Two things to start: First, JPMorgan Chase is suing Jes Staley, a former top executive, in an attempt to make him liable for any penalties the US bank might have to pay if it is found to have facilitated Jeffrey Epstein’s sex trafficking crimes in two high-profile lawsuits.
Next, EY has “paused” its plan to split in two amid a fierce dispute over how much of its tax business should stay with the audit side of the firm.
In today’s newsletter:
Two banks face a reckoning
Yannick Bolloré steps up to the plate
Activists circle The Restaurant Group
Two banks discover the music is stopping in private markets and crypto
Silicon Valley’s tech bankers have had a gruesome 12 months as their clients cancelled listings, paused M&A, cratered in valuation and, in some cases, imploded.
There are fresh signs of fragility in California’s tech ecosystem now that the the preceding decade of cheap money, low losses and easy gains has passed.
On Wednesday evening, Silvergate Capital, a publicly listed lender that once managed more than $16bn in assets announced plans to liquidate and wind down. It’s one of the first blow-ups of a large, publicly listed bank since the financial crisis.
Silvergate’s demise followed the broader implosion of the cryptocurrency industry, led by the bank’s most notorious customer: FTX, the failed exchange founded by Sam Bankman Fried.
In recent years, Silvergate had grown from a small lender based in San Diego into one of the fastest-growing bankers for crypto clients including FTX. Crypto groups used Silvergate to deposit and transfer billions of dollars in cash each month, DD’s Tabby Kinder reported in detail in December.
Last year, a series of crypto trading disasters fuelled a wave of bankruptcies. The largest was FTX, which filed for Chapter 11 in November due to a massive capital hole. US prosecutors have since charged SBF with what they allege to be one of the largest frauds in US financial history.
Silvergate was hit hard. In January, it reported a $1bn loss as crypto clients pulled funds in a dash for cash. It forced the bank to sell bonds on its balance sheet that had fallen in value as interest rates skyrocketed last year, realising a massive loss that ultimately spurred its demise. (Silvergate is planning to repay all depositors.)
Silvergate has hired Centerview Partners, Cravath, Swaine & Moore and Strategic Risk Associates to help with winding it down.
On Wednesday, another California-based lender revealed financial troubles.
Silicon Valley Bank, which has become a crucial player in financing US start-ups, shocked Wall Street with a large loss and plans to raise fresh capital.
SVB launched a $2.25bn share sale after suffering a large loss on its portfolio of US Treasuries and mortgage-backed securities as it grappled with rising rates and a cash crunch at many of the start-ups it helped finance.
The loss stems from selling $21bn of securities which meant that the lender would realise a $1.8bn loss as rising rates crimped their value. Private equity firm General Atlantic, a longtime client, will backstop $500mn of the share offering.
SVB is a familiar name to many of the largest private capital firms because it offers subscription financing to buyout funds and loans to their partners. (The FT dove deep into its risks last month.)
The troubles signal that fast-rising rates and depleting cash for start-ups are beginning to fuel a financial reckoning.
Vivendi’s new heir takes the throne
Despite officially giving up his role as chair of Vivendi’s supervisory board to his son Yannick Bolloré nearly five years ago, the billionaire corporate raider Vincent Bolloré has never been too far from the action at the French media group.
He carried out a gruelling battle for control of Lagardère and spun out Universal Music Group before following through on a long publicly declared promise to retire last year on the 200th anniversary of the Bolloré Group.
Well . . . sort of. The master dealmaker has retreated a bit from the limelight and left his two sons in charge of the family’s companies but he still weighs in on big decisions.
In the media part of the Bolloré empire, where Yannick is in charge, he faces a critical test: proving that Vivendi is a coherent company, not a disparate set of holdings.
“The challenge we have at Vivendi is to prove that we are an integrated industrial group,” he told the FT’s Adrienne Klasa.
Following the spinout of UMG — now valued at €40bn — Vivendi has slimmed down to a value of €10.8bn, with assets including pay-TV with Canal Plus, advertising agency Havas and print magazines.
That portfolio is set to grow significantly if the younger Bolloré can successfully convince European competition watchdogs to approve the deal that his father had spent years fighting for: a takeover of rival Lagardère, which owns book publisher Hachette and politically influential titles such as Paris Match and the Journal du Dimanche.
That’s as long as Vivendi can placate regulators in Brussels by spinning off its own French-focused publishing business, Editis, and selling its remaining stake.
An alliance of businessmen Stéphane Courbit, Daniel Kretinsky and Pierre-Edouard Stérin has submitted a bid for the Editis stake, as has Canadian group Quebecor and media group Reworld. The buyer is expected to be chosen soon.
Yannick hopes to have a final response from the EU on buying Lagardère by early summer.
In the meantime, he’s working to co-opt the group’s holdings, such as using material developed in its publishing houses to create television series for Canal Plus and build value.
Vincent Bolloré, known for his conservative views, has long thought that French media is too leftwing and has sought to build a counterweight, according to people familiar with his thinking.
DD is curious to see — should regulators approve the Lagardère takeover — whether Yannick shares his father’s politics.
Too many cooks in TRG’s kitchen
The Restaurant Group, the British group behind eateries Frankie & Benny’s and Wagamama, has come under pressure from a pair of activist investors. But so far, the company isn’t dishing out what has been ordered.
On Wednesday, London-listed TRG said that it intended to close 35 of its worst-performing sites and announced a three-year plan to boost operating margins.
But Hong Kong hedge fund Oasis Management, which has a 6.5 per cent stake in the group, was likely left feeling unsatisfied. TRG could offload its Brunning & Price pub chain for a valuation of £250mn, it had suggested, signalling that it would push for the departure of chief executive Andy Hornby if he failed to boost performance.
Hornby told the FT this week that TRG’s latest step “really isn’t” a concession to Oasis.
The pressure on TRG has also increased with the arrival of another activist investor, New York’s Irenic Capital Management, which has previously been involved in situations such as the proposed merger between Rupert Murdoch’s News Corp and Fox businesses.
TRG management has sought to play it cool, with Hornby stressing he isn’t feeling the heat from the activist funds. The temperature is rising nonetheless.
Wall Street dealmaker Raymond McGuire, who left Citigroup to run in New York City’s Democratic mayoral primary, has joined the independent investment bank Lazard as president.
London-based Goldman Sachs trader Riccardo Riboldi is leaving the firm, marking another exit from its equities division in recent weeks alongside that of newly retired veteran Joe Montesano.
JPMorgan Chase has appointed head of private capital markets Keith Canton to lead its equities capital markets group for the Americas, according to a memo seen by DD. He replaces Jeff Zajkowski, who retired in March 2022.
Citigroup has promoted London-based managing director Federico Monguzzi to head of real estate for Europe, the Middle East and Africa.
Fortune telling M&A bankers can rarely predict the future. Reuters Breakingviews dissects their sometimes overly optimistic methods for forecasting deals. Hint: it’s not an exact science.
Financiers on the field The world of sports ownership has proved more elusive for Wall Street players David Tepper and Steven Cohen, The Lex Newsletter writes. Sign up to get it in your inbox every Wednesday and Friday.
And one smart listen The FT’s Behind the Money podcast digs into the extraordinary rise of Abu Dhabi’s International Holding Company.