Morning Coffee: JPMorgan’s new top bankers are like a single being. Donald Trump denies having offered a top banking job

There are some propositions in the world of finance that you’d find few people to disagree with.  Things like “A year that starts badly will get worse”.  “The first earnings warning is never the last”.  “Someone who turns a deal down based on price will end up doing the same deal at a worse price”.  And even more than any of these, “Global co-heads of anything important always hate each other”.

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But although these maxims are usually reliable, there’s no such thing as a universal truth in investment banking. Troy Rohrbraugh and Jenn Piepszak of JPMorgan, for example, give every impression in their latest Bloomberg interview of genuinely enjoying each other’s company, to the extent of finishing one another’s sentences.  They have offices next door to one another (rather than the more typical arrangement of putting at least one wide ocean between co-heads).  When they did a tour of European offices to introduce themselves to the JPM bankers, they travelled together and did joint presentations. They have even gone to a baseball game together, taking their respective kids.

The lack of rivalry and animosity might be partly explained by the circumstances of their appointment.  Most of the time, a co-head structure doesn’t so much create reasons for two people to dislike each other, as uneasily accommodate a pair of egos that were on a collision course anyway. (Here’s an explainer for some of the reasons this phenomenon exists, including such classics as “big rainmaker refuses to report to anyone”, “senior management doesn’t trust recent hire” and “there’s an over-mighty branch office that needs to be kept under control”).

That wasn’t how Piepszak and Rohrbaugh came into the job.  One is a high-flyer who came up through the business bank and has already been Chief Financial Officer.  The other is a classic “markets guy” who started off as an FX trader. They were appointed by Jamie Dimon over a couple of phone calls (interesting fact: he always shows up as “unidentified number”, so be careful screening spam if you’re expecting him). And they’re expected to build out an investment banking operation to rival and even outpace Goldman Sachs.  To do this will involve filling in a lot of gaps in the advisory and capital markets franchises.

Neither of the two co-heads has an existing power base in these areas; in terms of internal politics, their interests are aligned.  For the moment at least.  One day in the future, either one of them will get Jamie Dimon’s job, or neither will, and as that moment approaches, the relationship will be put under strain.  Little differences - like the way that Piepszak always stays in contact with the office and has a generally risk-averse personality, while Rohrbaugh likes to go off-grid and thinks skiing isn’t fun unless it’s dangerous – may be amplified.  Even the significant difference in their ownership of JPMorgan stock might become a sticking point.

The partnership might still endure – having children the same age often makes close friends of people who otherwise don’t have much in common.  And if it turns out that one of them gets the top job while the other is the loyal lieutenant, they have a great pair of role models in the shape of Jamie Dimon and Dan Pinto.

Elsewhere, one reason that some people wondered whether the succession question at JPM might become pressing in the shorter term was that a short while ago, Donald Trump said that he’d consider offering Jamie Dimon the position of Treasury Secretary in his next administration. Dimon sensibly didn’t comment, but the simple fact that moving into a government job is an incredibly tax-advantageous way of accelerating the vesting of all your stock grants, got people talking. 

Now, on his Truth Social network, President Trump is denying that any such consideration ever happened.  Larry Fink of BlackRock is also apparently not in the hat either.  It’s hard to think either banker will be heartbroken – people don’t tend to reach that level without becoming familiar with airy and speculative half-offers of senior roles that don’t amount to anything.  They just usually come from headhunters rather than candidates for office.

Meanwhile …

Although he still claims to be innocent, 1MDB mastermind Jho Low apparently doesn’t want to do anything that might require leaving his current location of “believed to be somewhere in China”, and consequently he keeps shedding toys and baubles to US Department of Justice confiscation orders.  The latest to go are three “flawless” diamonds; the former general counsel has handed over a Picasso sketch. (Bloomberg)

Might the “fintech winter” be coming to an end?  Rising interest rates have turned Revolut’s deposit accounts into a cash cow, and it’s now talking about much higher potential IPO valuations. (WSJ)

… and with the Ebury IPO also planned for next year, fintech teams at investment banks across the Street are beginning to staff up and get ready for a recovery in deal flow. (Financial News) 

It’s an ill wind that blows nobody any good, according to Georgia Smartt and her team of ESG analysts at Citigroup.  They’ve published a research paper suggesting that even if we fail to save the climate, there’s still a lot of opportunities in “adaptation finance”, lending to projects to put houses on stilts and similar. (Bloomberg)

If you are setting off on a summer holiday, and you’ve unaccountably never heard of “Liar’s Poker” (for bankers under 30) or “Lords of Finance” (for over 40s), then Business Insider has updated its usual book recommendation list.  (Business Insider)

After 25 years in dealmaking, you’re ready to either take on a top job, or go and do something else.  Examples of both options recently – Florian von Hardenberg is leaving UBS to “explore opportunities outside investment banking”, after a quarter of a decade culminating in becoming head of FIG for Germany, Austria and Nordics.  Meanwhile, Kevin Brunner joined Bank of America in 1999 and has now been promoted to global head of TMT banking (and co-chair of Global M&A). (Bloomberg, Bloomberg)

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