Morning Coffee: When Morgan Stanley bankers are sneezed on by princes. An unethical way to improve your CV in a down market
Cast your mind back to the beginning of March, 2020. The first deaths had been recorded in the USA from a novel virus which had not yet been named COVID-19 and the phrase “social distancing” had just entered common usage. Financial markets were in something close to meltdown, and a number of sell-side conferences had either been cancelled or “gone virtual”. If you were reading Morning Coffee at the time, you might have read our comment on a small item in the Saudi Gazette, noting that despite everything else, Morgan Stanley CEO had gone ahead with a business trip to meet Crown Prince Mohammed bin Salman in Riyadh, Saudi Arabia.
It turns out that this was an even braver thing to do than we had thought; according to a new book on “How the World’s Biggest Companies Survived an Economy on the Brink”, the crown prince kept on sneezing throughout the meeting, blowing his nose on tissues and throwing them into a wastepaper basket on the floor between him and Gorman.
James Gorman did in fact catch COVID not long after (but only mildly – he wasn’t incapacitated so Morgan Stanley didn’t put out a press release until they announced he was recovered). He probably didn’t catch it from the prince - the meeting actually took place on the same day as the first confirmed case in the whole country. But the timing looks roughly consistent with his having been infected at some point during that business trip, which took in the Kuwaiti sovereign wealth fund, among other clients.
In many ways, it’s surprising (and to Gorman’s credit) that he hasn’t made more of this story so far. When faced with bankers showing reluctance to return to the office, the temptation must have been quite severe to point out to them that the CEO had more or less knowingly risked a horrible death to help grow the MENA franchise. For plenty of bankers, if they had been sneezed on by a prince during a pandemic, you would literally have never heard the last of it.
Of course, what the story really shows for other bankers is that Morgan Stanley, like the rest of the bulge bracket, knows that the Gulf states (and Saudi in particular) are one of the biggest growth markets looking forward five to ten years. And also, that nobody is going to win the race for the desert without demonstrating a lot of commitment; as the Aramco deal showed, clients there are pretty demanding. So it’s likely to be a good region to make a career, but it won’t be easy.
But what banking jobs are easy? James Gorman certainly took a calculated risk at the start of the pandemic. On the other hand, the lifestyle of a senior banker intrinsically involves a lot of rich food, long-distance travel and stress, and heart disease is just as deadly as a virus. The whole industry involves making a tradeoff between building your franchise and taking care of your health. The Saudi trip was, apparently, Gorman’s wakeup call to take the pandemic seriously; perhaps reading about it ought to make more of us think about what risks we’re running ourselves.
Elsewhere, here’s some … advice from twitter user @Compound248
I literally was the Head of Strategy at Twitter.— Compound248 💰 (@compound248) March 8, 2023
Not even kidding.
Anyone who followed me last year knows this is true - @elonmusk can verify. pic.twitter.com/tjYUlJCmgn
The idea of padding your CV with prestigious jobs that can’t be checked up on because the firm no longer exists is a bit harder to do in banking than most industries. Banks don’t often go bust in such a way as to leave no trace of their personnel records, they get taken over. And the regulatory paper trail means that it’s very difficult to claim you worked somewhere if you didn’t.
But it’s not by any means impossible. HR records don’t necessarily show what title you had or which accounts you covered, and if a bank has been through rapid turnover, then people might not remember exactly who in charge of the coverage team at any given time. It’s certainly not unknown for a bank which has closed down a trading desk to have three or four people out on the market all claiming to have been Head of Sales.
Just don’t push your luck. As well as being very, very, very, potentially career-endingly bad news if you get caught, there’s a self-limiting factor in banking which is that you have to do the actual job. If you’ve got hired and paid on the basis of a client list, then you need those clients to take your calls. And of course, the more senior a role you claim to have had, the more people are going ask whether it was your fault the place collapsed in the first place.
The EY split is turning into a divorce case, as both the audit and consultancy sides want custody of the tax advisors. The US audit practice (which is big and powerful) is allowed to do a lot more tax advice than most local subsidiaries, and so wants enough tax partners to stay with it to give it a viable international tax business. (FT)
After leaving Citi to run for Mayor of New York, Ray McGuire is returning to banking at Lazard. Ken Jacobs commented “you don’t want to hire in the boom times and only fire in the weaker times, you try to do this counter-cyclically” but really, if a banker is at the level of being an independent director of KKR, they aren’t facing a cyclical market. (Bloomberg)
“This is a developing story”, but it appears that JP Morgan have filed a lawsuit against Jes Staley, trying to hold him personally liable for any damages found against them in the Virgin Islands / Jeffery Epstein lawsuit. (FT, WSJ)
Nine weeks into 2023, how’s that “the pipeline is pretty full” optimism doing? (Reuters Breakingviews)
Possibly related to the uninspiring bonus year on Wall Street, New York’s most expensive wine shop is on the verge of bankruptcy. (NY Post)
It’s hard to know how much of the problem was related to legacy issues and derisking, and how much is structural damage to the franchise, but Credit Suisse’s equities trading business is now under the microscope as top managers try to work out if it can be turned round. (Reuters)
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