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The National
2 days ago
- Business
- The National
Expansion push to help JP Morgan double its Middle East revenue by 2030
Middle East revenue for JP Morgan Chase has almost doubled in the past five years and the biggest US lender expects to grow it by another 50 per cent at least by the end of the decade, the bank's Europe, Middle East and Africa chief executive has said. With about 10 per cent yearly growth from 2020 until the end of last year, the Middle East is the fastest growing market within the bank's broader Emea business, Filippo Gori, who is also the co-head of Global Bank at JP Morgan, told The National in Dubai. The wider Emea was a key contributor to JP Morgan Group's total global revenue of $180 billion last year. 'From 2020 to 2024, it has grown substantially … faster than the rest of the region,' Mr Gori said. 'What I can tell you is that, over the next five years, we believe that the revenues will grow another 50 per cent from here, so the cumulative growth over a decade would definitely be of more than doubling the revenues.' The lender, which has been part of some of the biggest public floats, debt market and mergers and acquisitions deals in the Middle East over the past five years, has grown above the region's economic expansion rate and gained market share. JP Morgan is convinced of the longer-term growth prospects of the region, which Mr Gori said is a major beneficiary of capital movement in the Global South. Geopolitical headwinds and short-term macroeconomic turbulence have no bearing on JP Morgan's commitment to the region, where it has been operating for almost nine decades. 'So, we don't make decisions based on macroeconomic factors that could impact things in the next two years, three years, five years. Clearly, you always want to have a view around that, the headwinds that we could be facing,' Mr Gori said. 'But if we believe the narrative, and we do believe the narrative that this region is going to be one of the winners of the Global South and relocation of capital, then you just invest.' Expansion drive All lines of JP Morgan's business, whether banking and markets, or asset and wealth management, have their separate plans for growth and investments in the region. Payments as a product is also becoming an increasingly important part of the growth strategy in this part of the world, Mr Gori said. 'You enter a country, or invest in a region, you're there forever,' he said. 'And what we're doing here is that we're investing for the next 20 to 25 years.' International financial institutions, regional banks and global asset managers have either expanded their operations or set up new offices in the Gulf region in the past few years. They aim to attract more business from sovereign wealth funds, family offices, wealthy individuals and large institutional clients. The growing financing needs of Gulf nations to fund their respective economic diversification drives have also resulted in the expansion in corporate banking operations. The sustained momentum in regional initial public offerings and a robust rise in the debt capital market activity have supported the market. With the rapid rise of personal wealth, boosting the number of wealth managers has also been a primary focus for asset management companies in recent years. JP Morgan plans to add more than 100 staff across the Middle East, Mary Callahan Erdoes, chief executive of the firm's asset and wealth management, said earlier this month. The move will boost the bank's regional staffing levels to about 500 from the current 370, she told delegates at the Qatar Economic Forum in Doha. Growth markets The UAE and Saudi Arabia, the Arab world's top economies, remain the biggest and main drivers of growth in the Middle East and Africa region, Mr Gori said. 'From the way we think about it, both markets need to grow. They have slightly idiosyncratic reasons for growth, which don't necessarily match,' he said. 'We need to invest both in our presence in Dubai and Abu Dhabi, and in our presence in Riyadh, if we want to capture those opportunities.' Plans are already in place to grow certain parts of the businesses in both markets, he said, declining to give specifics. Saudi Arabia is larger both in terms of equity and debt capital market activity, but the deals flow has been equally robust in the UAE. The IPO momentum in the region has driven the equity market business at a faster rate than the debt market, which is usually larger for banks around the world. 'This region has done better on ECM than DCM, for sure. So, it's kind of counter cyclical to the rest of the world,' Mr Gori said. Engine of growth Deal activity will continue to be driven by IPOs, while the rising financing needs of Gulf sovereigns for their multibillion-dollar development projects will also support future growth. While Saudi Arabia has hit some of its Vision 2030 milestones, it does not mean a slowdown in deal activity, Mr Gori said. 'I think it's business as usual in my opinion. Things come and go on as long as the narrative is correct and there is a trend, activity will come,' he said. 'There is the excitement for the region, and therefore we expect more deal activity to come.' While investment banking deals tend to be very visible and attract attention for a variety of different reasons, the actual engine of revenue growth is usually other lines of business, he said. 'Payments and markets, businesses are a larger proportion of the revenues than that of the investment banking,' Mr Gori said. 'The 50 per cent growth [over the next five years] will come from all the other lines of business from payment, securities, asset management market and so forth.'
Observer
11-05-2025
- Business
- Observer
Dealmakers hope on European revival as US stutters.
Top dealmakers are pinning their hopes on a revival of activity in Europe, with president Donald Trump's trade war having dampened expectations for US investment banking fees. At the beginning of the year, lawyers and investment bankers were anticipating that Trump would rekindle spirits and prompt firms to push ahead on pent up demand for M&A deals and equity fundraising. It hasn't worked out that way. The first quarter is disappointing, with global investment banking fees down by 10pc to $20.6bn for the first three months of this year, according to data provider Dealogic. The US has slipped by 7pc to $10.6bn for the period, while European fees have fallen even further, dropping 22pc to $4.6bn. But despite the numbers, top dealmakers in the financial district of London say that Europe is starting to benefit from the volatility that has hit the US. High hopes from Trump's election in November, when he promised to tame inflation, increase US exceptionalism and kick-start deregulation of the M&A market, have given way to caution. Global co-head of the alternative capital group at USB, Simona Maellare, said: 'In January, there was a lot of talk about animal spirit in the US and people were very negative on Europe. 'Three months later and those predictions have not come about because the M&A market does not like volatility. In Europe, sponsors are making progress, so we are seeing improved levels of activity. Overall, Q1 has been soft, but I am encouraged by the amount of activity in Europe, where we see big deals continue to happen.' Global co-head of the infrastructure and strategic investors group at JPMorgan, Guillermo Baygual, said that there was increasing optimism around European deal activity as appetite to transact has dampened in the US. 'This could end up being good for Europe, because it is forcing European nations to get their act together,' he said. 'The infrastructure fund in Germany, other infrastructure initiatives developing in European countries, the emerging plans for investment in the military across Europe, governments in Europe are supporting investment and therefore growth. Europe has big challenges, but suddenly there's a sense that things are looking up.' 'America First' policies in the US have seen European leaders coin the phrase 'Make Europe Great Again' – a nod to the red baseball cap sported by Trump supporters and Trump himself proclaiming he'll 'make America great again'. Dealmakers say that pressure for Europe to take care of itself is spurring growth. One example is the German government's plans to increase defence spending by 500bn euros in a bid to counter what its chancellor Friedrich Merz called Russian president Vladimir Putin's war of aggression against Europe'. Global head of sectors and advisory at BNP Paribas, George Holst, said that a 25pc increase in Emea (Europe, Middle East, Africa) M&A volume was spurred by 'material growth' in deals over 1bn euros, even though the number of transactions is down. 'Higher fiscal stimulus in Europe, paired with the need for greater sovereignty plus a trend of lower rates, has made Europe more attractive on a relative basis,' he said. 'The need and search for a scale is apparent in many sectors and we saw broad activity in a cross section of areas.' Bankers were also expecting an increase in equity capital markets activity after a slump in listings that has resulted in a brutal three years for the business. However, market conditions have led to clients pulling planned IPOs and struggling to price them effectively, dealmakers said. 'This recent period of volatility has reopened the debate on the sustainability of the recently reopened IPO market,' said Gareth McCartney, global co-head of ECM at UBS. 'The consensus was that 2025 would see a return to normalised IPO issuance volumes, but a slow start has questioned this, albeit we have a long way to go.' (The writer is our foreign correspondent based in the UK)andyjalil@
Business Mayor
03-05-2025
- Business
- Business Mayor
Citi del Sol: How the party ended for Wall Street bank's Málaga experiment
In 2022, as junior investment bankers complained of burnout from a record-breaking dealmaking boom, Citigroup had a solution for bringing in and retaining new talent: a better work life balance working in Spain's Costa del Sol. The US bank hired 27 analysts to work from a newly opened office in Málaga — a city favoured by tourists and Spaniards alike for its cocktail of sun, sea, restaurants and bars — promising eight-hour days and free weekends. Citi's rivals labelled it a publicity stunt that would do little to change the culture on Wall Street. But Manolo Falcó, then the bank's global co-head of investment banking, insisted 'this is not a gimmick'. Less than three years later, the office is closed and most staff moved to London. A handful of employees have been let go as the sun sets on an initiative designed to break from the traditional working conditions faced by the junior analysts who do much of the grunt work in investment banking. Citigroup selected 27 analysts from more than 3,000 applicants when it launched its Málaga hub less than 3 years ago Former employees who worked in Citi's Málaga office, as well as those involved in the project, say the reality differed to the bank's pitch, with many working long hours in the hopes of earning coveted roles in cities such as London and Paris. 'That flexibility that was marketed as the core of the offering there wasn't really respected,' said one former employee based in Málaga. 'If you want to succeed and be moved to London you couldn't do that without doing the same working hours as people there.' The project was conceived by a trio of Citi executives: Nacho Gutiérrez-Orrantia, who was then Citi's Emea head of investment banking and capital markets; María Díaz del Río, chief of staff for that business; and Falcó. The team looked across different countries, including Portugal, Poland and the Czech Republic, but landed on Spain — encouraged by the mayor of Málaga's business friendly approach. Each of the analysts hired from pool of more than 3,000 applicants was allocated to one of the industry teams in London. If they performed well at the end of a two-year period, Málaga could be a springboard to a job in the City. The project was the brainchild of three executives, including then investment banking chief Manolo Falcó © Francisco Guerra/Europa Press/AP The process was largely managed by del Río, who helped assign the junior bankers to different teams, and a senior manager was on the ground to manage shifts so that analysts did not work long hours. But former employees say the promise of a job in London, where they could be at the heart of the action, made them feel they had to work longer hours in order to stand out from their peers. 'A lot of the employees in Málaga were miserable,' said one person familiar with the initiative. 'There were lots of promises but little progression.' Citi said that its 'emphasis on fostering colleague mobility efforts and integrating our hubs' was 'evident in the successful applications by many of our colleagues from Málaga for positions in our London and Paris hubs'. The bank has not specified how many of the Málaga employees were moved to other locations. Junior analysts in Spain say they had more flexibility, but for those who wanted to move on it was a case of working the same hours as their London counterparts while earning half the salary. Read More How much do weddings cost? This one in Las Vegas is just $15 Citi analysts in Málaga said they were offered a starting salary of $55,000 while peers in major financial centres such as London and New York make upwards of $100,000. 'It's very subjective on what work you were doing,' said one employee. 'The more you were willing to commit to the cause, the more projects you got.' Some Málaga analysts viewed the job as a route to Citi's London office — and worked accordingly ©If Málaga employees were not willing to make themselves available until the early hours of the morning, they may not get allocated the more demanding mandates and that could scupper their chances of moving, they added. Banks have been grappling with how to attract and retain talent, particularly during the dealmaking boom that followed the pandemic slump when junior employees complained of burnout and 100-hour work weeks. Junior bankers at Goldman Sachs described 'inhumane conditions' in a presentation deck that triggered a flurry of new initiatives, some of which included at least one weekend day off work or a limit to the amount of hours employees could log. But a better work-life balance among junior employees stands at odds with the demands of investment banking where hours logged and hard work are often the currency to earning a promotion. One Citi employee in Málaga who moved to London called the culture inside the office 'truly special' because it had brought together young people from different nationalities who were eager to do well. 'I'll probably never get to work in an atmosphere like [the] one that I got there' again, the person said. 'There were lots of promises but little progression', one person familiar with the initiative said © Jon Nazca/Reuters But the downside of a new initiative staffed with eager 20-somethings — launched shortly before chief executive Jane Fraser kicked off a huge restructuring of the bank — was a lack of oversight from distracted Citi managers. Read More Scottish energy company 'not something we are able to do' Del Río's departure as part of the restructuring in 2024 meant there was no one to oversee the group and employees in Málaga felt forgotten about. 'It had its cons, not having your seniors there,' a former employee said. When the office first opened in the summer of 2022, there was an office manager overseeing the analyst class who stayed for almost a year, they said. Afterwards, there was a revolving door of senior people who came in and out of the office and there was a long stretch where there was no senior presence at all. 'We had a six-month span where we were completely forgotten,' said the former employee. 'When there was no manager it was pure anarchy, there were people that you wouldn't see for months, the morale was so low,' they added. There was poor attendance in the office as it became increasingly clear that Citi was likely to close it down and some employees who left for other jobs were not replaced. Citi said in a statement last week that the decision to close down the office was part of its strategy to 'simplify the firm and make improvements to how we operate'. Those involved say the Málaga office was a casualty of Project Bora Bora, the internal code name used for Citi's major restructuring. With del Río no longer at the bank and both Falcó and Gutiérrez-Orrantia in different roles, there was no one to support the cause. 'People lost focus because of [the restructuring] and without that force pushing it forward, who is backing this?' said another person involved with the programme. 'The concept was good, it was poor execution.' For many of the analysts based in Málaga, the sunshine coast was a stop-gap to a better job in London. But for those who were hoping investment banking could offer something different, Citi's proposition only put a plaster on a major issue. One of the employees said: 'They sold us the dream but the reality was much more different'.
Business Mayor
25-04-2025
- Business
- Business Mayor
Private equity executives face tougher checks on tax returns
Stay informed with free updates Simply sign up to the UK tax myFT Digest — delivered directly to your inbox. Private equity executives in the UK risk falling foul of tax rules around the reporting of carried interest, experts have warned, after HM Revenue & Customs tightened its guidance on self-assessment tax returns last month. HMRC cautioned that its compliance checks are more likely if PE fund managers' returns include 'insufficient information' on their carried interest, a performance-related reward that grants managers a share of the profits after investors above a pre-determined hurdle rate. The authority stressed it wants to see as 'much information as possible' from PE executives. Recommended Many private equity firms operating in the UK are part of international, typically US-based, firms and executives regularly use information provided by their US head offices for tax reporting purposes. However, the US runs on a calendar tax year while the UK's runs from April to April, leading to inaccuracies on UK managers' tax returns. It is not uncommon for UK managers to get information in a very 'US-centric way,' said Lewin Higgins-Green, head of Emea employment tax and reward at FTI Consulting. 'As the carry figure is for a calendar year, people will just pretend it's for the UK [tax] year and convert the USD figure into pounds and report that. Loads of people do that at the moment.' 'Technically it's never been correct and you shouldn't have been doing that, but lots of people did,' he added. HMRC warned this could open them up to receiving penalties — which are on a sliding scale of 0 to 100 per cent of the tax due — for not 'taking reasonable care'. Read More The valuation of the Mag 7, revisited In its updated guidance, HMRC acknowledged the difficulty PE executives face, but added that this difficulty 'does not alter the statutory obligation' on a UK tax resident to account for the correct amount of tax on any carried interest. 'If HMRC suspects the right amount of tax has not been paid, it will take action.' Tax experts at Macfarlanes law firm said HMRC's change to its guidance 'has the potential to cause concern' for executives in the PE industry. 'The new guidance is likely to increase the compliance burden and, potentially, the risk of challenge for individuals who have previously relied on non-UK specific tax reporting information in preparing their returns,' two of its associates wrote on its website last month. The note continued: 'HMRC's example of a US tax form being insufficient is particularly unhelpful, since many fund managers use at least some non-UK focused tax reporting information in preparing their tax returns and this approach has, broadly, been accepted by HMRC to date, where UK specific information is not readily available.' Higgins-Green said that part of the difficulty for executives stemmed from the UK's unusual tax year. The 12-month reporting window has ended in April since the UK switched from the Gregorian calendar in the mid 1700s. 'It's very bizarre that we in the UK stick rigidly with our April 6-April 5 year, it makes it really difficult for people who have global things going on,' he said. HMRC said: 'We've not changed the way carried interest should be reported. Everyone is responsible for their own taxes and our updated guidance will help customers get it right first time, reducing the risk of a compliance check.'
Business Times
24-04-2025
- Automotive
- Business Times
Europe: Stoxx 600 up as automakers, materials gain; Trump policy shifts in focus
[BENGALURU] European shares ended higher on Thursday (Apr 24), boosted by automakers and materials stocks, as investors digested a mixed set of corporate earnings and evaluated the ever-shifting US trade rhetoric. The pan-European Stoxx 600 index erased earlier losses to close 0.4 per cent higher, building on this week's rally. An index of automobiles and parts led the gains with a 1.9 per cent jump, with French carmaker Renault advancing 4.4 per cent after reporting a small rise in first-quarter revenue. The basic resources index added 1 per cent, making its fourth straight session of gains on the back of elevated copper prices despite US tariff-related uncertainties. The White House suggested on Wednesday its openness to lowering sweeping tariffs on China. Treasury Secretary Scott Bessent said high tariffs between the US and China were not sustainable, but also pointed out that a reduction would not come unilaterally. 'Right now, markets are focused on whether a deal is forthcoming or not... the market just wants some certainty, be it certainty with a deal or certainty without a deal,' said Geoff Yu, senior Emea market strategist at BNY. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Also aiding the broader mood was US President Donald Trump backtracking from his series of criticisms of Federal Reserve chair Jerome Powell, which included calls for Powell's resignation. The European benchmark has recovered over half of its losses from its near 18 per cent drop from record highs earlier this month after Trump's import tariffs triggered fears of a global recession. On the day, banks limited overall gains, falling 1 per cent. France's BNP Paribas fell 2.1 per cent after the lender reported mixed quarterly results. The telecommunications index also lost 0.8 per cent, with Finnish telecom firm Nokia sliding 9.4 per cent after the company missed first-quarter profit expectations. Shares in Adidas rose 2.9 per cent after the German sportswear and apparel maker reported first-quarter sales and profit above expectations. Belimo jumped 12.4 per cent – the top individual gainer for the day – after the heating and ventilation solutions maker upgraded its 2025 guidance for revenue growth and Ebit margin. Kering dipped 1 per cent, paring early losses, after the luxury group reported a bigger-than-expected decline in first-quarter revenue. The German government cut its economic growth forecast and said it sees stagnation in 2025 instead of a 0.3 per cent expansion. The German Ifo index data showed a surprise improvement in business morale in Europe's biggest economy for April, a day after dour PMI readings for the euro zone and Britain. REUTERS
