Morning Coffee: Allegations of flirty texts follow semi-naked games at private equity firm. JPMorgan's warning about banks

If you're a private equity firm whose website declares you're all about "collaboration, integrity, and mutual respect," then you may not also be a private equity firm where senior men send (probably more junior)  women flirty texts and where the senior partner appears in shirtless photos during a game of spin the bottle on the company ski trip where someone was also seen biting someone on the neck. But maybe you are.

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This is the situation that Triton Partners, a European private equity firm, finds itself in. Despite having the sort of sustainability policy that talks about diversity and a larger than average proportion of women in its senior team, Private Equity News reports that Triton has been afflicted by some allegedly flirty texts send by an unnamed individual. The revelation comes after its CEO was photographed playing an incontrovertible game of spin the bottle. 

It's not clear what the allegedly flirty texts said, but they were sent a while ago now, in 2020. Triton has long since dispensed with their sender after it says it took "external advice" and acted "accordingly."  

The texting allegations only surfaced recently after German paper Handelsblatt wrote a long article this time last year about the spin the bottle party on the company ski trip where there was reportedly some singing, dancing, partial nudity and neck kissing. CEO, Peder Prahl, subsequently apologised and said: "([I]) took off my shirt and participated in a game that I should not have done. That was wrong." 

Both incidents are fading into the past. Triton says it's a fine place to work and that internal surveys reveal it to be, "a highly investor-focussed organization with a strong emphasis on high performance, underpinned by a clear sense of purpose.” It also completed a culture study with some external consultants in July, the recommendations of which are in the process of being implemented. 

Separately, the Financial Times reports that JPMorgan has warned that banks' funding costs are being driven higher by credit concerns relating to car parts maker First Brands and to subprime car lender Tricolor Holdings. 

JPMorgan says investors are worried about the opaque relationship between banks and "non-depositary financial institutions," including private equity groups, private credit firms and hedge funds. These worries mean investors would like to be compensated more fulsomely for holding banks' shares, which in turn mean banks are being pushed to generate a higher return on equity.

This matters, because as banks' cost of funding rises, capital intensive businesses, like leveraged finance and some areas of fixed income trading, become less viable. Banks have been known to slim down such businesses as a result. 

Nonetheless, it's not that critical. JPMorgan also estimated that in time, banks' cost of funding will decline from its current average of 11.5% to only 10% on the basis of some "solid fundamentals."

Meanwhile...

Growing interconnectedness suggests that a market correction of the same magnitude as the dotcom crash could now wipe out over $20trn in wealth for American households, equivalent to roughly 70% of American GDP in 2024. (Adam Tooze)

Should credit problems persist, Bank of America says there could be a correction. “If private lending hiccups continue, pensions etc. may be forced sellers of index funds to avoid punitive private asset marks and meet ongoing obligations.” (Bloomberg)  

'There are complex circularities as banks may be investors or provide loan facilities to the same private credit funds providing the hedges in credit securitisations. The linkages will transmit losses back into the banking system and spread shocks rapidly.' (Financial Times) 

Cuts may be coming to the Bank of England. Andrew Bailey is having a detailed look at costs and managers are having to find savings of 6% to 8% in their operating budgets. (Sky) 

Citi hired Rajat Katyal, who was HSBC's head of energy investment banking. (Financial News) 

Brevan Howard hired Robbie Anderson, Nomura's EMEA head of flow rates sales. (Financial News) 

Michael Marsh, Goldman’s head of capital solutions for Europe, Middle East and Africa, is leaving. No one is taking over his role immediately, but Pete Lyon and Mahesh Saireddy, the US-based heads of the capital solutions group, will be covering Europe too. (Bloomberg) 

BNP Paribas shares fell 10.6% yesterday after the bank lost a class action claiming it financed the genocide in Sudan. Three bellwether plaintiffs were awarded $20m. There are another 23,000 of them. (Bloomberg)  

Apollo founder Leon Black was Jeffrey Epstein's primary source of income and paid Epstein for everything for tax advice to advice on his art collection. Epstein's going rate seems to have been $40m a year. (NY Times) 

Jamie Dimon has strict standards in meetings. “When I go to a meeting, I’ve done the pre-reads, and you get 100% of my attention...None of this nodding off, none of this reading my mail. If you have an iPad in front of me and it looks like you’re reading your email or getting notifications, I tell you to close the damn thing. It’s disrespectful.” (Fortune)

Observations at the banker reunion: "Nearly two decades had passed in some cases, and yet most faces were instantly recognisable. Thanks to diet, fitness and self-care (natural or otherwise), many looked better than they did years before." (Financial Times) 

If you have diversity jobs on your CV, no one wants to hire you. (Bloomberg) 

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