Morning Coffee: The new safety net for European bankers. When the customer picks up the bill for serious entertainment

When the industry is going through tough times, savvy bankers take the opportunity to reevaluate the merits of franchises that they might otherwise have ignored in favor of the familiar and resume-friendly names with parentheses. When layoffs are in the air, the appeals of working for the universal banking arm of a well-capitalized national champion become more apparent. They also look for CEOs who may have something to prove and may be tempted to invest some money in building market share when the competition falls.

Take Andrea Orcel’s Unicredit, for example, which set some pretty aggressive sales targets earlier this year and where Richard Kendall (General Head of CIB) and Sam Kendall (Head of Advisory & Capital Markets) just did a joint interview in which she will confirm this Don’t use current market conditions as an excuse to exit them. Their plan is to partly change the product mix — more hedging and risk management solutions — and partly take market share away from competitors.

So far the strategy seems to be working; Unicredit jumped from 4.7% market share to 6.2% in advisory and capital markets in the second quarter of this year, and while that wasn’t quite enough to halt the revenue decline, an 11% year-over-year decline was far ahead of the pack . Combined with strong growth in risk management products, the Unicredit CIB business was one of the few in Europe with growing revenues and now accounts for a third of the bank.

That doesn’t necessarily mean they’ll overload their recruiters and call every experienced dealmaker on the street. Despite Andrea Orcel’s personal background, Unicredit’s corporate banking business is more focused on medium-sized companies. As Kendall puts it, their goal is to be “more local than any international bank and more international than any local bank” and consequently capture market share from local players across Europe and from boutiques, rather than necessarily going toe with the bulge bracket for those biggest deals.

But it should mean that Unicredit’s bankers, if they’re in the right part of the bank and delivering the goods, could have a little more job security than some of their peers over the course of the year. Many of the top executives (including Sam Kendall) have been brought over from UBS since Andrea Orcel took over. You might find that in a year or two they’ll look back on it as a wise career move.

Elsewhere, one of the sights guaranteed to get a banker’s heart racing is that of a customer reaching for the wine list. Typically, the sell-side pays for everything related to business entertainment, and spending is subject to strict limits. That means if gallons of the finest Bordeaux are downed (or even a few glasses if it’s good enough), the investment banker might find that he or she picks up the tab in person.

With that in mind, it’s understandable that those rare customers who are willing to dig into their own pockets are often very popular on the sell side. Especially when their hospitality is as generous as that of Cevdet Caner, the Austrian real estate tycoon who apparently used to ferry bankers from Cannes to Saint-Tropez in his speedboat to collect tens of thousands of dollars in champagne in trendy nightclubs.

Unfortunately, the relationships formed at such events seem to have resulted in a number of deals that bankers are now happy to distance themselves from. The links between Mr Caner, the Adler real estate group and their lenders are somewhat controversial – and in fact are disputed in large part by Caner himself – but after an ongoing short selling campaign and an alleged whistleblower report, the debt is trading at distressed prices and allegations about it Yacht parties and investment banking fees bounce back and forth across the news lines. It just goes to show that, as the old saying goes, there are two types of alcohol – free alcohol and alcohol that you have to pay for. And the big difference between them is that free alcohol is more expensive.

In the meantime

Kewsong Lee is leaving the Carlyle Group just a few years after assuming the role of sole CEO. It appears talks of a new deal have stalled – given the changing environment for private equity fund raising, it’s easy to see how dead ends have been reached (FT)

The power of Goldman Sachs’ alumni network – after six years at BlackRock as head of iShares, Brendan McCarthy returns to the mothership as head of ETF specialists (TheTrade).

Life in the Panopticon of JP Morgan – Not only can JPM perform badge swipes to monitor office presence, but it can also collect data on how much time you spend on Zoom calls, how long it takes you to compose an email, and who you are talking to the phone. (business insider)

Michael Lewis has “found a new character” for his next book, which will appear to be “framed as a crypto book” but will really be about “screwed up market structures in the United States and so on” (Financial News).

AMTD Digital, the Hong Kong fintech that briefly exceeded Goldman Sachs in terms of market cap, is no longer around. (Blumberg)

Tidjane Thiam returns to Ivory Coast for the first time in 22 years; he emphasizes that it is a private visit and says he has no political ambitions. (fine news)

The “ick factor” associated with secondary markets for things like workout clothes, shoes, and yoga pants. (WSJ)

Photo by Frank Eiffert on Unsplash

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