Morning Coffee: Goldman Sachs, JPMorgan & Centerview bankers grinding to save SVB; Credit Suisse quietly cut most of its bankers in Japan
It's been a busy weekend for bankers at Centerview and for a certain cohort of people at JPMorgan. For some at Goldman Sachs, it was a time of reflection on the busy week before.
Centerview bankers, who are among the best paid in the industry, spent the weekend working on the sale of Silicon Valley Bank (SVB) either in its entirety or in parts. Rumours suggested they worked 72 hours straight. In doing so, someone seems to have lined up an overnight sale of SVB's UK unit to HSBC in the UK 🙌, thereby returning many of SVB UK's recent leveraged finance hires to the place they came from.
Goldman's own financial institutions group (FIG) bankers were busy grinding over SVB the weekend before. In its analysis of Goldman's failed efforts to save SVB with a midweek deal to raise $2.25bn of common and preferred equity, Business Insider says GS people worked all weekend trying to put the package together under the threat of a credit rating downgrade by Moody's. Goldman launched the deal last Wednesday, but the language in the deal communication was arguably a little off and when the documents revealed that SVB had sold a $21bn portfolio of bonds at a $1.8bn loss to restructure its balance sheet, retail clients took fright. The Goldman deal fell through and Centerview's bankers took over.
At JPMorgan, meanwhile, it's not the FIG bankers who've been toiling over SVB, but the client onboarding professionals. As SVB customers frantically try to open accounts at larger, safer, banks, JPMorgan appears to be their destination of choice, along with a few other big names. The New York Post reports that JPMorgan was operating a "war room situation," in which people "stayed up all night opening accounts" for SVB clients.
Shout-out to the back office clerks at JPM, BofA, and Citibank who are grinding through the night processing KYC packs and opening accounts for the thousands of SVB companies scrambling. We see you, we appreciate you. pic.twitter.com/UMa8nwrycO— Matt Grimm (@mttgrmm) March 11, 2023
Separately, amidst the drama of SVB, Credit Suisse has been cutting a few more staff. Bloomberg reports that the Swiss bank chopped most of the 20+ people in its Japanese investment banking unit.
With deposits fleeing the bank at a rapid speed – a material disruption in the company's business – Goldman, SVB, and its lawyers couldn't price the deal. (Business Insider)
Goldman's capital raising collapsed late on Thursday after venture capital firms like Peter Thiel's Future Fund, advised clients to pull their money from the bank. (Reuters)
"Silicon Valley Bank was the main bank for two of our companies, my personal savings, and my mortgage. This is how things unfolded for us" (Twitter)
Fellow passengers were frantically tapping on their phones, rushing to move their money. “The bank run,” he realized, “was actually happening.” (WSJ)
The head of SVB Securities, Jeff Leerink, and his team are seeking help to finance a potential management buyout. (Bloomberg)
SVB was without a chief risk officer for nine months from April '22 to January '23. (SVB)
SVB had no duration hedges on its bond book. (AndreasSteno)
Things seem to have gone wrong for SVB circa 2017 when 'new financial leadership began to 'shift an ever greater percentage of excess cash into long-term fixed-rate bonds' in pursuit of an extra 0.4% of yield. This blew up the bank. (Financial Times)
SVB's chief administrative officer was previously CFO for Lehman's investment bank. (Reddit)
Deutsche Bank stock fell 7% on Friday. (Bloomberg)
If you ignore the global financial crisis, Friday was one of the biggest US bank stock pukes in 25 years, only beaten by the initial Covid-triggered market panic of 2020 and 2011’s US government debt downgrade. (Financial Times)
It won't be easy for JPMorgan to recover $80m from Jes Staley as it's not relying on specific bonus clawback clauses but failure to adhere to a code of conduct. (Financial Times)
Sambacor N'Diaye, global co-head of strategic equity derivatives, is leaving Bank of America - possibly as a result of job cuts. (Financial News)
Hedge funds want to hire macro traders. Headhunters say demand is "exceptionally high, both in quant and discretionary." (Financial Times)
If you're feeling stressed, you should probably just dig a hole. It helps with "raw focus." (WSJ)
Greg Becker, CEO of Silicon Valley Bank, likes to cycle to destress. (Net interest)
Greg Becker sold $3.6 million of SVB under a trading plan less than two weeks before the firm disclosed extensive losses. (Bloomberg)