Morning Coffee: The ex-Deutsche Bank rates trader who wants $600m & the head of the CEO. The worst private equity and credit funds to work for
Italian banking aristocrat Michele Faissola had a good run at Deutsche Bank. Faissola worked at the German bank for over two decades and was close to former CEO Anshu Jain, who rendered him everything from head of OTC derivatives, to head of global rates, to head of combined wealth and asset management. At one point, Faissola was even expected to become Deutsche Bank's CEO.
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But Faissola did not make the cut. Instead, Jain was replaced by John Cryan and John Cryan was replaced by an accountant, Christian Sewing. Sewing is Deutsche Bank's CEO to this day. Neither replacement CEO was good for Faissola's career.
First, Cryan let go of Faissola during one of Deutsche Bank's interminable restructurings in 2016. And then Sewing's audit team produced a report that made Faissola's life a misery.
Sewing's report concerned a series of repo deals that Deutsche Bank did with Italian bank Monte dei Paschi after Monte dei Paschi acquired rival Antonveneta in 2007. Written in 2014, this internal report looked at Deutsche Bank's processes and was disclosed to the Italian regulator. The report was weaponised in a subsequent court case arguing that Deutsche Bank had been using enhanced repo transactions to "window dress" the accounts of Italian banks, including Monte dei Paschi, which had to be bailed out by the government in 2017. The transactions were allegedly intended to help Monte dei Paschi conceal its losses and Faissola - who was head of global rates - and six others were held responsible.
That might have been the end of the affair, except that various Deutsche Bank executives, including Faissola were eventually fully acquitted in a Milan court of all allegations in 2022. Faissola has been seeking restitution ever since. As of yesterday, the extent of that restitution has been framed: Faissola wants $624m, while reserving the right to come back for still more. Less explicitly, Faissola and his co-dependants have been arguing that Sewing's 2014 audit report was flawed. They would undoubtedly like to see the current CEO pay for this with more than Deutsche Bank's money.
Faissola, who is now aged in late his 50s, is still working. He's long been close to the Qataris and is CEO of Dilmon, Sheikh Hamad bin Khalifa Al Thani’s family office. If he gets $624m from Deutsche Bank, Faissola may yet retire and have a family office of his own, courtesy of Deutsche Bank shareholders. He will not be alone: Michele Foresti, another former Deutsche Bank rates trader and member of Faissola's team already received a settlement from Deutsche two months ago.
Separately, if you're embarking upon a career in private equity or private credit now, do not join funds raised before 2021.
The Financial Times notes that private equity and credit funds raised $1.2 trillion from investors in 2021 and that they attempted to quickly invest their resulting war chests. This pushed up asset prices, which then peaked in 2021 having doubled over the preceding decade. Now, those investments are underwater and funds can't raise new money. 25% of funds raised before 2015 are zombies and can't pay their people carried equity. And this is even before software investments have been written down...
Meanwhile...
It's a terrible time to be a young person in the UK. Graduates are stuck living with their parents while unsuccessfully applying for hundreds of jobs. “When I went into computer science, I was expecting quite a lot of demand for the skills that I worked for. But then we’re in 2026 now and people are talking about having AI replacing software developers, and it is hard to compete with a technology that makes mistakes, but can be easily fixed by a senior.” (Bloomberg)
Start-ups in the US have begun paying high salaries instead of relying on equity. An MIT graduate got an entry-level software engineering role that pays $220k in base salary. $300k is not unheard of. (WSJ)
The Department of Labor in the US is making it possible for private credit and private equity to be added to retirement plans, as long as safeguards are considered. (Financial Times)
Distressed investors are feeling excited about private credit. (Financial Times)
Goldman Sachs says hedge funds have just cut global equity holdings for a sixth straight week, driven by short sales. (Bloomberg)
lpen Partners, a Swiss-based wealth manager, has helped 30 clients including some family members get out of the likes of Dubai and Israel. It's about more than just managing money. (FT)
Announced global M&A for the first quarter is the strongest since 2021. Equity and equity-linked sales globally have also had their best first quarter since 2021; initial public offerings have posted the strongest first quarter since 2022. (Bloomberg)
The boyfriend of an executive assistant at Morgan Stanley was convicted of insider trading after extracting information from her laptop. (Bloomberg)
Grant Thornton wants 340 graduates. This is 33% more than before. (Financial News)
ABN AMRO's CEO used to work for BNP Paribas and she says lunches there were a thing. “I now take lunch early and at my desk. This is a big cultural change because French meals can be long. This has been one of my adjustments.” (FT)
JPMorgan will only build a new office in Canary Wharf if it gets a multi year 100% council tax rebate. (Guardian)
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