Morning Coffee: Christmas is cancelled for London investment bankers. Hedge fund managers give up on sweet treats

It’s beginning to look a lot like… work?  There is a quirky little provision of the UK’s Takeover Code which requires a firm bid to be made within 28 days of the buyer’s interest becoming public. It’s based on a simple day count, with no allowance for public holidays or anything else.  And so, if a deal gets into the newspapers late in November, the bankers can be faced with a deadline that falls on a day when they might normally not expect to be working.

This year, there are two such deals; Aviva’s acquisition of Direct Line Insurance, which needs to have a deal by 5pm on Christmas Day, and Macquarie’s bid for Renewi plc, which, like Good King Wenceslas, has to go out on the Feast of Stephen (December 26).

Obviously, the sensible thing to do in this sort of situation is for everyone to realise that because of the calendar, the 28 day deadline is an effective 26 day deadline, and everything needs to be completed two days early so that the advisors and clients can enjoy a normal Christmas break. Equally obviously, bankers can’t always be trusted to do the sensible thing. 

We certainly hope that the Aviva and Macquarie deals (and a few other smaller transactions which also have festive deadlines) will be fixed up with time to spare. But the temptation is always there to try to play games and gain slight advantages on the deal terms, by trying to project a greater willingness than the other side to have one’s family events spoiled. Obviously, if you were in the mood to play these games, you might growing a new appreciation for the strategic benefits of a diverse workforce; one or two bankers on the team who don’t celebrate Christmas could significantly improve the credibility of the threat.

But hopefully nobody would seriously attempt that, particularly not in an environment where everyone is expecting 2025 to see a lot more deals, and so there will be plenty of opportunities for misbehaviour to be retaliated against.

So in many ways, the bankers with deadlines falling on the bank holidays are the lucky ones. There are also plenty of transactions which need to be wrapped up early in the New Year, where it will have been possible to tell everyone to take the time off. Doing this means that the senior bankers (who might be meeting each other socially over the festive period anyway if their country places are near to each other) can relax, while the juniors have the whole thing hanging over them like an unfinished piece of school homework. If there’s one thing that nobody wants to find in their Christmas stocking, it’s a set of Powerpoint slides with a message from Santa saying “pls fix”.

Elsewhere, if you’re thinking of stocking filler gifts for a commodities hedge fund manager this year, you might want to give the golden chocolate coins a miss. Cocoa has been a bit of a widowmaker trade this year, as factors as disparate as weather, disease, political instability and even illegal gold mining have affected supply and demand conditions, causing wild price swings which have raised margin requirements and driven out all but the most risk-tolerant of investors (Pierre Andurand, obviously, has been having a great time). 

And it turns out that although people are often highly critical of the involvement of financial speculators in commodities produced by low-income countries, the cocoa market really needs the hedge funds to come back – without them, there’s no liquidity for the big traders, and it becomes much more difficult for producers in Ghana or Cote d’Ivoire to sell their crops. 

One of the great things about working in finance is that almost anything that happens in the world has a potential financial markets angle. So if anyone complains about the cost of their sweet treats over the holidays, why not tell them about the role that hedge funds play in bringing chocolate to their door?

Meanwhile…

The good news for the outlook for Chinese investment banking in 2025 is that absolutely everything is in place for a roaring recovery except enthusiastic support from Beijing. The bad news is… well, it’s the same as the good news. (Reuters)

Ahmed Beydoun joined Deutsche Bank’s Dubai office in 2008 and is now leaving the bank as its head of institutional client coverage (mainly sovereign wealth funds) for the Middle East. It’s hard to imagine a market that’s changed more over the last 16 years. (Bloomberg)

“You don’t go to school to become a compliance professional”, as even specialist recruiters admit. Not only that, but attracting early-career professionals to investment banking’s least glamorous job is a difficult knife-edge – lots of young people just don’t have the skills of attention to detail, critical thinking and the ability to say “no” to angry millionaires. (WSJ)

Although this year’s video was a bit of a disappointment, there’s still a lot of interesting things to learn in this “Access Hollywood” behind the scenes look at Blackstone’s comedy video team. Including the fact that the thrown drink this year was the first “stunt” they’d ever done, and that there are often (surprisingly pointed) in-jokes included at the expense of senior management. (Business Insider)

It turns out that printing US dollars without a licence is a licence to print money. Tether has made more than $10bn in profit in the last year, reinvesting half of it into other crypto projects and startups. (Bloomberg)

Apparently in the Chinese system, the precise meaning of “morally corrupt” is “having three or more mistresses”.  It’s one of the charges levelled at Liu Liange, former chairman of Bank of China, in a financial fall from grace that has got him the death penalty. (SCMP)

Although the salary cap in Ireland means that there aren’t very many Dublin bankers included in the regulatory list of highest earners, there is one trader at an investment firm there who made €15m in this year’s list. (Irish Independent)

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