sources say the cuts were executed last week across various titles and locations, and we understand that some front office people were chopped in London. This comes a few weeks after Goldman announced a new class of MDs. 

There will almost certainly be further use of the knife at other banks. Search firm Options Group indicated where it thinks the cuts will occur in its recent dot chart. This said Asian quants, EMEA cross asset desks and Brazilian bankers are all at risk. However, Options Group also suggested the chart is not to be interpreted without independent activation of the viewer's own evaluative faculties, so cuts may be broader than that.

Separately, collateralized loan obligation (CLO) bankers have had a good run. Hiring in the area "went crazy" four years ago and has remained unhinged as private credit firms have pushed into the market and recruited from banks. But, there's a sign that things might have gone too far.

Bloomberg reports that one of BlackRock's private credit CLOs, priced at $495m in 2021, is having problems. Some of its investments have performed so badly in the regular over-collateralisation (OC) tests that check the value of the underlying loan pool, that BlackRock has reportedly been forced to waive management fees. 

The CLO in question is thought to have invested in Renovo, a home improvement company which promised dream bathrooms, but which went bankrupt in September. BlackRock has said it's just a one-off, but sometimes a yellow flash in the dark is a genuine canary.

Meanwhile...

JPMorgan likes to write enormous cheques for private credit deals. “If we’re in for a penny, we’re in for a pound,” said Kevin Foley, JPMorgan’s global head of capital markets. “We either feel good about a deal or we do not.” (Bloomberg) 

Shares in Oracle popped more than 30% in September when the company disclosed a $317bn revenue backlog. When it became apparent that this resulted from a deal with OpenAI Oracle lost all this ground and more. (WSJ) 

BlueOwl won't be merging two of its private credit funds and forcing investors to accept a 20% loss after all. (Financial Times) 

Ex-Lloyds of London CEO John Neal was going to be become CEO of AIG. But then allegations that he'd promoted a woman he was in a close personal relationship with surfaced. (FT) 

Mizuho wants to expand in India and is saying things like: “We want to pivot from being a Japanese bank with international operations to becoming a truly global bank." (Bloomberg) 

Verition is growing from about three commodity trading pods to six. It has 160 teams investing across asset classes, and about 3% risk exposure to commodities, which is below Citadel and Jain Global. (Bloomberg) 

Renaissance Institutional Equities Fund (RIEF) and the smaller Renaissance Institutional Diversified Alpha Fund (RIDA) were down around 15% for the month in October. (RupakGhose) 

The Big Four only made 179 promotions this year. A few years ago, they made 276. (FT) 

BNP Paribas stopped giving its graduates branded merchandise in 2020 and gave them each a tree instead. Since then, they've had nothing at all. (FT) 

If your hip hurts at work, you should probably retire. (WSJ) 

Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, Whatsapp or voicemail). Telegram: @SarahButcher. Signal: sarahbutcher.22  Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. 

Bear with us if you leave a comment at the bottom of this article: comments are moderated intermittently by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. You must take sole responsibility for comments you post on this site. We will take reasonable steps to weed out anything that we consider to be offensive or inappropriate.