Morning Coffee: The most futuristic 37 year-old at JPMorgan. When banking results become meaningless
If you're looking for the niche skills that will protect your career against a future of extreme upheaval, whether climatic or geopolitical or technological, or all three, you might want to get a start in quantum cryptography. As we've written here often before, quantum technology is slowly appearing in financial services, and banks like Goldman Sachs are already using quantum machines for derivatives pricing, but it's in quantum cryptography that the future is likely to be huge.
In the words of Stephen Roberts, the Man Group professor of Machine Learning at Oxford University, quantum computing stands to change everything. Once quantum computers are fully functional, current cryptographic codes will become obsolete. All banks' current protections will be ineffective.
Banks are alert to this. In his shareholder letter accompanying last year's annual report, JPMorgan CEO Jamie Dimon described quantum computing as a "critical area" for investment in the context of encryption. It makes sense, therefore, that one of JPMorgan's newest hires, 37-year-old Charles Lim, is a quantum encryption expert.
CNBC reports that Lim, who will be based in Singapore, has joined JPMorgan as global head for quantum communications and cryptography, "focusing on innovative digital solutions that will enhance the security, efficiency, and robustness of financial and banking services." He has a PhD in quantum cryptography and information theory from the University of Geneva and has spent the past five years as an assistant professor at the University of Singapore, researching the security of applied quantum cryptography.
Lim is joining JPMorgan's most exciting technology team - he'll be working with Marco Pistoia in applied technology research. Pistoia, who is also JPMorgan's head of quantum technology, is assembling a team working on futuristic technologies that can impact JPMorgan's business. As we reported earlier this week, he's also hired Blair MacIntyre, a professor at the Georgia Institute of Technology as a managing director and global head of augmented and virtual reality research.
The pedigrees of both Lim and MacIntyre reflect the fact that for some of the most rarefied technology jobs in financial services, a bachelor's degree isn't enough. Nor is a Masters or a PhD. You need to be a professor. Lim will keep his assistant professorship at the University of Singapore while working for JPMorgan, but is on (possibly permanent) leave.
Separately, there are always issues comparing different banks' revenues by business line, not least because different banks have different business mixes in areas like fixed income trading, for example. However, a quirk in Barclays' reporting protocol seems particularly egregious.
The issue related to leveraged loans, which are proving an important topic in this year's results - and which may become more important as the year wears on and write-downs mount. Bloomberg reports that while many banks subtract leveraged loan losses from advisory fees, Barclays books the markdowns on its leveraged loans in corporate lending income. This means that Barclays' advisory fees look unusually good compared to rivals'. Barclays doesn't break out the value of its leveraged loans, but Bloomberg estimates them at $180m-$200m.
When this accounting quirk is taken into consideration, Barclays' investment bankers didn't do so well after all - their performance was less good than US banks and more on a par with the other Europeans.
Barclays' results were rendered unfathomable by a £1.3bn conduct charge, the real cost of which may have been anything from £711m, £581m or £416m. The takeaway is that Barclays is complex and unpredictable and this is why its shares trade at half book value. (Financial Times)
Nature is healing: the CFA® Level III exam pass rate is back up to 49%. (Bloomberg)
Forget private equity, Carlyle says the action is elsewhere. “The chatter is about the challenges in the PE fundraising market. That’s kind of old news. We’re seeing that the demand for private credit, infrastructure and investment solutions is quite high.” (Financial Times)
Private equity (and private credit) is about to become less lucrative in America as the Biden administration removes the favourable tax treatment of carried interest. (Bloomberg)
EY says its revenues are up 13.5% to $45.4bn following booming demand for its services. (Financial Times)
More than half the £46.5m in fines levied against professional services firms last year were levied against KPMG. (Financial Times)
London hedge fund manager Richard Deitz bought $123m of distressed loans issued by state-owned Ukrainian Railways in 2019 and wants that money back. The debt is currently in the Ukrainian subsidiary of a Russian bank taken over by Kyiv. (WSJ)
When you're asked to return to the office and just don't go. (Business Insider)
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