Morning Coffee: Mystery ex-Citi MDs are objecting to Anand Selva's big bonus. Private equity job cuts still coming
Anand Selvaskari (Selva) does not always seem entirely popular at Citi. As the bank's COO with ultimate responsibility for transforming all Citi's messy systems, this is perhaps inevitable. But Selva's star has been further dimmed both by a legal case being brought by a former JPMorgan MD who joined Citi and who says he asked her to lie about how well the transformation was going there (Citi strenuously denies this), and by rumblings about an alleged tendency to play politics and to favour his cliques (Citi strenuously denies this too).
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Now, Selva has been hit by further whinge. Bloomberg reports that a group of 10 mysterious and anonymous ex-Citi managing directors (MDs) have contacted the board asking for bonus payments made to 250 employees working in risk management, controls and culture at Citi to be halted and clawed back. Those payments included an additional $1m bonus for Selva and for Citi CFO Mark Mason.
The grumbling MDs say that these bonuses make no sense in the light of Citi's $136m July fine for the slow progression of its transformation effort. They also say that the bonuses are simply being paid because of “longstanding internal loyalties" to Citi CEO Jane Fraser, and that the transformation team lacks the "type of independent thinking, managerial execution and strategic redirection needed by Citi at this critical time.” Citi, naturally, disagrees and says progress is inevitably non-linear, and that there will always be criticisms from people who would have done things differently and who have departed, in some cases, 'intentionally.'
The implication, then, is that Citi let go of some of the whinging MDs, who are now gripped by resentment. Selva and others might argue that they've already been punished by the fact that they only received 80% of their supplementary bonus last year, versus 94% in 2022. - Selva was $250k down on his potential.
It seems unlikely that Citi will claw back Selva and others' bonuses at this stage. But maybe it will think twice about awarding them again for this year. In the meantime, the ex-MDs appear to be risking clawbacks of their own. - They reportedly have nearly $13m in deferred compensation tied to Citi's stock. In most cases, the bank's severance agreements include a condition that ex-employees don't speak to the press or belittle the bank in public.
Separately, private equity jobs involve a degree of jeopardy that wasn't the case in the past.
The Financial Times notes that US private equity firms have increased by 50% in number in the past five years, to 18,000, and that many of them are going to struggle when they try to exit investments made during the good years of low interest rates. Because funds operate on a seven to 10-year cycle, this hasn't occurred yet. But it will. And when it does, funds and jobs will disappear, especially in the mid-market. Careful which kind of fund you join.
Meanwhile...
JPMorgan has hired Rumesh Rajendram from rival Deutsche Bank as head of consumer and retail M&A for EMEA. (Yahoo)
If you want a job in a Trump administration, you need to talk to Cantor Fitzgerald Chief Executive Howard Lutnick, who is compiling shortlists of candidates for everything from attorney general to the deputy solicitor for water resources. (WSJ)
Kyle Hackett has joined JP Morgan as a US rates trader, based in New York. (The Trade)
Who gets the carried interest? Men make up 85% of carry recipients and receive 96% of all carry. Middle aged individuals, between 40 and 60, make up more than two thirds of recipients and receive three quarters (76%) of all carry. Carry recipients also live predominantly in London and the South East (82%), with these regions together receiving 88% of all UK carry. Residents of Kensington receive more carry than everyone living outside London and the South East (16% vs 12%). Almost half of carry recipients are foreign, but most have lived in the UK for a long time. (Centax)
Josh Harris, the workaholic ex-Apollo boss who's hiring for his new platform 26North says PE firms have become beta factories. “They were sort of the beta of alts...What had been left a little bit behind was alpha.” (Yahoo)
Macquarie's investment bank isn't doing so well. (Bloomberg)
Barclays’ CEO CS Venkatakrishnan says UK Chancellor Rachel Reeves has done an “admirable job” of balancing spending, borrowing and taxation. (FT)
A former Elliott Management portfolio manager has written a novel about Argentinian sovereign debt but he feared it would be too boring so added spicy sex scenes and subterfuge now everyone wonders if it's real. Elliott has banned the novel from its offices. (WSJ)
A taxonomy of consciousness (Physorg)
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