Somehow, we seem to be back in the TMT era. Do you even remember what those initials stood for? Think telecoms, media, technology, and dial back 12 years to the dot-com mania and the 3G auctions for mobile phone licences.
In mid-October, the BlackBerry email network went down for several days, causing consternation to most financiers. For several years now, the BlackBerry has been seen as uncool. "A device for boring old men," one teenager sniffed. But I should point out that the London rioters planned their nocturnal activities using BlackBerry’s free messaging service.
The BlackBerry crumble, as they’re calling the hiatus, presumably means that the Apple iPhone will gain ground as a business tool. One senior banker wailed: "I’m on a business trip in the States and I have no access to email. That means, when I return, I will need to read at least 1,500 emails. It’s unbearable."
I made soothing noises but inside I felt smug. I changed my BlackBerry for an iPhone more than a year ago. The Abigail with attitude column is always ahead of the curve.
So that’s your technology nugget, but the media story I unveil below is causing nearly as much discussion. An ‘empty interview’ occurred in the German Handelsblatt newspaper. BNP Paribas’ chief executive Baudouin Prot did an on-the-record interview with the banking editor but then insisted on revising his answers.
Irritated by this interference, the paper published the interview without the answers. I’m not sure this shows Monsieur Prot in his best light – he certainly doesn’t come across as a ‘master of the universe’ if he has nothing to say for himself.
But in a way, the empty interview proves that freedom of the press is still alive, despite the dictates of big business.
I recently had lunch with a charming mole at the Savoy Grill, which used to be a legendary meeting place for the power crowd. It has now been refurbished and is run by Gordon Ramsay. To me, the crowd seemed less powerful: a sprinkling of CEOs and a surfeit of more mundane, middle-ranking executives munching on expense accounts.
However, at the next table, I spotted a grey-haired, glum-looking gentleman. "It’s odd," I mused to Mole. "That chap looks a bit like a much older version of Mike Sherwood (co-head of Goldman Sachs International). Mole laughed. "Abigail," he said. "Welcome to 2011. That is Woody."
Sherwood, who has spent most of his career at Goldman Sachs – rising through the ranks of the fixed income, currency and commodities’ division – owns a lot of Goldman stock. One source estimates the share stack at close to $40 million. Perhaps that’s why Sherwood looked so gloomy. After all, Goldman’s share price has declined by more than 40% from its $175 peak in January. By the way, it’s worth pointing out that most bank employees now receive stock as a large part of their compensation. All plans awarded in early 2011 must now be severely under water.
Woody’s glum demeanour might also have been a result of succession planning, or the lack of it, at the firm. For more than a year, commentators have been insisting that Goldman’s chief executive Lloyd Blankfein would have to step down. There have, indeed, been hiccups: the Abacus CDO case with the Fabulous Fab in the driving seat; the obvious hostility of regulators towards the firm; the "we do God’s work" interview. But Teflon Lloyd prances on.
And I’m not convinced he’s going anywhere in a hurry. But if he were to be run over by a bus tomorrow, who would ascend the Goldman throne? Sherwood has been mentioned as a contender but my sources say this is unlikely. Potential candidates Gary Cohn, president, and Mike Evans, head of growth markets, are not popular internally. I wouldn’t discount David Viniar, the firm’s respected chief financial officer. But might the baton fall to Johnny Weinberg, co-head of the investment banking division?
Weinberg keeps a low profile but has form. He is part of a dynasty that has been at Goldman since the early 1900s. Johnny’s father John L Weinberg ran the firm from 1976 to 1990 and his grandfather, the sainted Sidney, was in charge from 1930 to 1969. Sidney, who started as the janitor’s assistant aged 16, came to epitomize the art of relationship banking. In his heyday, he sat on more than 30 corporate boards and is said to have attended an average of 250 board or committee meetings a year.
Blankfein might turn out to be one of the great survivors. Nevertheless, I am becoming increasingly convinced that the investment banking industry can be compared to the good ship Titanic, silently advancing through the dark night towards the immutable iceberg. Bank CEOs and bank boards have done their shareholders a terrible disservice: they refused to contemplate a plan B. What would happen if there was no sustainable economic growth after the rebound in 2009? And, of course, regulators have twisted the knife by insisting on higher capital requirements and lower leverage ratios.
One mole moans: "This is an industry in meltdown." As we wait to see if European politicians will proffer anything more substantive than woolly words, the European banking industry stands on the edge of a recapitalization precipice, and the results from US financial institutions will be poor. For how much longer can the industry justify an egregious compensation structure that elevates the pocket-books of employees and mocks the interests of shareholders?
Markets melted in September and the febrile rumour mill churned incessantly. Numerous contacts called to hiss down the line that the French banks were in big trouble and then tossed into the peppery pot: "Oh and I’m also hearing very bad things about Morgan Stanley and Bank of America."
