Morning Coffee: Curious case of the finance CEO not in a romantic relationship with a subordinate. M&A bankers are not on fire at BNP Paribas

When John Neal, ex-chief executive of insurance broker Lloyd's of London stepped down as CEO after six years in January 2025, Lloyds seemed a bit regretful. Neal had delivered some "outstanding financial performance," it said. He'd also been "instrumental" in promoting the insurance industry to "critical stakeholders." Neal sounded like a fun guy. For his part, Neal said he was "forever grateful" to his colleagues there. A LinkedIn post showed him giving a valedictory speech in a flower-filled atrium while those colleagues looked on in mournful deference.

Since then, the flowers have wilted. Yesterday, Lloyd's issued a statement saying that if Neal still had deferred stock bonuses, it would withhold them. His reign was marked by "serious failings," "serious failures" and conduct "detrimental to the interests" of Lloyd's, said Lloyd's. If Neal is still grateful, his ex-colleagues are not.

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What occurred to change Lloyd's mind? Unproven allegations of a romantic relationship with a subordinate. Neal was accused of giving preferential treatment to his chief corporate affairs officer, a woman whom we estimate to be around 20 years his junior. There were suggestions of an unfair promotion. Senior people at Lloyd's raised concerns. Lloyd's says Neal undertook to modify his conduct, but did not do so in a "material" way. 

The claims have taken their toll on Neal's career. He left Lloyd's to join Aon; then he dropped Aon to join AIG; then AIG said he wouldn't join due to "personal circumstances." However, things are looking up. In a message to us yesterday, Neal said he now feels vindicated and able to move on. "I look back on my time at Lloyd's with real pride, and wish the Corporation and the Market every continued success in and for the future. My focus is solely on what’s next in my career.” 

Neal's vindication comes from the fact that even after a lengthy investigation by a law firm, Lloyd's said it was unable to find "conclusive evidence" that he was in a relationship with the chief corporate affairs officer. Nor was it able to find process failures relating to her promotion. The chief corporate affairs officer has engaged her own lawyer who told the Financial Times that Lloyd's had decided against her client "on the pretext of ‘perception’, the source of which was rumour, gossip and innuendo.” Neal himself tells us he was not at all surprised that the investigation found no inappropriate relationship and that this was "never in doubt." 

Why would Lloyd's like to retain Neal's stock, then? It points to his incorrect handling of whistleblowing reports, his failure to modify undefined elements of his conduct in relation to the corporate affairs officer with whom he was at least found to be "sufficiently close" that eyebrows might be raised, and failure to meet "the standards of judgement, transparency and accountability expected of a Lloyd's Chief Executive." Neal also declined to handover his phone for his text messages to be scrutinised. 

It's notable that Lloyd's can't retain Neal's deferred stock anyway. He gave it back when he left for AIG. But if it could, this is why Lloyd's says it would. 

Despite the vindication, none of this sounds like a great reference. In the midst of intern season in investment banks, it should be a reminder that  irreproachable behaviour is advisable at all times. 

Separately, M&A bankers are on fire. But they are not on fire at BNP Paribas.

Bloomberg has spoken to Wendy Stewart, president of global commercial banking at Bank of America. Speaking of M&A, Stewart said: “It feels like it’s been strong for the last 18 months and we still have a strong pipeline ahead, so I don’t see that we’re anywhere near the end.” Stewart is not necessarily an M&A banker, but Bloomberg notes that Jeremy Barnum, CFO at JPMorgan also declared last week that M&A “remains quite robust, and the current activity levels seem to be encouraging more activity.”

This follows a 41% increase in year-to-date M&A activity globally according to Dealogic. In Europe, Dealogic say M&A revenues are up 74%. M&A bankers everywhere should be thriving. 

Sadly, this does not seem to be the case at BNP Paribas. The French bank reported its second quarter results today and the Financial Times notes that revenues in its global banking and advisory unit rose by the merest 4% in the second quarter.

BNP's M&A bankers seem to have faltered. The French bank also said today that although it was an "outstanding quarter" for infrastructure, real assets and DCM, its "recent wins" in M&A are in fact weighted to the second half of this year. Despite this, BNP said it ranks third for M&A across EMEA; Dealogic appears to put it 6th. 

BNP's M&A bankers will therefore need to make amends in the months to come. The French bank has been busy adding senior M&A bankers in an effort to scale the league tables. Speaking earlier this year, George Holst, BNP's head of corporate coverage, declared that the bank had no urge to be a top three M&A house but was nonetheless ambitious and humble for its M&A future. 

Humility seems necessary after Q2.

Meanwhile...

Jamie Turturici, head of TMT equity capital markets at Barclays says it's “a golden age” for tech IPOs. (Bloomberg) 

Citi hired itself five new tech MDs. Three came from JPMorgan. They are: Chris ​Groe (ex-BofA), Josh Sheets (ex-UBS), Florian Path, Dhruv Fotadar and Anand Agarwal. (Reuters) 

Singaporean hedge fund managers are leaving for Hong Kong. Roles that don’t strictly require a Singapore presence now default elsewhere, and several global managers have excluded the country from consideration for new regional setups. (Bloomberg)

Citadel Securities has got a new office in Amsterdam. You will find five people in it. (FT)

Prologis wants to acquire UK property group Segro for £13.5bn but it says Segro is relying on “very aspirational” projections for its revenues and wrongly resisting its overtures. (FT)

There aren't enough operating partners to improve private equity investments in Asia and for this reason some private equity firms are foregoing investments in the first place. (Bloomberg) 

Private capital firms' shares are down 20% in the past 12 months. Big investment banks' shares are up 18%. (FT) 

Raising money in Saudi Arabia is not as easy as it was. But it's all very dynamic because so many people there are aged under 30. (The iBanker) 

Ex-Citadel portfolio manager Matthew Smith has got a newly launched fund called Chronometer Partners which is backed by CPP Investments, and is now on the fundraising trail again. (Financial News) 

Daiwa is doubling its institutional salesforce to 20 people. (Bloomberg) 

Morgan Stanley is generating wealth revenues from SpaceX millionaires. They are a "gift that keeps on giving." (Bloomberg) 

A cautionary tale about investing in railways. Wes Edens, a co-founder of Fortress Investment Group, led a $3.5bn buyout of a freight carrier, Florida East Coast Railway, in 2007. Florida East Railway was supposed to achieve 8m riders by 2026; last year it only had 3m. Now it's engaged in a $6bn debt restructuring. (Financial Times) 

OpenAI had caged some models in a “sandbox,” that didn’t have access to the internet. But the AI software used its hacking skills to break out. It found a way to get online, and then hacked into Hugging Face’s network. (WSJ) 

Isabel Rose from London said a British banker raped her in Hong Kong. She then tried to extort £100k from him. A court said she "took advantage of [the man]'s kindness, naivety, friendship and romantic interest," and jailed her for six years. (BBC)

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