Morning Coffee: How to intimate you're ready to leave your $36m job at JPMorgan. Bewilderment strikes HSBC after restructuring

For very good reasons, most banks discourage people from talking about politics on the trading floor or in the office.  Even more than sports, religion or Bitcoin, it’s an area where really destructive bad blood can be created in a very short space of time.  Jamie Dimon knows this as well as anyone, having had to quickly apologize for making some ill-considered remarks about the Chinese Communist Party in his time.  So it’s unsurprising that, despite his normal willingness to talk about issues of the day, he has a firm policy of never endorsing Presidential candidates.

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However, Jamie is a registered Democrat, and apparently in private conversation he has gently indicated that he might consider taking a post in a Kamala Harris administration, if there is one. That’s despite having had a phone call “like two dogs in a fight” with her when she was attorney-general of California negotiating a mortgage misselling settlement, and despite having made enough Trump-adjacent remarks earlier in the campaign to have had to put out a press release denying rumours that he was officially on Team MAGA.

Why would someone consider breaking the habit of a lifetime, even in private and to “three people who asked not to be identified discussing his politics because Mr. Dimon was speaking privately”?  Well, maybe a feeling of patriotic duty.  And also the small matter of accelerated vesting and extremely favourable capital gains tax if he was compelled to sell his mountain of JPMorgan stock in order to avoid conflicts of interest.

For someone in Dimon’s position, it must feel slightly tempting to consider making a clean break at the end of an incredibly successful career, rather than hanging round for a few years as a non-executive chair and then waiting out the rest of the vesting period in some emeritus capacity, taking all the risk on whatever strategy his successor comes up with.  But that itself might be a problem.

Because the Dimon succession question is nowhere near to being resolved at JPMorgan.  If he were to “fall under a bus” tomorrow, Dan Pinto would probably still be the natural successor, at least on an interim basis. But with the departure of Takis Georgakopoulos and Vis Raghavan, Pinto's star has allegedly faded.  So if Jamie were to answer the phone to a hypothetical Harris transition team some time next month, and leave JPM early in the New Year, what would happen?

Something of a nightmare, in all probability; the board would have to make a quick choice between Jenn Piepszak, Marianne Lake, Troy Rohrbaugh and a few other internal candidates. The very horribleness and destructiveness of such a short term scramble might be the best reason to suppose that Dimon isn’t going to do anything of the sort, out of loyalty to the company. But on the other hand, a glance at a share price chart would indicate that JPMorgan shareholders owe Jamie Dimon a lot more than he owes them – perhaps they wouldn’t begrudge him his final glorious exit?

Elsewhere, the new strategic plan for HSBC has been announced – or has it?  Georges Elhedery has given the broad brush outlines of the new structure, and announced a new operating committee (without some quite senior names like Greg Guyett on it).  But in terms of understanding whether your job is at risk or not, HSBC bankers have been left in a state of uncertainty.

As widely rumoured, the new strategy has a sort of family resemblance to Citi’s Project Bora Bora; there’s a merger of the corporate and investment banking business lines, and a downgrading of the geographical divisions in favour of regional reporting lines for “Asia” and “Western Markets”.  But the two big franchise businesses in the UK and Hong Kong sit outside that structure, and there are still global functional titles like “Head of Wealth and Premier Banking” on the operating committee, as well as the firm’s first female CFO. 

What does this mean for co-heads and middle managers further down the tree?  Presumably there are redundancies on the way, as Elhedery aspires to cut at least $300m of costs.  But the areas of high and low risk are unclear, and will probably remain so until February, when HSBC plans to give full details with its annual results. This kind of uncertainty tends to get people looking for recruiters’ phone numbers, so HSBC must be hoping that it won’t end up losing the people it wants to keep and keeping the ones it wants to lose.

Meanwhile …

Management fee rates are getting squeezed down to their lowest levels since 2005, according to Prequin data, as private equity firms try to keep raising assets in the absence of profitable cash-returning exits.  Carried interest percentages have held the line, but management fees are usually what’s used to pay basic salaries and keep the lights on; conditions for PE people might be about to get a bit tighter. (FT)

UBS has promised everyone in Switzerland it won’t allocate too much of its capital to “risky” investment banking after acquiring Credit Suisse (even though it wasn’t really investment banking that did the damage).  This promise might be hard to keep as overall industry returns and revenues get stronger in that market and weaker in wealth management. (NZZ)

In an absolute investigative scoop, it is exclusively revealed that the TV series “Industry” isn’t always completely accurate.  Not the sex, drugs and violence, but the regulatory and financial technicalities. (WSJ)

The CFA Institute might consider using AI to try to detect candidates who actually understand something but gave an unfortunate answer to an ambiguous question, and then ask them a follow-up to improve their chance of passing. (Bloomberg)

If you’re making millions by trading FX and crypto, and you enjoy driving a Lamborghini, then be careful about how much you boast about it on social media, as the FCA is having a crackdown on “finfluencers”. (Financial News)

Whose clients are they, really?  JP Morgan says that the “vast majority” of Gary Carruthers’ accounts were pre-existing clients of the bank assigned to him, but more than two dozen of them with $24m of assets have already followed Carruthers to Wells Fargo. Potentially in breach of a noncompete agreement, which is why it’s in the news. (Bloomberg)

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