Morning Coffee: Bank CEO says he's a loner, that all his friends are his wife's. The Big Four hedge funds
Jes Staley is not the CEO of Barclays right now, but he was for six years, until his apparent close friendship with alleged paedophile and sex trafficker Jeffrey Epstein emerged blinking into the daylight. Staley was subsequently banned from working in a senior management role in the UK financial services industry for life by the British Financial Conduct Authority for giving the false impression that his Epstein relationship was ephemeral. He's now in court trying to clear his name, and some of the arguments being used by his defence seem curious at best.
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Firstly, for example, Staley defence has argued that Epstein did not send their client photographs of young women but of mature women. These included an 'innocuous' image of a woman in an evening gown with whom Epstein had spent an evening. There were no comments about the appearance of these mature ladies.
Secondly, Staley is arguing that his friendship with Epstein was purely professional based around Epstein's "most remarkable network of contacts,.” And then he's claiming that he doesn't really have friends anyway.
Instead, as other senior bankers might quietly confess themselves, Staley says most of his friends belong to his wife and that he is, in fact, a loner. His 'friendship' with Epstein was about business, says Staley, echoing comments he made in 2019 when he said: "[Epstein] and I never went out for dinner at a restaurant … we never went for a drink … we never went to football games together."
Staley's lack of friends might explain why he's decided to drag himself through the dirt in an attempt to clear his name. As one former colleague remarked to the Financial Times, Staley would be better to just "let it go" and retreat to his yacht. He would be richer too: Staley is spending a huge amount of personal wealth on the case and has hired Lord David Pannick KC, one of the UK’s most expensive barristers, whose clients have included Queen Elizabeth II and the entire Kingdom of Saudi Arabia.
For an experienced banker (Staley spent 34 years at JPMorgan's investment bank before his time at Barclays) who claims to have no real friends, the case ironically pivots on what friendship is. Can clients be friends? Can you be friends with someone who's never been to your house? Is someone with whom you communicated via your daughter a friend? Is someone to whom you sent 1,200 emails a friend? - Including someone who you called "My most cherished friend." Maybe this is simply how to network and win clients? The courts must decide.
Separately, there are hedge funds and then there are the Big Four hedge funds. Not to be mistaken for the Big Four accountancy firms or the Big Three consulting firms, the Big Four hedge funds are a newer phenomenon and include the multistrategy platforms: Millennium, Citadel, Point72 and Balyasny.
Business Insider notes that these Big Four are consuming the hedge fund world. They've got more assets than anyone else. They've got better technology than anyone else. And they pay more than anyone else. It's all fine, unless one of them has to wind its investments in a hurry, in which case their bigness might become a big problem for everyone.
Meanwhile...
Balyasny’s hedge fund gained 0.9% last month. Millennium fell 1.3%. Citadel fell 1.7%. (Bloomberg)
The ECB thinks Deutsche Bank's loan book is more risky than Deutsche Bank is letting on. Deutsche’s internal expectations for loan losses in 2024 stood at €1.5bn last year. The ECB thought €2.5bn might be more appropriate. (Financial Times)
A US-based managing director in a private credit firm would typically receive annual compensation of between $1 million and $2 million, plus carried interest of between 3% and 15%, the note showed. In London the total is between £600,000 ($760,000) and £1.5 million. (Bloomberg)
European banks are, more than ever, dependent not only on a small number of outsourcing providers (30 firms account for half the total spend), but on non-EU firms. Within these top-30 firms, slightly more than 50 per cent of contracts are with companies whose ultimate parent is a US corporation. (Financial Times)
Over 6,100 US citizens applied for UK citizenship last year, the most since records began two decades ago and 26 per cent more than in 2023. (Financial Times)
Steve Barry spent 26 years at Goldman Sachs and now he's retiring as CIO of the fundamental equities business. He says: “I said to the team today, 160 earnings seasons, 10,000 days of being mark-to-market, and the best job in the world. It’s time to hang up the spikes.” (Bloomberg)
Rothschild has hired punching banker Jonathan Kaye. It says, “A settlement has been reached that will resolve the outstanding legal proceedings against Jonathan Kaye and result in the dismissal of all charges. “We are confident that Jonathan will be a strong addition to our team and live up to our values as a firm.” (Financial Times)
How to sleep five hours a night like a fashion designer. "I sleep for, like, five hours. But if I have a very good breakfast, and a good diet with very little alcohol, I have very good energy. I like salty stuff: ham, cheese, cooked vegetables, egg whites. Before deciding to stop having too much coffee, I had, like, six, seven. Now I’m around three a day. Only short espresso, the Italian way." (WSJ)
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