In banking, as in sport, it’s usually the case that no player is more important than the team. But in banking, as in sport, sometimes there are unique talents like Lionel Messi where it’s not obvious that this is true. Because it’s made up of extremely large transactions which really can’t be allowed to fail, and the client base is more or less unique, sovereign debt restructuring is one of the specialities which is closest to being an individual rather than a team sport, and the Zinedine Zidane of sovereign restructuring is Centerview’s Matthieu Pigasse.
Pigasse used to be in charge of the sovereign restructuring practice at Lazard, the acknowledged market leader which had handled Argentina, Greece and other record-breaking defaults. So when he moved to Centerview in 2020 to set up a similar team there, everyone was wondering – would the magic travel? Or would Lazard’s strength in depth be enough to preserve the franchise without Pigasse and his longtime lieutenant Hamouda Chekir?
Well, now we know. Greece no longer holds the record for the biggest losses imposed on sovereign bond investors; Venezuela’s $240bn debt restructuring has taken the crown. And the restructuring mandate went to Centerview, despite Lazard apparently making a last-minute offer to do the whole thing for a surprisingly low fixed fee.
Does this mean that Centerview are now the go-to bank for this profitable niche? It would certainly seem to, except that if their triumph is built on Matthieu Pigasse’s personal franchise, they might not have their rainmaker for very long.
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A few weeks ago, Le Monde reported that Pigasse had indicated his availability to the Socialist, Green and Communist parties of France, suggesting that if they were looking for a consensus candidate of the Left for the next Presidential elections, he was willing to be persuaded. (If he were to stand and win, he would be the second investment banker in a row to occupy the Elysee Palace, after former Rothschild MD and consumer goods coverage specialist Emmanuel Macron).
It might seem strange that Matthieu Pigasse would be running with communist support, given that he’s a multimillionaire investment banker who is currently involved in a deal that originated when Donald Trump arrested the former President of Venezuela. But he has always had sympathies in this direction – he’s famously a fan of punk rock, he owns a radio station and is on the board of France’s equivalent of Rolling Stone. One French observer has noted that “the more right-wing his actions are, the more left-wing his speeches become”.
However, nothing is yet fixed, and many political careers never make it past the rumour stage. It may yet be the case that Centerview has many more years to enjoy the services of one of the few bankers in the world who has a reasonable claim to say “l’etat, c’est moi”.
Elsewhere, the trend in the hedge fund industry over the last ten years has been toward bigger and bigger size, with substantial economies of scale and crippling fixed costs of technology and compliance meaning that small funds have become less and less viable, and the big multi-strategy “pod shops” have taken over. But could that be about to change? Although the expense of employing teams of analysts to parse and analyse central banker speeches and economic data is not the biggest cost for a macro hedge fund, it’s quite substantial and in the era of AI, it might be possible to replace this headcount with a reasonable budget for tokens.
Alfonso Peccatiello of Palinuro Capital certainly thinks so – he says that “It’s effectively like having a set of unbiased analysts for a portion of the cost”, and that with clever use of LLMs, a five-person team can compete with desks of twenty or even fifty analysts and traders. Dharmesh Maniyar, a former Brevan Howard and Tudor portfolio manager with a PhD in machine learning agrees – he says that it allows a boutique like his fund MQT Capital “to build powerful capabilities much earlier in our lifespan”.
Of course, if the robots can really replace headcount, we would expect to see the multistrats using them too, as the war for talent has affected that space really seriously in the last few years. But it seems that for the moment, AI can only replace commodity headcount, and that for those with genuine investment talent, it’s levelling the playing field.
Meanwhile …
The “Essex Boys” group of traders were accused of co-ordinating their activity and driving the price of oil futures to negative levels in 2020. The Financial Conduct Authority’s case against them has now been dropped, as they have agreed to collectively make a donation of £1m to the government’s Crisis and Resilience Fund, and this will apparently “ensure that deterrence is not undermined” (FT)
A trading floor can be a cruel place, and if you take a few days’ holiday to go to Turkey then come back with a fuller head of hair than you had when you left, you have to expect a degree of mockery. No wonder that many men are “baldmaxxing”, copying the look that’s been favoured by senior bankers for years. (WSJ)
ESG now stands for “Energy, Security and Guns”, and Citigroup is opening up a new Baltic office (most likely in Lithuania) to be close to the growing European defence market. (Bloomberg)
James Fishback, who quite spectacularly lost a lawsuit with Greenlight Capital over whether he was allowed to say he’d been their “Head of Macro”, has been ordered to pay $1.2m of Greenlight’s legal fees. His campaign to be governor of Florida doesn’t seem to be going all that well either. (Florida Politics)
Seventy per cent of Americans would turn down a high paying promotion if it meant more stress and might have a negative impact on their mental health. The trend is being called “job dropping”, although there’s not much evidence of it in the banking industry yet. (Guardian)
A former professional soccer player is in court, being accused of having stolen details of forthcoming M&A deals from his girlfriend’s laptop and insider dealing on them. (Bloomberg)
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