Morning Coffee: Goldman Sachs' latest big promotions are complicated. Bank allocates bonuses for being in the office

Following last year's fuss about the exclusion of two London partners at Goldman Sachs from a new operating committee, it's clear that committee membership matters to people at Goldman a lot. Yesterday, the firm nominated two of its partners to the committee that matters most of all: Pete Lyon and Mahesh Saireddy will now sit on Goldman's main management committee, which ejected two people early last year. 

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While Lyon is not someone who dispenses the most helpful careers advice, as Goldman's head financial institutions group (FIG), he is someone who knows a lot of important people at financial institutions, including private equity and private credit funds. Saireddy, meanwhile, is the sort of person who can help Goldman buy $15bn of outstanding loans from a failed bank. 

The two men have been given big promotions. They now sit on Goldman's most illustrious committee. But they also have a complicated task: they're running Goldman's new 'Capital Solutions Group' which serves clients that Goldman is both competing with and wooing. 

The newly created Capital Solutions Group will be made up of bankers who have a speciality in working with private credit and private equity funds, as well as others who directly structure the types of transactions — often leveraged buyouts — that are financed by those investors. 

The Wall Street Journal notes that the purpose of the group will be finding and facilitating financing deals, both to corporate clients and to private equity and private credit clients. The Financial Times notes that Goldman can still lend to private equity and private credit clients, despite post-financial crisis regulations that prevent banks from directly financing risky transactions from their own balance sheets. Goldman wants to expand this part of the business, which already accounts for nearly half of all its lending. At the same time, though, Goldman is competing against these funds when it comes to directly financing its own large corporate transactions that aren't banned by the 2008 rules. 

Lyon and Saireddy therefore have the task of making loans to funds who are both Goldman's clients and its competitors. There are plenty such ambiguities in banking, but it will be a test of the two men's charm. Goldman is expecting big things from the new group: the Wall Street Journal says the firm's senior people expect that, "a handful of private-credit firms and similar institutions will soon dominate the debt landscape," and that it wants to be financing them. Lyon, presumably, knows all the funds. Saireddy knows how to bring in asset backed securitisation assets, which are one of the fastest growing areas of the market. 

In a reflection of the blurred lines, Apollo, one of the big funds Lyon is presumably wooing, recently hired Philip Aldis, Goldman's former head of international mortgages and FICC structured investing, to expand its very own asset backed finance business in Europe. If the new group doesn't work out at Goldman, it's a sign that Saireddy at least could probably walk into a new job at one of the funds they're working with.

Separately, the Financial Times reports that Lloyds Banking Group has hit on a novel method of getting people into the office: an office presence will become part of the bonus criteria for Lloyds' senior employees. 

Unlike JPMorgan, which is commanding everyone to be in the office five days a week, Lloyds only wants its people there two days a week. The Guardian says Lloyds wants senior staff to set an example for everyone else. 

Meanwhile...  

JPMorgan disabled comments on its intranet after employees shared concerns about commuting costs, child care and work-life balance in the wake of the 5 day a week return to the office. (WSJ) 

JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley are expected to see a 16% increase in profits after trading and dealmaking related to Trump's election. (Financial Times) 

JPMorgan, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup are expected to end 2024 with a combined 15% increase in trading revenue to $24.5 billion, the highest fourth quarter in at least five years. (Bloomberg) 

Lazard's Peter Orszag says the downturn in M&A was caused by rising rates, a disconnect between buyers and sellers and "big is bad" regulatory interpretations. Those are lapsing and ongoing drivers of deal activity like technology, biotech, energy transition, supply chain changes and tariffs are becoming more prominent. (WSJ) 

Maybe IPOs won't come back after all. "It’s going to be hard to sell IPOs this year. Companies that need the money are going be forced to make a decision and it will likely be selling equity at a lower price. Firms that don’t need the money will probably just pull their IPOs.” (Bloomberg)

AI startup Mosaic has created technology that builds financial models. “Our technology takes more than 14 hours of work… and squishes it down into 15 minutes.” (Business Insider) 

Donald Trump junior is joining prediction market start-up Kalshi as a senior advisor. (WSJ)

Polymarket, a popular crypto-based prediction market, is facing controversy for allowing bettors to try and make money by correctly anticipating the course of the Los Angeles wildfires. (WSJ)

Nik Storonsky has sold well over $400m (£330m) of stock in Revolut. (Sky) 

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