Welcome to IFR

China’s Ant Group has wrapped up the largest IPO in history after investors flocked to the US$34.4bn A/H-share listing in Shanghai and Hong Kong, despite global market sell-offs and increasing regulatory scrutiny in Ant's home market. The deal could raise up to US$39.4bn if a 15% greenshoe is exercised, comfortably beating Saudi Aramco's US$29.4bn IPO last December to be the world’s largest. Banks organising the deal in Hong Kong and Shanghai are in line for a payday approaching US$400m. The HK$133.7bn (US$17.2bn) Hong Kong leg, comprising 1.67bn H-shares, came with a fixed price HK$80 per share and was covered within an hour of launch on Monday as big investors in Europe and the US placed individual orders of US$1bn or more, hoping sizeable orders could get them a decent allocation. Asian orders rushed in on the second day of bookbuilding, prompting Ant to close the books on Wednesday, a day earlier than planned. The deal was heavily oversubscribed with more than 1,800 investors participating, including sovereign wealth funds, top-tier long-only funds and technology specialists. “It’s just too big to miss! I’m expecting a 15%–20% pop on day one,” said a Hong Kong-based hedge fund manager. More than 1.5 million Hong Kong retail investors answered the call, with many placing orders funded on margin to increase their chance of getting a slice, leaving that tranche 389 times covered and soaking up HK$1.3trn of subscriptions. The retail tranche was the most popular in Hong Kong's history in terms of number of investors and subscription amount, surpassing the 977,000 investors for Industrial and Commercial Bank of China’s IPO in 2006 and the HK$671bn of orders for Nongfu Spring's IPO in September. It is the largest listing in the city since insurance giant AIA’s US$20.5bn IPO in 2010. As the retail tranche was more than 20 times covered, 10% of the Hong Kong offer went to retail investors instead of the original 2.5%, leaving 90% for institutional buyers. Ant’s Rmb114.9bn (US$17.2bn) Shanghai Star listing, the largest-ever A-share IPO, drew a similarly strong response. It sold 1.67bn A-shares at Rmb68.80 per share. More than 430 institutional investors participated in the institutional tranche, which was 284 times covered. The retail tranche attracted about Rmb19trn of subscriptions from 5.15 million investors, and was 872 times oversubscribed even after Ant allocated the entire 15% overallotment to the retail tranche. After the overallocation and retail clawback, Ant sold 70% of shares to strategic investors, 12% to institutional investors and 18% to retail investors. The original split for the three tranches was 80%, 16% and 4%, respectively. REGULATORY RISK The extent of demand for Ant is remarkable, especially at a time when renewed Covid-19 lockdowns in Europe and the looming November 3 US election have increased market volatility. The Dow Jones Industrial Average Index fell 2.3% and 3.4% last Monday and Wednesday respectively on worries that rising Covid-19 cases in the US and Europe would slow the pace of the global economic recovery. “The falling markets didn’t have much impact on the deal. We saw a lot of inflated orders, and some long-only funds just have to buy it as Ant will become an index heavyweight in both Hong Kong and Shanghai,” said a person close to the deal. Singapore’s sovereign wealth fund GIC, which spent Rmb2.01bn to be a strategic investor in Ant’s Shanghai IPO, is understood to have placed an order of more than US$2bn in the Hong Kong tranche as well. Taiwan’s Fubon Life Insurance also said it planned to subscribe to up to US$700m of Ant’s H-shares. However, not all investors think Ant is a must-buy stock. Some reckon the valuation is expensive and are concerned about the increasing regulatory risk it is facing. Founded in 2004 as a digital payments processor, Ant has grown into a short-term lending and

EQY

7 min read

Asia

IFR 2357 - 31 Oct - 06 Nov

Fiona Lau, Karen Tian

IFR 2357 - 31 Oct 2020 - 06 Nov 2020

Ant IPO fees approach US$400m

Ant Group is paying an underwriting fee of up to US$198m for the Hong Kong leg of its record US$34.4bn A/H listing in Hong Kong and Shanghai for what is set to be the world’s largest IPO. The Chinese digital payment giant is paying an underwriting commission of up to 1%, equal to US$172m at the base deal size. The fee will go up to US$198m if a 15% greenshoe is exercised in full. Combined with the Shanghai component, which is said to pay a similar percentage, that means Ant's bankers are in line for a payday approaching US$400m. In percentage terms, Ant’s fee is lower than the 1.2% underwriting commission – US$300m – that Alibaba Group Holding paid for its US$25bn New York IPO in 2014, and is low by Hong Kong standards. AIA paid a 1.75% underwriting fee and a 0.25% incentive fee for its US$20.5bn Hong Kong IPO 10 years ago. It is, however, significantly higher than the 0.25% fee Saudi Aramco paid for its US$29.4bn IPO, which ended up as a domestic sale as the oil giant decided not to market shares internationally. The 14 bookrunners on Ant’s Hong Kong float are expected to share most of the fee. Normal practice would see sponsors CICC, Citigroup, JP Morgan and Morgan Stanley get the highest commissions, followed by joint global coordinators Credit Suisse and CCB International, and then joint bookrunners ABC International, Barclays, BNP Paribas, BOC International, CMB International, DBS, ICBC International and Mizuho. There are also 10 joint lead managers. CICC, which is also a sponsor for Ant’s Star IPO in Shanghai, is expected to share most of the fees in the mainland leg with the other sponsor China Securities. The two banks also invested Rmb1bn apiece in the strategic tranche of the IPO, as required by regulations governing Star IPOs, and are subject to a 24-month lock-up. At the time of writing, Ant has not disclosed the underwriting fee for the Star listing, though bankers are expecting that it will be more or less the same as the Hong Kong float. Bankers on the Hong Kong listing are especially concerned about what Ant is paying for the Star IPO as this may affect their payday. “We hope the issuer will pay less to CICC for the Hong Kong tranche as they may already earn a handsome fee from the Star IPO. If that’s the case, we have a higher chance to make some good money,” said a banker. For comparison, Semiconductor Manufacturing International Corp paid a 1.3% sponsor and underwriting fee for its Rmb53.2bn (US$7.7bn) Star IPO in August. For Ant’s Star IPO, Citic Securities, Huatai United Securities, Shenwan Hongyuan Financing Services and BOC International (China) are the other bookrunners. Haitong Securities is the financial adviser.

EQY

3 min read

Asia

IFR 2357 - 31 Oct - 06 Nov

Fiona Lau, Karen Tian

IFR 2357 - 31 Oct 2020 - 06 Nov 2020

Quantum of yield: investors get solace from rejigged Aston Martin deal

Aston Martin Lagonda had to radically revise terms on a high-bond on Friday and ended up offering a double-digit yield as it struggled to convince investors to buy into its turnaround story. The US$1.085bn five-year non-call four US dollar bond – a very different structure to the deal that had been announced earlier in the week – priced at 10.5%. The UK luxury carmaker dropped a sterling tranche, amended its call structure and widened pricing by up to 175bp from the initial announcement. "This has been the worst week in the market since the Covid lockdown in March," said a source familiar with the deal. "The market went down pretty aggressively. People are pretty risk-off given the US election, Covid-19; that the iTraxx has widened out. The market is now very different from the start of the week." Several borrowers ran into trouble in the US high-yield bond market last week as a surging primary started to stutter. Still, it was Aston Martin's sterling tranche that bit the dust while the size of its US dollar bond was increased as investors prioritise big deals in liquid markets, said the source. In another concession to the volatile market, bankers also decided to bump the call period up to a five-year non-call four structure from a five-year non-call two. "I think people want convexity in this instrument, especially if they're buying in a volatile market," said the source. "You don't just want to have one or two years before you get repaid. You want convexity. If Aston Martin performs from here, in a five non-call two you're capped on the pricing upside. It's another way of avoiding OID." BOND, RESTRUCTURED BOND Global coordinators JP Morgan and Barclays had approached investors on Tuesday with a £840m-equivalent (US$1.087bn) senior secured five-year non-call two bond, split between US dollars and sterling notes. Initial price thoughts were high 8s to 9% for both currencies. At the time, the bulk of the deal was expected to be in US dollars, with about £285m raised from the other tranche, said sources. But after the deal was announced, investors grumbled about the yield and duration on offer, saying that it did not compensate them enough for the challenges the company is facing. They said the credit's risks include its rate of cash burn, its sizeable leverage, and the sheer number of units it will need to sell to increase its Ebitda. Then there are political risks – including Brexit, which could affect the company's supply chain – and the US presidential election to consider. Some investors said they would rather be in the US$335m second lien notes, which were privately pre-placed before the bond was announced with a 13.5% coupon, consisting of 8% cash and 5.5% payment-in-kind, "Aston Martin is a tough story for the debt market," said Azhar Hussain, head of global credit at Royal London Asset Management, before the revised terms were released. "I don't think I would go near this credit unless it was paying double digits. This is an equity story. The privately-placed second lien coming at 13.5% is an indication of how difficult a story this is." BEST OF BRITISH? Just as Jaguar Land Rover and aero-engine maker Rolls-Royce did earlier this month, James Bond's favourite carmaker was looking to raise funds to shore up its balance sheet in the wake of the economic damage caused by Covid-19. All three companies, though, were in a weakened state beforehand and face a daunting task in trying to rebuild their businesses. There were, though, investors who had thought the initial price would compensate them for the risk involved. Speaking after the initial terms were announced, Adam Coons, portfolio manager at Winthrop Capital Management, said he thought the company would find investors at 9%. Still, he said there would be some bumps down the road. “The problem with Aston Martin is much like Jaguar," said Coons. "Their focus is on a market that is essentially dying, in a landscape where reduc

BON LOA EQY

7 min read

EMEA

IFR 2357 - 31 Oct - 06 Nov

Eleanor Duncan, David Bell

IFR 2357 - 31 Oct 2020 - 06 Nov 2020

Quantum of yield: investors get solace from rejigged Aston Martin deal

BON LOA EQY

7 min read

EMEA

IFR 2357 - 31 Oct - 06 Nov

Eleanor Duncan, David Bell

IFR 2357 - 31 Oct 2020 - 06 Nov 2020

Etihad Airways pushes boundaries with 'transition sukuk'

Etihad Airways has issued US$600m five-year unlisted "transition sukuk" to finance its shift to a greener future, which it says is the first of its kind and the first sustainability-linked bond from the high-emitting airline industry. The UAE flag carrier claimed another first for sustainable finance with an unusual framework that allows it to issue either project-specific "use-of-proceeds" deals, or sustainability-linked instruments that tie financing costs to achieving company-wide ESG targets. As the deal is a sukuk issue, failure to meet the targets will trigger a penalty clause linked to purchasing carbon offset credits rather than the 25bp coupon step-up seen on SLBs for companies such as Italian electricity generator Enel and Brazilian pulp and paper company Suzano, as the rapidly developing market continues to expand. “It is the first public aviation deal and demonstrates the feasibility of the sector. The amount of interest showed that investors want to see the aviation sector in the sustainable finance market and it is welcome if structured correctly,” an ESG banker said. Bankers said Etihad opted for the structure to show its seriousness about sustainability and to overcome scepticism about a difficult sector that many investors view as inherently unsustainable. Etihad also played it safe by issuing an attractively priced instrument compared with other Abu Dhabi entities and one that was primarily designed to appeal to a local investor base, several of whom put in anchor orders. “This was not marketed as a traditional public bond,” a banker at one of the leads said. “It was more like a customised private placement.” Etihad, which is owned by the Abu Dhabi government and rated A by Fitch, set the spread at 200bp over mid-swaps, while state holding company Senaat, also A rated by Fitch, has December 2025 sukuk that leads saw bid at 187bp over swaps. It also provided a premium over lower-rated national cooling company Tabreed (Baa3/–/BBB), which has US$500m seven-year sukuk, priced earlier this month at plus 215bp, bid at plus 194bp according to Refinitiv. Tabreed is owned by state wealth fund Mamoura and French utility Engie. Although the ESG angle attracted some international investors, it made little difference to the outcome. Local and regional investors are the mainstay of the sukuk market and were more interested in the credit than ESG considerations, while some green investors will not buy sukuk. However, the transparency that ESG investors expect was marred by a non-disclosure agreement that investors wishing to access the financials were asked to sign, which led some investors to question the governance – or ‘G’ of ESG. Although this curbed some interest, the leads were able to almost fully allocate the book of US$700m to buy-and-hold investors. Alongside the new issue, Etihad launched a tender offer on its US$1.5bn sukuk due 2021, of which it will buy back US$300m. NOVEL APPROACH Etihad’s sukuk deal supports its pledge to reach net-zero emissions by 2050 via carbon reduction targets that it says will see the airline halve its 2019 emissions by 2035. It has also pledged to cut emissions intensity in its passenger fleet by 20% by 2025. The sukuk deal was issued under the transition financing and sustainability-linked financing framework, and the deal also has two separate second-party opinions by Vigeo Eiris. “This way they have the transparency of the use of proceeds and the accountability of a KPI-linked instrument,” a banker said. Etihad’s eligible "use of proceeds" focuses on investment in next-generation aircraft to replace old fleet and research and development into sustainable aviation fuel. This investment includes the US$600m sukuk and any other financing required to help Etihad achieve a single KPI – to reduce CO2 emissions intensity in its fleet. The target has been set at a 17.8% reduction in CO2 compared with

BON

6 min read

IFR 2357 - 31 Oct - 06 Nov

Tessa Walsh, Sudip Roy

IFR 2357 - 31 Oct 2020 - 06 Nov 2020

Banks mull big changes as margin pressures increase

Three years ago, the outgoing boss of HSBC said the challenge of running a major bank when interest rates were close to zero was like an oil company trying to make money when the oil price was US$5 per barrel. Well, the problem has deepened since then and another steep drop in net interest income last quarter has left banks with a massive hole in earnings this year. Across 11 major US and European banks, NII in the first nine months of this year was down US$23bn from a year earlier, according to IFR estimates. Several bank bosses have warned it could get worse. The collapse in NII has prompted HSBC and others to consider dramatic changes in business models, including charging for accounts that have long been free, and ramping up the focus on fee-based products, such as in wealth or asset management, and payments or foreign exchange processing. HSBC is set to earn about US$27.5bn in NII this year, down US$3bn from a year ago and US$5bn below its 2015 level. That’s because low global interest rates crimped its net interest margin to 1.2% last quarter, its lowest level for at least two decades and half the margin it had in 2011. HSBC is one of the hardest hit banks, but it is far from alone. The big four US commercial banks – JP Morgan, Citigroup, Bank of America and Wells Fargo – brought in US$138bn in NII in the first nine months of this year – down US$13.2bn from a year earlier, or 9%. Some US$6.7bn of that shortfall was in the third quarter alone, when NII across the four banks tumbled 13% from a year earlier. Wells Fargo and Bank of America have been hardest hit and their NII revenues are down 15% and 10%, respectively, this year. NII across seven major European banks – HSBC, Santander, Deutsche Bank, Barclays, Lloyds, Credit Suisse and Standard Chartered – was US$97.8bn in the first nine months of this year, down US$10.5bn from a year earlier, or 11%, IFR calculated. It was down 8% or more at each bank. Deutsche’s net interest income of €9bn in the first nine months was down 15% from a year earlier. At a time of intense scrutiny on its restructuring and costs, that €1.5bn in lost revenue is equal to almost all the revenue it has made from bond and equity underwriting and M&A advisory this year. Credit Suisse’s NII this year has also fallen 15% from a year ago, while it is down more than 10% at Barclays, Lloyds and Standard Chartered. Several bank chiefs warned at recent result announcements that there is no let up likely soon. Deutsche’s net interest margin dropped to 1.1% last quarter, from 1.4% a year earlier, while Wells Fargo’s was squeezed to 2.13% from 2.66%. LONG-TERM SQUEEZE Banks have complained about the impact of low or zero interest rates on their revenues for years, but most were comforted by the idea that low rates were spurring economic growth and helping drive revenues higher in other areas. They also cushioned the impact by increasing loans. Many were also confident the headwind would soon turn into a tailwind. But more are now fundamentally rethinking strategy. HSBC’s conservative traditions and exposure to Asia have long seen the bank hold big customer deposits and in the last year it has taken in US$160bn in extra deposits. Yet in the current environment about 30% of its deposits may not be making money or are loss-making. “Near zero interest rates will be a persistent revenue shock to our business over the next few years. We're actively adjusting our business model to address this,” HSBC finance chief Ewen Stevenson told analysts last week. The bank said it will look at a number of areas to fill the shortfall, mostly from areas that generate fees. That will include wealth management products across Asia and asset management and insurance products. It plans to grow its transaction banking business to generate fees from foreign exchange, trade, payments and cash management. That may be easier said than done, howeve

P&M

8 min read

Americas, EMEA

IFR 2357 - 31 Oct - 06 Nov

Steve Slater, Philip Scipio

IFR 2357 - 31 Oct 2020 - 06 Nov 2020

Etihad Airways pushes boundaries with 'transition sukuk'

BON

6 min read

IFR 2357 - 31 Oct - 06 Nov

Tessa Walsh, Sudip Roy

IFR 2357 - 31 Oct 2020 - 06 Nov 2020

AMS ups investor protection on €760m CB

Austrian sensor maker AMS enjoyed a successful visit to capital markets with a €760m convertible bond as its financing of the acquisition of Osram gets back on track following the SFr1.75bn rights issue that ended in disaster earlier this year. While AMS is a regular visitor to the equity-linked market, Tuesday’s deal looked very different to its previous forays. The high-yield company, rated Ba3/BB–/BB–, opted to repeat the guarantee structure employed on straight bonds issued in July to significantly reduce the credit spread used for pricing. Existing AMS CBs are issued by AMS AG with no additional guarantees. The straight bonds carry guarantees from the operating companies of both AMS and Osram and as a result trade with an implied credit spread over 100bp tighter and at times they have been 200bp tighter. Initially the new CBs offer AMS subsidiary guarantees, with the intention to add Osram following the acquisition. If Osram is not added by May 1 then there is a coupon step-up of 75bp. FINDING A FLOOR It did mean that the new CB was not what many expected, but the structure ensured wider appeal among investors overall. Even with the guarantees, the credit spread was assumed at 575bp and the seven-year bonds had a bond floor of 80–83 on launch terms. A CB representing a 10% capital increase without guarantees would have been heavily sold to hedge funds due to a bond floor in the 70s. Very high sensitivity to the underlying equity (even on the final terms the delta was 60%) would have meant heavy shorting punishing the company’s share price. The success of the structure was immediately clear as shares performed very strongly during marketing and were even up for the day at one point, showing the success in attracting outright buyers seeking exposure to the underlying. Austrian rules meant AMS had announced the forthcoming bond over two weeks ahead of execution, ensuring lots of reverse enquiries and guidance from investors on the desired structure of the bonds. The high delta was welcomed by those wishing to get exposure to the equity story, which was helped by AMS flashing third-quarter results alongside the bond launch that came at the upper end of expectations and with a positive outlook for the fourth quarter. The multiple times covered final book showed a broad level of interest. The deal was covered by indications from Monday’s pre-sounding by HSBC, Morgan Stanley and UBS and hedge fund orders came in early on Tuesday with outrights taking longer, but ultimately coming in size and making up several of the top orders in the book. Over 100 lines in the book included fixed-income funds that have done well out of the straight bond – bonds issued in the summer at 99 were bid last week at 105.5. There were also long-term shareholders buying CBs. At the final count hedge funds did outweigh outrights, but it was close, said one banker involved. Pricing came at mids from 1.875%–2.375%, up 45%–50% guidance. The reference price of SFr20.1736 was just 3% off the previous close and shares ended Tuesday at SFr20.20. Converted to euros that makes for a conversion price of €27.7209. Bonds were at par to par and a quarter around the market close. MOVING ON The two successful bond issues, and a new €750m bridge loan, end the Osram financing more successfully than it began. AMS found itself largely a victim of unfortunate timing as its SFr1.75bn rights issue coincided with the collapse in equity markets in March. The syndicate underwriting the offering ended up owning 21% of AMS, with nearly 15% held by HSBC and UBS alone. In the event they were bailed out by a relatively swift recovery in the share price so that within two weeks the HSBC/UBS stake was just 0.68%. There were some changes in equity houses employed on the two deals, most notably with Morgan Stanley promoted to the top line of the convertible alongside HSBC and UBS as global coordinators. The trio were th

EQY

4 min read

EMEA

IFR 2357 - 31 Oct - 06 Nov

Owen Wild

IFR 2357 - 31 Oct 2020 - 06 Nov 2020

Banks mull big changes as margin pressures increase

P&M

8 min read

Americas, EMEA

IFR 2357 - 31 Oct - 06 Nov

Steve Slater, Philip Scipio

People & Markets

Credit Suisse eyes loan growth to battle rate attrition

Credit Suisse said it hoped to recoup lost income from lower US dollar interest rates by accelerating the amount of loans it makes next year. The Swiss bank also set out plans to resume distributions to shareholders, saying it had received no objections from its domestic regulator. “We submitted proposals to them and they have not disapproved them, so it is now up to the board to decide,” David Mathers, chief financial officer, told analysts. The plans were set out after the group reported a 30% fall in pre-tax profits during the third quarter compared with a year ago to SFr803m (US$881m). Some of the drop was due to the weakness of the US dollar, which is now Credit Suisse’s operational currency. “We are clearly seeing significant pressure [on net interest income] due to the fall in the US dollar rate, so for 2020 we expect it to be the same as in 2019. In 2021, I’d expect it to be offset by loan growth, but I can’t commit to whether it will fully offset this,” said Mathers. In the investment bank, its trading businesses did not perform as strongly as peers. Fixed income, not including Asia Pacific or Switzerland, reported a 10% increase year-on-year to US$921m, and equities was up 5% to US$588m. Some fixed income units have seen revenues up around 50%. Credit Suisse said it had tougher comparatives than other banks, since the equivalent period in 2019 had been particularly good. The bank’s fixed income arm is more focused on credit trading and has less of a presence in FX and rates, where much of the volatility has been a boon. “Our FICC business does not have the exposure to rates that others do,” said Mathers. “It is driven more by credit and the quest for yield.” On the primary side, the bank had a much better performance in equity capital markets, where fees leapt 202% to US$332m. Debt capital markets fees slipped 2% to US$326m and advisory was down 26% at US$140m as fewer deals completed. DIVIDEND RESTART The board said it would hold an extraordinary general meeting to approve the dividend for the second half of 2019, which has still not been paid, and also said it wanted to lift its 2020 dividend by 5% but did not say when that would be paid. In addition, it said it would resume share buybacks in January with a view to spending SFr1bn (US$1.1bn) next year but possibly as much as SFr1.5bn, depending on how the coronavirus pandemic affects the business. Currently, Credit Suisse, like many investment banks, is pretty sanguine about prospects. It only took an additional SFr94m credit provision in the third quarter, taking the total for this year to SFr958m. Total provisions, for all years, now represent 2% of the whole loan book. The bank said it expected “elevated levels of transactional and trading activity” across both its wealth management and investment banking businesses over the final few months of the year due to the ongoing macroeconomic uncertainties. Despite the detrimental impact on its net interest income, the bank is also optimistic about increasing the levels of loans it can extend next year. It said: “The interest rate environment should continue to support higher levels of financing demand, and we would expect higher loan growth to help Credit Suisse to offset the pressure from lower interest rates.” Credit Suisse’s long-standing chairman, Urs Rohner, is stepping down at the next April’s annual general meeting, as are non-executive directors Joaquin Ribeiro and John Tiner. A replacement for Rohner has not yet been found but the board has proposed two new directors: Clare Brady, former director of internal audit at the International Monetary Fund, and Blythe Masters, who was chief financial officer at JP Morgan, among numerous other roles.

P&M

4 min read

Americas, EMEA

Christopher Spink

IFR Events

IFR hosts a comprehensive programme of conferences, seminars and roundtables throughout the year, providing authoritative insight into the trends and outlooks for specific regions and asset classes.

View Events Calendar

IFR Digital Edition

Access a digital replica of IFR's print magazine, updated each Friday. Plus regular Special Reports and Roundtables, covering industry themes and trends.

Latest Digital Edition

Bellwether

Household name

It’s good to see that in these dark days, when the world is fretting about Covid-19 and banks are looking for ways to make money in a zero interest rate environment, HSBC finance chief Ewen Stevenson is keeping his sense of humour. Stevenson, the former star Credit Suisse FIG investment banker who is now forming a happy double act with CEO Noel Quinn, spent some time with analysts outlining HSBC’s plans for making up for lost net interest income. The upshot: it’s going to be a hard, long, boring slog. HSBC, after all, is one of the world’s most conservative banks and likes to keep far more deposits than it lends to customers. So, one analyst asked, would it be prepared to be more aggressive and try to put more of those deposits to work and start lending more aggressively? “I'd rather find growth – good, sustainable revenue growth – rather than just buying books of assets for the sake of buying books of assets to use up liquidity,” Quinn replied. Stevenson chipped in. “You would know that 20 years ago, we tried something like that, and it didn't work out so well.” A FIG banker to the core, he was of course referring to HSBC’s disastrous acquisition of Household. Suffice to say, it wasn’t a deal he advised on. A DECENT EARNINGS season means CEOs have been reaching for the superlatives, although some more than others. While earlier this month Morgan Stanley’s James Gorman was able to toast the bank’s “best third quarter on record”, Deutsche Bank’s Christian Sewing last week trumpeted his bank’s “strongest quarterly profit of the current year”. It’s not a huge boast but it certainly lowers everyone's expectations ahead of the bonus round nicely. It's also further proof that the ever-bullish Sewing never passes up an opportunity to point to the progress Deutsche is making in its restructuring – in fact he made this very point in every other quarter this year. IF YOU’RE WORKING from home and missing the office vibe, then “Industry” could be for you. It’s a new TV series on HBO focusing on the lives of a group investment banking analysts at the fictional Pierpoint & Co. It’s a tale of ambition and self-worth written by Mickey Down and Konrad Kay, who briefly worked at Rothschild and Morgan Stanley respectively. So what to expect from the 20-something graduates as they enter the modern world of finance? Some high-stakes Excel spreadsheet activity, perhaps? A race against time to ensure the bank’s risk models are Basel compliant? It seems not. Instead, some familiar stereotypes endure, such as a managing director who swings a baseball bat on the trading floor and a trader who loses his temper when a junior member of staff gets his salad order wrong. The fact it’s salad and not cocaine is perhaps a Gen Z nod to how banking has changed. The production crew built the bank’s offices in a studio set in Cardiff, South Wales. With banks re-thinking their real estate footprint post-Covid, that could prove to be the most prescient thing about the whole project. APPARENTLY, THE MERCHANDISE of defunct financial services firms is the must-have fashion accessory of 2020. According to the Financial Times, duffel bags and hats bearing the logos of Lehman Brothers, Bear Stearns and Merrill Lynch are being snapped up on the secondary market by millennial financiers. And indeed Bellwether found a Lehman tote bag on eBay for a healthy £87. Given that Lehman, Bear Stearns and Merrill were all sold for knock-down prices, it breaks the heart to think of the value that shareholders missed out on. Just think what they would have been worth had the merch arbitrageurs known what was to come.

IFR 2357 - 31 Oct - 06 Nov

More Bellwether

IFR Events

IFR hosts a comprehensive programme of conferences, seminars and roundtables throughout the year, providing authoritative insight into the trends and outlooks for specific regions and asset classes.

View Events Calendar

IFR Digital Edition

Access a digital replica of IFR's print magazine, updated each Friday. Plus regular Special Reports and Roundtables, covering industry themes and trends.

Latest Digital Edition

Bellwether

Household name

IFR 2357 - 31 Oct - 06 Nov

More Bellwether

Welcome to IFR

Asset Class

Region

Display

IFR Events

IFR Digital Edition

IFR Events

IFR Digital Edition

Our Privacy Statement & Cookie Policy