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Morning Coffee: Barclays is depending upon two men in New York to prevent £1.7bn of cost cuts. Evercore, like Goldman Sachs but better

Cathal Deasy, who's Irish by birth, may have an accent that can be a bit difficult to understand for Barclays bankers in New York, but they'll need to get used to lip-reading. The words of Deasy, and of Taylor Wright, his fellow co-head of investment banking at Barclays, are critical to Barclays' immediate future. 

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The two co-heads have run investment banking at Barclays since January 2023. Under their leadership, Barclays lost around 40 US managing directors to competitors last year, while the fees it generated from investment banking declined 12%. Barclays' CEO, C.S. Venkatakrishnan, is suggesting that things need to change.

Speaking to Bloomberg, Venkat said Barclays' investment banking business is behind its sales and trading business when it comes to "ROE efficiency", or the ratio of income to risk weighted assets. The investment banking business, run by Deasy and Wright, needs to improve its ROE efficiency and to generate higher revenues, said Venkat. If it doesn't, he added that Barclays will need to cut up to £1.7bn more from costs. “We’ve also got cost projections which are based on that [higher] revenue,” Venkat observed. 

Deasy and Wright are therefore under a bit of pressure. All the more so, because Venkat doesn't want just any kind of investment banking revenues. Barclays has historically been strongest at generating debt capital markets (DCM) revenues, but these are not the ROE efficient reveues Venkat wants. The future must be all about advisory (M&A) and equity capital markets revenues instead.  

This is where Deasy (a natural resources M&A banker from Credit Suisse and Deutsche Bank) and Wright (an ex-Morgan Stanley ECM banker) come in. Unfortunately, they're stewarding a depleted team that could probably benefit from some more hires. Whether Venkat will spend the money on new people without the new revenues first isn't clear. In the meantime, 49-year-old Deasy is working a crazy schedule that involves spending alternate weeks in London and New York and presumably seeing clients in between. It all sounds a bit tiring, but people across Barclays need to hope he can do it. £1.7bn are a lot of extra costs to extract if he can't. 

Separately, if you want to work somewhere that's like Goldman Sachs but better than Goldman Sachs, you could apparently try Evercore. 

Evercore bankers have been lauding the superiority of their employer to the Financial Times. It’s “Goldman without the bullshit,” declares one. "Evercore is like Goldman was 20 years ago,” said another, who's seemingly worked for both. “It’s very entrepreneurial, they celebrate wins. Goldman [today] is more about lamenting losses.”

It's doubtful that Goldman Sachs would agree with this, but Evercore does have quite a few ex-Goldman people working there, including executive chair and Goldman royalty John Weinberg, so there's obviously some appeal. Last year alone, the FT notes that it hired three more senior Goldman people (Nick Pomponi, Michael Tarulli and Tammy Kiely). It helps that the boutique has an "eat what you kill" bonus structure, although pay consumed 68% of Evercore's revenues for 2023. 

Meanwhile...

Simon Cooper, the head of Standard Chartered's investment bank, is leaving to pursue other interests. His job is being taken by trading boss Roberto Hoornweg in Dubai and Singapore-based Sunil Kaushal, head of Africa and the Middle East. (Financial Times) 

Goldman Sachs wants to expand its private credit portfolio to $300bn in five years (and will presumably need some more people to manage it). (Reuters) 

Corinthia Global Management, a private credit platform backed by Nomura, is hiring 20 people from Barings. (Bloomberg) 

Private equity firms are under pressure. Investment firms CVC and HPS recently discussed a merger that would have created a $300bn giant. CVC is a leader in European buyouts, HPS is a runaway hit in the fast-growing world of private credit. The talks fell apart. (Semafor) 

Bank of America appointed Lukas Poensgen has head of M&A for Germany, Austria and Switzerland, and Juan Vilarino Rumeu as head of M&A for Iberia. (Financial News) 

Ex-Credit Suisse bankers John Estrada joined Societe Generale as the new global head of foreign exchange. (FX Markets) 

Jamie Dimon is all about AI. “Before any other major investment, it’s how are we doing on AI,” the top banker said via video link at the Australian Financial Review Business Summit in Sydney on Tuesday. “You’ve gotta get it, make it part of the management conversation.” (Bloomberg)

How to describe a trader at Citigroup. “The muscular-verging-on-fat physique of a man who has been very well fed for many years, possibly from birth . . . It spoke of a capacity for violence.” (Financial Times) 

Eating a high fat, high sugar breakfast may make you stupid. (WSJ) 

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AUTHORSarah Butcher Global Editor

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