Morning Coffee: When Goldman Sachs bankers work for free. When J.P. Morgan bankers spend too much

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It might be quite normal to work for free if you’re an M&A banker in China (where M&A is often seen as a loss-leader), but pro-bono work isn’t common practice among investment bankers in London.

Goldman Sachs is therefore doing the people of Ireland a favour. Reuters reports that the US investment bank is charging the Irish government nothing at all for its advice on the sale of Allied Irish Bank (AIB). The work is expected to take six months and may ultimately lead to an IPO. We assume that Goldman's staff will be paid by the bank for their efforts during this period, although the non-fee paying travails could impact their bonuses.

Goldman may be hoping that this preliminary advice puts it at the front of the queue for (paid) work on the IPO in which the Irish government recoups the €21bn it spent rescuing the bank. However, Ireland's finance minister Michael Noonan, thinks Goldman is lending its services because it wants to look benevolent. “"It's common practice seemingly, particularly in the city of London, that finance houses like Goldman Sachs feel that their reputation is enhanced for other work if they're the advisers to sovereign governments for key pieces of work," he told the Irish parliament. In the UK, fees for government-related sales are typically 0.5% of the deal value, but they can be as low as 0.1% to 0.2%. By charging nothing at all, Goldman therefore looks unusually generous. Given that the firm was implicated in a debt structuring deal that helped Greece mask its debts and join the eurozone in 2001, it may want to offer free debt restructuring services to the Greek government next.

Separately, you should watch your costs for client entertainment, especially if you work for JPMorgan. Bloomberg reports that two senior London-based FX sales people (Michael Spencer, head of JPMorgan’s hedge-fund currency sales team in London, and Chris McCoy, executive director for hedge-fund currency sales) have been put on leave from the US bank because of “client related expenses.” There’s no further elaboration on this point, leaving us to wonder whether Spencer and McCoy spent too much or spent on the wrong things.


Structured credit is making a comeback. Goldman is selling clients a “bespoke tranche opportunity.” That’s essentially a CDO backed by single-name credit-default swaps, customized based on investors’ wishes. (Bloomberg) 

Barclays is making pre-bonus redundancies in the US, again. (Dealbreaker) 

Fadi Attia, an emerging market syndicate manager, just left Barclays in New York after four years. (Global Capital) 

Morgan Stanley thinks Barclays has an additional $8.2bn of conduct costs coming in the next two years. (Bloomberg) 

The British Bankers Association wants all fixed income bankers to pass a qualification: “Everyone undertaking activity in the wholesale fixed income, currency and commodity markets should be required to pass exams and become professionally qualified.” (Financial Times) 

A senior FX trader just left Deutsche Bank in London. (Global Capital)

Why currency volatility has got worse. The short version. (The Economist) 

Realized FX volatility — or the magnitude of swings — right now has spiked to its highest non-crisis level for the past 20 years. (WSJ)  

Money laundering, kidnap, murder, diamonds, Ferraris and villas: tales from Otkritie. (Bloomberg) 

Words you must not use at work: ‘assume.’ (Inc)  

How caffeine is killing your success. (Inc) 

Work in Silicon Valley. Live with your parents. (MarketWatch) 

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