American bankers banned from travel for their own safety

There are some phrases which are blandly factual in their content, but which are nonetheless frightening because of the context in which they are uttered.  For example, when a Chinese foreign ministry spokesperson says “For anyone in China, whether Chinese or foreign, they need to abide by Chinese law”, then you know that something has gone very badly wrong indeed.

In the latest episode, it seems that Chenyue Mao, a managing director in Wells Fargo’s trade finance business, has been blocked from leaving China after entering the country recently.  Nobody seems to know exactly what she was doing, but her out-of-office message says she’s travelling on business, and she was recently elected to be chair of a trade association.  That accolade might bear some relationship to the ill-fated visit, as although Mao is Chinese by birth, she was actually working out of Atlanta, and Wells Fargo has comparatively little trade finance business in mainland China.

Understandably, Wells have made the decision to suspend all travel to China until they can work out what’s going on, and hopefully put it right.  This sort of thing does happen from time to time; exit restrictions don’t necessarily imply any criminal activity on the part of any individual or firm, and they are often imposed in the context of civil litigation and business disputes.  Unfortunately, being the chair of a trade association might give you more exposure to the sort of counterparty squabbles that sometimes end up in this situation.

Whatever the cause, it’s obviously very worrying for her family and colleagues, and serves as a reminder that banking can sometimes be a dangerous career.  As globalisation recedes and an authoritarian streak starts to be found in all sorts of countries’ border control and immigration authorities, perhaps a lot of senior bankers will begin to revise their views on the relative merits of virtual conferences and video calls.

Elsewhere, the people who pay fees to hedge fund managers often resent doing so, but not usually in quite such scathing terms.  Jagdeep Singh Bachher, the CIO of the University of California pension fund has said, in the context of the final execution of his decision to remove the fund’s allocation to alternative investments, that the experiment had basically been twenty wasted years, and that he could have “avoided all the drama and the illiquidity and all the high fees” by just putting the money in public equities.

Few facets of the modern hedge fund industry appear to have escaped criticism – the extended lock-up periods and “pass through” fee structures associated with modern multistrategy funds, along with the “art and private jets and amazing houses” that fund managers own.  In particular, Bachher notes that the original purpose for investing in hedge funds was to be protected from major market crises, but that in 1999, 2008 and 2020, “hedge funds didn’t hedge us … they exposed us to the opposite kind of risk, which actually meant they hurt us”.

These are all familiar criticisms of hedge funds.  But they aren’t so widely shared as to have dissuaded other pension funds from “surging” into the sector. And what’s interesting is that even Bachher has to admit that there are some managers who are worth their money.  He singles out Bill Ackman of Pershing Square and Sir Chris Hohn of TCI as “phenomenal” investors who have “consistently been right”.  If he ever decides to go back into the sector, he might get a warmer welcome for his money from those two funds than from the ones with whom he’s burned his bridges.

Meanwhile …

From the department of “but why would you try to do that?”, a tech founder talks about trying to raise $150m of debt without using a banker, and what it taught him. Surprisingly, the lesson learned wasn’t something like “this is what a banker is for”; instead, it’s inspired him to create an “AI-Native Deal Room” to link companies with private credit markets. (Fortune)

There are many reasons to go into private credit as a career, perhaps one of the best being “because you are banned for life from trading in public markets”. David Sharpe, former CEO of Bridging Finance, feels like he might want a public-market career though, and is trying to get the Canadian regulator to overturn his ban. (Bloomberg)

Hao Zhang, the “godfather” of TwoSigma’s “techniques team” (and former flatmate of Citadel Securities CEO Peng Zhao), left TwoSigma during last year’s drama. Now it looks like he’s setting up his own quant fund. (Business Insider)

Possibly the most value added by a KYC check in banking history?  In 2016, hackers linked to North Korea managed to transfer more than $20m out of the central bank of Bangladesh.  Now they have finally given an award to the officials at a Sri Lankan correspondent bank who realised something was wrong, raised the alert and helped save most of the money. (Adaderana.lk)

When you’re trying to forecast industry trends, the maxim to remember is that projections are an opinion, targets are an opinion but personnel is a fact and real estate is a fact.  Hedge funds are currently hiring agents to let a record amount of office space in London, so the future in that regard at least looks bright. (Bloomberg)

Who’s the dirtiest employer in Canary Wharf?  According to the cleaning unions, it’s EY.  Their contractor is planning to lay off 37% of the cleaning staff, and there have been protests outside the office building this week. (Business Insider)

“From what we can tell, decisions were based largely on titles and high-level optics rather than a nuanced understanding of roles, skills, or actual overlap in responsibilities”.  It seems that Amazon’s AWS handles reductions in force pretty much exactly the same as a big bank. (The Register)

It might seem to be an odd time to be cutting your “geopolitical risk identification and management team”.  But HSBC is removing ten posts in this function worldwide, seemingly because they want to cut down on overlaps.  And possibly because the risks are no longer subtle or difficult to identify? (Bloomberg)

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