If traders in JPMorgan's fixed income sales and trading business receive poor bonuses this year, they will have someone to blame: a pesky former colleague who was their manager's favourite and who defected to credit hedge fund GoldenTree Asset Management to work for Steve Tanabaum in late October.
Bloomberg reports that that Gianfranco Canepa, JPMorgan’s former co-head of high yield trader for EMEA oversaw trades that have generated a large loss since his exit. The trades, which were seemingly making a profit before Canepa left, have reportedly since swung to a loss of nearly $70m.
Canepa has not commented for this article, and it’s possible he may have a different version of events. Bloomberg reports that it attempted to contact him and that he didn’t respond. Bloomberg claims that his team amassed a €500 million ($526 million) position on Casino Guichard-Perrachon SA, the French grocer, and made bets on Metalcorp, a subsidiary of Monaco Resources Group SAM. Both turned sour. His Casino position included credit default (CDS) swaps, which generated losses as the perceived probability of Casino defaulting fell and the CDS declined in value. Bloomberg reports that the Metalcorp position generated a further loss of up to $20m when the company failed to repay €70m of debt on time to investors in October.
It's not clear whether it was Canepa himself who placed the bets that made the alleged loss, or the team who worked for him. In either case, it seems the trades were profitable before Canepa exited, implying that the team could have acted to mitigate the situation.
Sources inform us that Canepa was one of the favourites of Sanay Jhamna, global head of credit trading at JPMorgan. In 2021, Jhamna is understood to have promoted Canepa ahead of other individuals in the team, not suspecting that he would leave only a year later.
Canepa isn’t the only recent exit from JPMorgan’s high yield business. Sebastian Pearce, the former co-head of European high yield credit trading left for Deutsche Bank after nearly 15 years at JPM in July 2021. Alun Shepherd, the former co-head of EMEA high yield, crossover and distressed debt trading, left for BNP Paribas around the same time. JPMorgan has also suffered numerous exits from veterans across its high yield and credit sales and trading business in the past few years, including Guy America, the global head of credit trading, who’s exit was announced in August 2022. Bhavit Sawjani, the bank’s top high yield credit trader, also left JPMorgan after 16 years in 2020 and is now at hedge fund GoldenTree Asset Management.
Following the recent loss, it’s possible that JPMorgan may want to add some new experienced traders to its bench.
Separately, as knives are sharpened for a probable bloodletting in the analyst and associate classes in the new year, some juniors in London may find themselves at particular risk.
Financial News reports that 30% of a sample of 344 analysts at banks and boutiques in London swapped jobs last year, up from 18% in 2020. Many went to private equity. Some went to rival banks. Private equity jobs are starting to look less secure than usual, but it’s the juniors in new banking jobs who might be most exposed. Last in first out is a cliché for a reason.
Meanwhile..
I enjoyed working at Elon Musk’s Twitter and sleeping on a sofa in the office on Saturday night, until I was in a meeting in which my laptop screen suddenly turned grey and messaged flashed up saying my password had been changed. I was fired. My boss was fired. So was his boss. And his boss’s boss. And their boss. (Economist)
It’s ok, Credit Suisse can call itself First Boston. (Financial Times)
ECB staff are not happy with their 4% pay rise. “With inflation in Germany and the euro area likely around 8.5% this year, it means a substantial loss in purchasing power.” (Bloomberg)
HSBC hired Robin Brown as a managing director within its mid-market M&A team. He joins from family-owned investment bank, Stephens, where he ran the technology team. (Financial News)
Mark Ashton-Rigby, the COO of Barclays investment bank who joined from JPMorgan’s corporate and investment bank, is leaving. He’s being replaced by Vim Maru who came from Lloyds and is far more of a retail banking type. (Bloomberg)
Credit Suisse, which is increasingly funded by Saudi Arabia, is locked in a $440m legal dispute with SoftBank, which is also funded by Saudi Arabia. (Bloomberg)
The former CEO of UBS’s APAC investment bank bought himself an £11m manner with his £45m exit payment. After an acrimonious divorce, he’s now being compelled to give some of that to his ex-wife. (Daily Mail)
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Morning Coffee: JPMorgan traders blame ex-colleague for large loss. The most exposed junior bankers in London - eFinancialCareers (US)
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