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Opinion

18 May: F is for foreign (exchange and travel)

"My Morgan musings started when I saw the results of Euromoney’s 2006 foreign exchange poll. JPMorgan Chase was ranked a lowly ninth (down from seventh last year) in the overall market share table. This is an extraordinary and inexplicable lapse for a bank that aspires to be a full-service financial supermarket. "

During our final year at Oxford, grim reality faced my fellow hedonists and me. The J word loomed large. J is for job. Is it a coincidence, I asked myself, that job rhymes with sob, blob and rob?


However, there was one job that we all coveted. We all wanted to work for JPMorgan, which had the best training programme on Wall Street. The prospect of being paid to run amok in New York had us effervescing with excitement. A rigorous selection process thinned the ranks of aspirant, unwashed youth and a favoured few were chosen. The elected included, as I recall, a member of the English aristocracy.


Then the heavy hoof of journalistic enterprise intervened. An article appeared in the national press detailing the louche lifestyle enjoyed by Oxford’s jeunesse dorée. The aristocrat was quoted. He described how one of the greatest pleasures of his undergraduate days was becoming “hog-whimperingly” drunk. Apparently JPMorgan immediately withdrew its offer of employment. The young man shrugged his shoulders, derided all bankers as peons in the capitalist food chain and went off to be a captain of industry. “Go figure” as the Americans say...


JPMorgan also offered my best friend a job. Prince Albert II of Monaco was one of her fellow trainees: “Al Grimaldi to us,” she said firmly. On being told that I was writing about her former employer, my friend wrinkled her nose in distaste: “Please, not JPMorgan. Now it’s JPMorgan Chase.” She spat out “Chase” contemptuously. I imagine George Bush utters the word “Chávez” in much the same fashion. Would it be too cruel to say the leader of the free world would like to spit out the words “Mahmoud Ahmadinejad” but can’t remember them?


To some extent, it’s human nature to romanticize the past. But we can all agree that the House of Morgan has suffered many mutations on its journey to become JPMorgan Chase. In 2000, 16,000 people worked for JPMorgan, today the merged entity employs more than 170,000. My Morgan musings started when I saw the results of Euromoney’s 2006 foreign exchange poll (published in the May edition of the magazine). JPMorgan Chase was ranked a lowly ninth (down from seventh last year) in the overall market share table. This is an extraordinary and inexplicable lapse for a bank that aspires to be a full-service financial supermarket.

FX is not some outlying and esoteric product line. It is an essential tool for most borrowers and investors and is an area where universal banks tend to excel. Look at the firms that top the poll: Deutsche Bank, UBS and Citigroup. Surely, these are key competitors for JPMorgan Chase? Is it not humiliating to trail behind Bank of America, which rose eight places and ranks number eight this year?

In the Euromoney sample, North American FX volumes accounted for more than 35% of business transacted. This should favour the American houses – especially a bank like JPMorgan Chase, which must have strong corporate relationships. Morgan proffers its balance sheet to clients and dominates the syndicated loan league tables.

Foreign exchange is a highly commoditized and competitive area where margins can be anorexic. And perhaps Morgan has decided to quietly lower its profile in this space. Nevertheless, I would bet a bottle of vintage champagne that when chief executive Jamie Dimon, a renowned micromanager, learnt the poll results, he picked up the phone to David Puth, Morgan’s global head of currencies, commodities and emerging markets. Did Jamie ask Davie if he knew which way was up or did he purr: “Please try harder next time.”? What do you think?

Demonic, driven, drop-dead delicious Dimon. Everyone has their own take on the kid from Queens turned number-crunching dealmaker. In this era, when the reality of business is more dramatic than fiction (the film “Wal-Mart: the high cost of low prices” is playing at a cinema near you), it won’t be long before they turn his life into a movie. Richard Gere will surely play Dimon.

Indeed, continuing the Shakespearean theme of my previous column, I have read that Dimon himself compared the rupture with mentor Sandy Weill to the exile of the Earl of Kent for challenging the overweening authority of King Lear. Remember how the Earl criticizes the King in Act 1:

“Be Kent unmannerly
When Lear is mad. What woulds’t thou do, old man?
Think’st thou that duty shall have dread to speak
When power to flattery bows?”

For Dimon to compare Weill to insane, impoverished and ultimately dead Lear is harsh. But it at least shows he has feelings, unlike many banking bosses who think “emotion” is a brand name for a laxative.

I am a Dimon devotee. Why? Because in a way his story is appealing and universal: the ordinary, although hardly humble, background, the apprenticeship to, and rift with, Weill (a man old enough to be his father), the marriage to a college classmate and the aversion to the empty trappings of wealth (yachts, houses, golf memberships). Of course, I might be less enamoured if I had ever worked for the man. Somehow, the words Dimon and undemanding don’t seem to go together.

There are many things I would like to ask Dimon. Most of them have nothing to do with his current role. Dimon studied psychology at Tufts University and I wonder what answers he was seeking by taking this course. But the crucial question for investors is: will the Morgan Chase/Bank One “combo” be a winner? Indeed what is Dimon’s strategy for the minotaur he has created? And is his vision anything more than a desire to get even with the man who cast him out in to the wilderness of regional banking?  More on Morgan next week.

We all know the markets are frothier now than the frothiest of cappuccinos. All the portents of impending doom are in place: record prices for art, a maniacal property boom and short shorts as the fashion essential for this summer’s well-dressed woman. It takes me back to the heady days of 2000.

It was late 2000 when Barclays Capital chairman Hans-Joerg Rudloff explained to me that top people no longer flew commercial: “If you do not have a private plane, you are perceived as a nobody,” he harrumphed. “And unfortunately I don’t, unlike some of my ex-colleagues.” I nodded sympathetically, not daring to demur, because what did I know about the mores of corporate titans? But I must say – although HJR was a hero of mine and still is – I felt downcast. What chance was there that I, a mere minion, would ever be able to commandeer my own jet?

So imagine my joy when last month, a friend (let’s call him Frankie) suggested I accompany him on his private jet to the Balkans. Frankie does not own a plane. Instead he charters an aircraft from NetJets (“fractional jet ownership” for those in the know).

NetJets Inc. is owned by Warren Buffett, and its business proposition is to provide “the benefits of private aviation – and more – with none of the responsibilities.”  Frankie disagreed. He was irritated that the takeoff venue changed three times within 12 hours. And that we had to switch planes in Montenegro because of over-extended pilot shifts.

“It’s so inconvenient,” Frankie fumed to his executive assistant (on a Sunday morning). “We’re going to have to move all the luggage” (two minute bags and his briefcase). He then muttered darkly about initiating a class lawsuit against the company. Frankie is American and thus treats litigation as an enjoyable hobby.

His mood did not improve when I started painting my fingernails a vivid purple hue. “This is the first and last time anyone uses my plane for cosmetic purposes,” he said frostily. Why, oh why are men so one-dimensional? Their refusal to multi-task is a constant disappointment. Although, as author Kathy Lette pointed out during a recent Intelligence Squared debate (a must-attend London event coming to New York soon), men have no difficulty multi-tasking at an orgy.

And as for me? Well, luxuriating in the cotton-wool cocoon of a NetJets aircraft with my perfect purple digits, I was in seventh heaven! In fact, I even offered to move the bags myself.

So how was your week? Please send news and views to abigail@euromoney.com.

See more from Abigail Hofman

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