Big trouble for two West Coast banks

Two issues to begin: First, JPMorgan Chase is suing Jes Staley, a former prime government, in an try and make him responsible for any penalties the US financial institution might need to pay whether it is discovered to have facilitated Jeffrey Epstein’s intercourse trafficking crimes in two high-profile lawsuits.

Subsequent, EY has “paused” its plan to separate in two amid a fierce dispute over how a lot of its tax enterprise ought to stick with the audit facet of the agency.

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In at present’s publication:

Two banks face a reckoning
Yannick Bolloré steps as much as the plate
Activists circle The Restaurant Group

Two banks uncover the music is stopping in personal markets and crypto

Silicon Valley’s tech bankers have had a grotesque 12 months as their shoppers cancelled listings, paused M&A, cratered in valuation and, in some circumstances, imploded.

There are contemporary indicators of fragility in California’s tech ecosystem now that the previous decade of low cost cash, low losses and straightforward beneficial properties has handed.

On Wednesday night, Silvergate Capital, a publicly listed lender that when managed greater than $16bn in belongings announced plans to liquidate and wind down. It’s one of many first blow-ups of a giant, publicly listed financial institution for the reason that monetary disaster.

Silvergate’s demise adopted the broader implosion of the cryptocurrency business, led by the financial institution’s most notorious customer: FTX, the failed alternate based by Sam Bankman Fried.

Lately, Silvergate had grown from a small lender based mostly in San Diego into one of many fastest-growing bankers for crypto shoppers together with FTX. Crypto teams used Silvergate to deposit and switch billions of {dollars} in money every month, DD’s Tabby Kinder reported in detail in December.

Final yr, a sequence of crypto buying and selling disasters fuelled a wave of bankruptcies. The biggest was FTX, which filed for Chapter 11 in November due to an enormous capital gap. US prosecutors have since charged SBF with what they allege to be one of many largest frauds in US monetary historical past.

Silvergate was hit laborious. In January, it reported a $1bn loss as crypto shoppers pulled funds in a splash for money. It pressured the financial institution to promote bonds on its steadiness sheet that had fallen in worth as rates of interest skyrocketed final yr, realising an enormous loss that finally spurred its demise. (Silvergate is planning to repay all depositors.)

Silvergate has employed Centerview Companions, Cravath, Swaine & Moore and Strategic Danger Associates to assist with winding it down.

On Wednesday, one other California-based lender revealed monetary troubles.

Silicon Valley Financial institution, which has grow to be a vital participant in financing US start-ups, shocked Wall Street with a big loss and plans to lift contemporary capital.

SVB launched a $2.25bn share sale after struggling a big loss on its portfolio of US Treasuries and mortgage-backed securities because it grappled with rising charges and a money crunch at most of the start-ups it helped finance.

The loss stems from promoting $21bn of securities which meant that the lender would realise a $1.8bn loss as rising charges crimped their worth. Personal fairness agency Basic Atlantic, a longtime consumer, will backstop $500mn of the share providing.

SVB is a well-recognized identify to most of the largest personal capital corporations as a result of it presents subscription financing to buyout funds and loans to their companions. (The FT dove deep into its dangers final month.)

The troubles sign that fast-rising charges and depleting money for start-ups are starting to gas a monetary reckoning.

Vivendi’s new inheritor takes the throne

Regardless of formally giving up his function as chair of Vivendi’s supervisory board to his son Yannick Bolloré almost 5 years in the past, the billionaire company raider Vincent Bolloré has by no means been too removed from the motion on the French media group.

He carried out a gruelling battle for control of Lagardère and spun out Common Music Group earlier than following by way of on a protracted publicly declared promise to retire final yr on the 2 hundredth anniversary of the Bolloré Group.

Effectively . . . type of. The grasp dealmaker has retreated a bit from the limelight and left his two sons in command of the household’s firms however he nonetheless weighs in on huge choices.

Within the media a part of the Bolloré empire, the place Yannick is in cost, he faces a critical test: proving that Vivendi is a coherent firm, not a disparate set of holdings.

“The problem we now have at Vivendi is to show that we’re an built-in industrial group,” he instructed the FT’s Adrienne Klasa.

Yannick Bolloré is chair of the advisory board of the conglomerate his household controls © AFP through Getty Photos

Following the spinout of UMG — now valued at €40bn — Vivendi has slimmed right down to a worth of €10.8bn, with belongings together with pay-TV with Canal Plus, promoting company Havas and print magazines.

That portfolio is ready to develop considerably if the youthful Bolloré can efficiently persuade European competitors watchdogs to approve the deal that his father had spent years combating for: a takeover of rival Lagardère, which owns e-book writer Hachette and politically influential titles equivalent to Paris Match and the Journal du Dimanche.

That’s so long as Vivendi can placate regulators in Brussels by spinning off its personal French-focused publishing enterprise, Editis, and promoting its remaining stake.

An alliance of businessmen Stéphane Courbit, Daniel Kretinsky and Pierre-Edouard Stérin has submitted a bid for the Editis stake, as has Canadian group Quebecor and media group Reworld. The customer is predicted to be chosen quickly.

Yannick hopes to have a ultimate response from the EU on shopping for Lagardère by early summer time.

Within the meantime, he’s working to co-opt the group’s holdings, equivalent to utilizing materials developed in its publishing homes to create tv sequence for Canal Plus and construct worth.

Vincent Bolloré, identified for his conservative views, has long thought that French media is just too leftwing and has sought to construct a counterweight, in line with individuals accustomed to his considering.

DD is curious to see — ought to regulators approve the Lagardère takeover — whether or not Yannick shares his father’s politics.

Too many cooks in TRG’s kitchen

The Restaurant Group, the British group behind eateries Frankie & Benny’s and Wagamama, has come underneath strain from a pair of activist buyers. However up to now, the corporate isn’t allotting what has been ordered.

On Wednesday, London-listed TRG said that it intended to close 35 of its worst-performing websites and introduced a three-year plan to spice up working margins.

However Hong Kong hedge fund Oasis Administration, which has a 6.5 per cent stake within the group, was possible left feeling unhappy. TRG may offload its Brunning & Value pub chain for a valuation of £250mn, it had recommended, signalling that it will push for the departure of chief government Andy Hornby if he failed to spice up efficiency.

Hornby instructed the FT this week that TRG’s newest step “actually isn’t” a concession to Oasis.

The strain on TRG has additionally elevated with the arrival of one other activist investor, New York’s Irenic Capital Administration, which has beforehand been concerned in conditions such because the proposed merger between Rupert Murdoch’s Information Corp and Fox companies.

TRG administration has sought to play it cool, with Hornby stressing he isn’t feeling the warmth from the activist funds. The temperature is rising nonetheless.

Job strikes

Wall Avenue dealmaker Raymond McGuire, who left Citigroup to run in New York Metropolis’s Democratic mayoral major, has joined the impartial funding financial institution Lazard as president.
London-based Goldman Sachs dealer Riccardo Riboldi is leaving the agency, marking one other exit from its equities division in latest weeks alongside that of newly retired veteran Joe Montesano.
JPMorgan Chase has appointed head of personal capital markets Keith Canton to guide its equities capital markets group for the Americas, in line with a memo seen by DD. He replaces Jeff Zajkowski, who retired in March 2022.
Citigroup has promoted London-based managing director Federico Monguzzi to go of actual property for Europe, the Center East and Africa.

Sensible reads

Fortune telling M&A bankers can not often predict the longer term. Reuters Breakingviews dissects their typically overly optimistic strategies for forecasting offers. Trace: it’s not an exact science.

Financiers on the sector The world of sports activities possession has proved more elusive for Wall Avenue gamers David Tepper and Steven Cohen, The Lex E-newsletter writes. Sign up to get it in your inbox each Wednesday and Friday.

And one good pay attention The FT’s Behind the Cash podcast digs into the extraordinary rise of Abu Dhabi’s Worldwide Holding Firm.