Latest / Masters in Business / BONUS: JP Morgan Co-Head of Global Banking Filippo Gori

Transcript

BONUS: JP Morgan Co-Head of Global Banking Filippo Gori · Masters in Business

0:02
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in
0:11
Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
0:17
Speaker 2: This week on the podcast What a Fascinating Conversation. Felipe
0:21
Speaker 2: o Gory is co head of Global Banking at JP Morgan.
0:26
Speaker 2: He has started in London and eventually moved over to
0:31
Speaker 2: Hong Kong, where he worked for thirteen years before coming
0:34
Speaker 2: recently to New York. He's seen just about every aspect
0:38
Speaker 2: there is when it comes to commercial corporate investment banking
0:42
Speaker 2: around the world. I thought this conversation was quite fascinating,
0:46
Speaker 2: and I think you will also with no further ado
0:49
Speaker 2: JP Morgan's Felipe.
0:51
Speaker 3: O'gory, thank you for having me.
0:53
Speaker 2: I'm fascinated by the mispronunciation of your name, Philippe o'gory.
0:58
Speaker 2: Did the people when Hong Kong really think you we
1:02
Speaker 2: were Scottish or Irish at the beginning when I just
1:05
Speaker 2: moved to Hong Kong, people were surprised when I arrived
1:08
Speaker 2: there because the way they pronounced my name and surname
1:12
Speaker 2: it sounds more.
1:12
Speaker 3: Like Philip Ogori, so they were expecting an Irish or
1:16
Speaker 3: a Scottish person. Then they had an Italian, so they
1:18
Speaker 3: had to adjust to that.
1:19
Speaker 2: That's very that's very funny. So let's roll a little back.
1:23
Speaker 2: Before Hong Kong you get your Masters of Science and
1:27
Speaker 2: Economics zumma cum laude from is that Boconi or University
1:32
Speaker 2: in Milan was markets and investment banking always the career plan.
1:37
Speaker 3: Absolutely not the plan, well, not that I really had
1:41
Speaker 3: any plans back then, but my passion was and still
1:46
Speaker 3: his history. So my idea was I was gonna I
1:50
Speaker 3: grew up in rural Tuscany and I'm the by product
1:56
Speaker 3: of the Italian state education. So you have you take
1:58
Speaker 3: your high school exam at the age of nineteen, and
2:02
Speaker 3: then you applied to university. So in the three months
2:06
Speaker 3: between finishing high school and deciding where you go to university,
2:09
Speaker 3: I thought I was gonna go and study history in Florence.
2:13
Speaker 3: But my dad, who has been a central figure in
2:16
Speaker 3: my life, and it suggested to me, why don't you
2:21
Speaker 3: apply to Boconi University. I didn't really have an idea
2:26
Speaker 3: what it was, and I only knew it was in Milan,
2:29
Speaker 3: and maybe more to please him, I took the tests
2:34
Speaker 3: and I went on with the rest of my holidays
2:39
Speaker 3: summer holidays, and then I got accepted to Boconi and
2:45
Speaker 3: I decided to go there, but with no real plans.
2:50
Speaker 2: Back then, well, you mentioned you were a history thinking
2:54
Speaker 2: about going into history. You taught classical civilization in the UK.
3:00
Speaker 2: Tell us was the academic career ever in the cards.
3:05
Speaker 3: Yeah, so when I when I finished with Boconi, I
3:10
Speaker 3: thought I was going to do I graduated in economic
3:13
Speaker 3: history and I thought I was going to do a
3:16
Speaker 3: PhD in that in that in that topic. Back then
3:19
Speaker 3: there was a rule whereby you are not allowed to
3:22
Speaker 3: move from master to PhD. Story the way, you need
3:25
Speaker 3: to work for a couple of years and then you
3:27
Speaker 3: apply for the for the pH d. And thefore it
3:31
Speaker 3: made sense to think about, okay, you know what, I'm
3:33
Speaker 3: gonna remain in academia as I started thinking about the
3:38
Speaker 3: dissertation that I that I will work on for my PhD.
3:42
Speaker 3: And therefore I, for a variety of totally strange reasons,
3:47
Speaker 3: I ended up as a teacher in North Yorkshire in
3:50
Speaker 3: an English college, teaching Italian as a foreign language and
3:54
Speaker 3: classical civilization too. And and then by you are chance,
4:01
Speaker 3: I stepped into the opportunity to apply to JP Morgan
4:06
Speaker 3: and I applied to JP Morgan and kind of I've
4:10
Speaker 3: never left since then.
4:11
Speaker 2: That was London in nineteen ninety nine. Yes, so first
4:15
Speaker 2: you start, did you start in markets or an asset
4:20
Speaker 2: management or banking?
4:22
Speaker 3: I started, that's a very good question. I started in
4:24
Speaker 3: a graduate program back then. So I joined jupy Morgan
4:27
Speaker 3: pre merger which Chase. It was a tiny back then
4:31
Speaker 3: global institution of around fifteen thousand people globally, think about
4:35
Speaker 3: now we have three hundred and thirty thousand. We had
4:39
Speaker 3: lost the covert raising back in the middle of the
4:44
Speaker 3: nineties and it was a bank they had was trying
4:49
Speaker 3: to find it, so its roots back. So we were
4:53
Speaker 3: not one of the five broker dealers that were the
4:58
Speaker 3: shining object of the era. We were probably a tier
5:02
Speaker 3: two of not theater institution back then. And I joined
5:07
Speaker 3: in a graduate program called internal Consulting Services. The idea
5:10
Speaker 3: was they were hiring the most diverse people with the
5:14
Speaker 3: most diverse of the backgrounds, hence somebody like me to
5:19
Speaker 3: work on a variety of different things, including the Internet,
5:23
Speaker 3: which was something that was coming to be back back then.
5:28
Speaker 3: So they hired me and the idea was you would
5:30
Speaker 3: rotate in this graduate program every three months on a
5:33
Speaker 3: different in a different part of the firm, so you
5:38
Speaker 3: learn how the firm operates and you can decide how
5:42
Speaker 3: you can help interjecting Internet into all of this. My
5:46
Speaker 3: first rotation was in asset management. My second rotation was
5:49
Speaker 3: in CRM Client Relationship Management, believe it or not. And
5:54
Speaker 3: then as back then literally the world was so small,
5:59
Speaker 3: they say, okay, suddenly they need an analyst in the
6:02
Speaker 3: Milan office to do effects seeds. They look around, they say,
6:06
Speaker 3: who is the last Italian who has joined us? Well,
6:08
Speaker 3: somebody says, there's this guy in I've seen him around.
6:13
Speaker 3: So they called me up and say, okay, do you
6:15
Speaker 3: know one plus one? Kind of that was the interview,
6:18
Speaker 3: say okay, you moved to Milan to do effects seeds.
6:21
Speaker 3: So that's how we moved to markets to do effectsis
6:25
Speaker 3: and then things the merger which has happened, they brought
6:28
Speaker 3: me back to London. I moved to the rivatives and
6:31
Speaker 3: I grew up in the mark on the market side
6:33
Speaker 3: of the business.
6:34
Speaker 2: So London to Milan and then what brought you to
6:37
Speaker 2: Hong Kong in twenty thirteen.
6:39
Speaker 3: In twenty thirteen, that's another interesting story. So we need
6:46
Speaker 3: to wind the clock back. It's twenty twelve. I'm in discussion.
6:53
Speaker 3: I've been running SOUDI in Europe for quite some time
6:56
Speaker 3: when with a friend who was my co head back then,
6:59
Speaker 3: and and the opportunity to move to New York started
7:04
Speaker 3: to develop. So I discuss with my wife, who back
7:10
Speaker 3: then was working at Bank of England, whether she can
7:12
Speaker 3: be seconded to the FED and so on and so forth.
7:16
Speaker 3: So the conversation starts happening as okay, you know what,
7:20
Speaker 3: after twelve years or thirteen years at the firm in London,
7:24
Speaker 3: we're going to move to New York. And then suddenly
7:30
Speaker 3: May twenty twelve London whale happened and the decision will say,
7:34
Speaker 3: forget about it, you stay put. Back then, my wife
7:39
Speaker 3: said to me, please, please, I know that Asia is
7:43
Speaker 3: not on your cards you want to move to New York,
7:45
Speaker 3: but if there is ever the opportunity to move to Asia,
7:49
Speaker 3: please promise me that you will consider it. And as
7:52
Speaker 3: every Italian man do, of course, Darling absolutely So roughly
7:56
Speaker 3: a year later I get a call and and from
8:00
Speaker 3: my boss then said okay, Daniel Pinto was our the
8:04
Speaker 3: see of the CIB back then, it wants to see
8:07
Speaker 3: you tomorrow to discuss about an opportunity to move to
8:10
Speaker 3: Hong Kong. Don't don't see to it thinking it about
8:16
Speaker 3: too much. There's an external there. They're considering somebody externally too,
8:21
Speaker 3: So make up your mind pretty quickly, so as you
8:23
Speaker 3: do in those circumstances. An Italian man, I, whether did.
8:27
Speaker 3: I sent a text to my wife and the text
8:29
Speaker 3: was something along the lines darling, maybe tonight after dinner
8:32
Speaker 3: we should have a conversation because there is an option
8:35
Speaker 3: to move to Asia, but itally unlikely. I'm not so sure,
8:38
Speaker 3: she replied. Five minutes later, tell them that we're going.
8:43
Speaker 3: So the following morning, when I went to interview with
8:45
Speaker 3: the boss, say that's fine, whatever than you, We're going. So, literally,
8:49
Speaker 3: I moved to Hong Kong. I never been to Hong
8:52
Speaker 3: Kong in my life.
8:53
Speaker 2: Wow.
8:54
Speaker 3: And I've never been to Asia in my life. But
8:58
Speaker 3: the family was happy or exces so it was a
9:01
Speaker 3: family adventure, so we took it like that. Literally. The
9:07
Speaker 3: further ist I had been was India, but I'd never
9:10
Speaker 3: been to Asia when I moved there.
9:12
Speaker 2: Why was your wife so enthusiastics and Asia? Had she
9:16
Speaker 2: been before?
9:16
Speaker 3: She had traveled around Asia definitely already she had been
9:20
Speaker 3: to Japan and other parts of the region.
9:23
Speaker 2: And pen and Hong Kong very different.
9:25
Speaker 3: Very different, and she won. She said, it's the right time.
9:30
Speaker 3: We were both late thirties, the girls were still young.
9:35
Speaker 3: Life is about the journey, and before it was the
9:40
Speaker 3: right thing to do. Interestingly enough, from a career standpoint,
9:46
Speaker 3: was a totally non traditional choice. And everyone was saying
9:51
Speaker 3: to me, you're going to come back in a body
9:53
Speaker 3: bag or there was this Acronymy filth failed in London
10:00
Speaker 3: Hong Kong because there was a little bit idea back
10:04
Speaker 3: then that if you were not good enough to operate
10:07
Speaker 3: in Europe, they used to ship you to Asia, back
10:11
Speaker 3: from the colonial days.
10:12
Speaker 2: I was gonna say that might have been true fifty
10:15
Speaker 2: years ago, well, but in the nineties and two thousand.
10:18
Speaker 3: Well still there was that view. So but we went
10:22
Speaker 3: there and we loved it. We absolutely loved the Hong
10:26
Speaker 3: Kong to the point that we spent twelve years there.
10:28
Speaker 2: Wow. So obviously there's a bit of culture shock, but
10:33
Speaker 2: I'm really interested in what was it like being an
10:37
Speaker 2: Italian who worked in London now going to an entirely
10:42
Speaker 2: different culture, different way they do business. How challenging was
10:47
Speaker 2: that transition.
10:49
Speaker 3: It was interesting in the sense that I thought the
10:53
Speaker 3: new diversity because back then I was running Southern Europe.
10:56
Speaker 3: Italyis paying Greece and Portugal, which although common there are
11:02
Speaker 3: commonalities from a cultural standpoint, they are a different way
11:05
Speaker 3: of doing business. And I know that for US and
11:09
Speaker 3: Italian and Spaniards are not the same things, the same thing.
11:12
Speaker 3: But largely the reality is that we have we have
11:15
Speaker 3: a lot in common culturally. So you move to Hong
11:19
Speaker 3: Kong and you run a region of sixteen sixteen seventeen
11:22
Speaker 3: countries that is truly, truly diverse. And the best definition
11:29
Speaker 3: that I got of Asia was it's a conglomerate of
11:33
Speaker 3: countries that happens to share the same time zone.
11:36
Speaker 2: But that's it.
11:37
Speaker 3: And even that definition is wrong because if you think
11:40
Speaker 3: about well into And in New Zealand and Mumbai in
11:43
Speaker 3: India seven and a half hours, so it's wider than
11:46
Speaker 3: the US, So they have really nothing in common. So
11:49
Speaker 3: you spend a lot of time try to understand how
11:55
Speaker 3: the business operates around you, and there is no way
11:59
Speaker 3: that you manage to do it unless you put the experience.
12:02
Speaker 3: You put the years. So after twelve years. I feel
12:07
Speaker 3: I am comfortable in understanding how Asia operates, but it
12:12
Speaker 3: took me truly a long time.
12:14
Speaker 2: So I was going to ask you, say, how Asia operates.
12:19
Speaker 2: But sixteen different countries, different regulations, different ways of doing business,
12:24
Speaker 2: different cultures, different languages.
12:25
Speaker 3: Absolutely, So let me give you an example. You go
12:29
Speaker 3: to Japan, it's not so important what is said in
12:35
Speaker 3: the meeting, but what is not said in the meeting
12:37
Speaker 3: and how it is and the concept of face and
12:39
Speaker 3: how things operate. You go to Australia at the opposite
12:43
Speaker 3: end of the region, and it's very much in your face.
12:47
Speaker 3: They tell you very clearly what they think of you,
12:50
Speaker 3: and so on and so forth. And then you have
12:52
Speaker 3: between these two extremes you have every shape and things.
12:58
Speaker 3: So it takes time, but it's fascinating and I loved
13:03
Speaker 3: the getting to know the culture, getting to know their history,
13:06
Speaker 3: getting to know quote unquote the biases, getting to know
13:10
Speaker 3: the opportunities and if you think about it, and this
13:15
Speaker 3: is probably not well known, but by most likely by
13:19
Speaker 3: the end of this decade, fifty percent of the global
13:21
Speaker 3: GDP will be housed in Asia Pacific and the second,
13:26
Speaker 3: third or fourth largest countries from a GDP standpoint will be.
13:30
Speaker 2: Asians, China, Japan, Korea is.
13:33
Speaker 3: Now China, India, Japan.
13:35
Speaker 2: Most likely South Korea doesn't make the top South.
13:38
Speaker 3: Korea doesn't make the top four.
13:40
Speaker 2: Really really interesting to say nothing of Taiwan, and obviously
13:45
Speaker 2: Vietnam and other countries.
13:47
Speaker 3: Are Australia, which is a continent in itself with all
13:53
Speaker 3: the peculiarities. So it is a remarkable, interesting region that
13:59
Speaker 3: is not well understood both from an opportunity standpoint and
14:03
Speaker 3: the challenges standpoint, And it's interesting. In Chinese. The sign
14:08
Speaker 3: for opportunity and challenge is the same.
14:12
Speaker 2: Really really interesting. English the universal language over there, or
14:16
Speaker 2: was so when you're when you're in obviously Australia New
14:22
Speaker 2: Zealand is going to be easy, but when you're in
14:25
Speaker 2: China or easier. Two people separated by a common language.
14:32
Speaker 2: Is the old joke about America and the UK. But
14:35
Speaker 2: what was it like trying to communicate in places like,
14:38
Speaker 2: you know, Thailand or Vietnam or the Philippines.
14:42
Speaker 3: English is in Southeast Asia, English is more widely used
14:49
Speaker 3: for historical reasons. Think about Singapore, Thailand and some of
14:56
Speaker 3: the alone Malaysia and so on and so forth. In
15:00
Speaker 3: North Asia, it is not as widely used, and therefore
15:05
Speaker 3: you need to learn how to communicate through two translations
15:12
Speaker 3: or the whole ritual that there is at times related
15:16
Speaker 3: to the translation, and at times, especially in the mainland
15:20
Speaker 3: in China, even in meetings where your audience will speak English,
15:26
Speaker 3: the meeting will be held in Chinese with the translations.
15:29
Speaker 3: So there is a whole understanding on how you operate
15:33
Speaker 3: in those countries that is complicated.
15:39
Speaker 2: So you've said that the corporate outlook has remained very
15:43
Speaker 2: resilient despite it seems like an endless run of geopolitical uncertainty.
15:49
Speaker 2: We've had tariffs, we've had wars, we've had inflation. What
15:56
Speaker 2: are people in various regions doing to cope with and
16:00
Speaker 2: what underlines this ongoing resiliency.
16:04
Speaker 3: So the resilience is probably one of the biggest surprising
16:08
Speaker 3: factors of twenty twenty six. If you think about what
16:12
Speaker 3: has been put through the global economy in the last
16:17
Speaker 3: couple of years, the global economy has been exceptionally exceptional resilient.
16:23
Speaker 3: This is through of the world. Then, depending on where
16:28
Speaker 3: you are around the world, clients are focused on, regulators
16:33
Speaker 3: or governments are focused on different topics. So if you start,
16:41
Speaker 3: for instance, with the US, clearly the economy is doing
16:45
Speaker 3: fantastically well and there is a sense of how can
16:51
Speaker 3: we continue to dream about outcomes that were not even
16:57
Speaker 3: possible a few years back, and how we can participate
17:00
Speaker 3: in this incredible engine of growth at this super resilient economy.
17:05
Speaker 3: There are some concerns around inflation. Every now and then
17:09
Speaker 3: you hear people talking about it, but generically, and this
17:12
Speaker 3: tells a lot about the cultural attitude store of different
17:16
Speaker 3: places in the world. Here there is a sense of
17:18
Speaker 3: optimism that is clearly, clearly palpable. You move to Europe
17:25
Speaker 3: and the environment is resilient. Europe is doing to a
17:30
Speaker 3: certain extent better than at times we give it credit for,
17:34
Speaker 3: but it is preparing for a heavy electoral cycle that
17:38
Speaker 3: will come next year. Italy will go to election, the
17:41
Speaker 3: parliament will come to an end next year, so we'll
17:45
Speaker 3: do France and the UK most likely will have a
17:50
Speaker 3: new prime minister after the summer. So there is already,
17:54
Speaker 3: as you go around Europe a sense of we are
17:57
Speaker 3: beginning the electoral cycle. There is concerns around inflation in
18:04
Speaker 3: Europe spilled over from from the Iran crisis and how
18:08
Speaker 3: would that prompt acy be which has already high grates,
18:11
Speaker 3: and how would that shape the European economy. There is
18:14
Speaker 3: a war on the eastern border with Russia, between Ukraine
18:18
Speaker 3: and Russia that is impacting the rest of the of
18:21
Speaker 3: the region and it's shaping the way leaders and business
18:24
Speaker 3: leaders are thinking about the future. And there is to
18:29
Speaker 3: a certain extent a sense of admiration looking towards the
18:34
Speaker 3: US and the sense of there is is there more
18:37
Speaker 3: that can be done to make Europe like the US.
18:42
Speaker 3: Then you go to the Middle East. Clearly, the Middle
18:44
Speaker 3: East is still recovering from what's going on, but that
18:47
Speaker 3: part of the world is for sure the winner in
18:53
Speaker 3: a global South narrative for a variety of different reasons.
18:57
Speaker 3: In the Middle Easts it will remain a winner of
19:00
Speaker 3: the global South narrative for a variety of different reasons.
19:04
Speaker 3: Noway standing the geopolitical headwinds, and you can see the
19:08
Speaker 3: investments that are still going there and they will keep
19:11
Speaker 3: on going there. There is an infrastructural shift in the
19:15
Speaker 3: way the Middle East thinks also in building infrastructure that
19:19
Speaker 3: is fundamental. Then you go to Africa, which is a
19:24
Speaker 3: supremely important content for a variety of different reasons, very
19:30
Speaker 3: probably the most extreme in terms of dealing with countries
19:33
Speaker 3: in which we are not really used to. We have presence,
19:37
Speaker 3: in a large presence South Africa, in Nigeria, Kodawara and Kenya,
19:42
Speaker 3: and there you see importance of critical minerals, the importance
19:48
Speaker 3: of urbanization, the demographics that are exceptional in favor of
19:52
Speaker 3: that part of the world. So while for the past
19:56
Speaker 3: decade and this decade, Asia has been a fundamental part
20:00
Speaker 3: of the global economic landscape, we need to start thinking
20:05
Speaker 3: that after the Middle East, Africa will become the next
20:09
Speaker 3: big thing, and then you move to Asia. Asia to
20:13
Speaker 3: a certain extent is not up and coming. It's really arrived.
20:17
Speaker 3: I already mentioned second third and fourth largest economy in
20:20
Speaker 3: the world, and there it will be a matter of
20:24
Speaker 3: dealing to a certain extent with the geopolitical winds. Sometimes
20:28
Speaker 3: the blow in a direction, sometimes they blow in a
20:30
Speaker 3: different direction, the strategy strategic angle of that part of
20:35
Speaker 3: the world. There is a narrative out there that globalization
20:38
Speaker 3: is finished. I beg to disagree because the economy is
20:44
Speaker 3: al so intertwined and if you see how much manufacturing
20:48
Speaker 3: happens in Asia, it is very difficult to reach. It
20:54
Speaker 3: doesn't mean that you should not try, but shift in
20:57
Speaker 3: supply chains takes years, if not decades, so that part
21:02
Speaker 3: of the world will remain fundamental. And there you have
21:05
Speaker 3: Japan that is exceptionally well performing and it's super interesting.
21:12
Speaker 3: You have China that remained supremely interesting from an opportunity
21:18
Speaker 3: standpoint and the way they're changing their own economy in
21:24
Speaker 3: that sense you mentioned Korea. Think about the importance of
21:28
Speaker 3: Korea from a memory standpoint for the AI ecosystem. Then
21:32
Speaker 3: you have India, you have Southeast Asia, you have critical
21:35
Speaker 3: minerals in Australia. So different parts of the world are
21:39
Speaker 3: dealing with the current set up in different ways. And
21:43
Speaker 3: you have probably the two extremes. If I think about
21:48
Speaker 3: as with Europe in the center, US and Asia really
21:54
Speaker 3: gunning for growth, while Europe is still trying to figure
21:59
Speaker 3: out a way to grow more in this current environment.
22:03
Speaker 2: So we're going to talk a whole lot more about
22:06
Speaker 2: Asia in a bit, but I want to circle back
22:09
Speaker 2: to the Middle East and to Africa. When you say
22:14
Speaker 2: I think a lot of us think of the Middle
22:16
Speaker 2: East as just a collection of petro states with sort
22:20
Speaker 2: of Israel in the middle and then whatever geopolitical turmoil
22:24
Speaker 2: surrounds that structure. It sounds like you're looking at the
22:29
Speaker 2: Middle East more as not only a changing set of
22:33
Speaker 2: infrastructure becoming a financial center. What else is happening in
22:38
Speaker 2: the Middle East. That's huge change.
22:41
Speaker 3: Part of it. You mentioned it already. It is becoming
22:45
Speaker 3: a more relevant financial center for sure. The uas are
22:50
Speaker 3: becoming much more important from that standpoint, and you can
22:54
Speaker 3: perceive when you go there the degree of investments that
22:57
Speaker 3: are taking place from global players positioning themselves over there.
23:05
Speaker 3: Then there is the whole set of investments and reform
23:09
Speaker 3: to the economy of the kingdom and how that is
23:13
Speaker 3: shaping the changes of Saudi into the future. And again
23:20
Speaker 3: it is remarkable the changes that you see happening day
23:24
Speaker 3: to day over there. Then you have Katar, and there
23:28
Speaker 3: is an enormous infrastructure play taking place in that part
23:32
Speaker 3: of the world. Typical solid infrastructure, but there is also
23:36
Speaker 3: digital infrastructure that is taking place over there. Think about
23:42
Speaker 3: energy and how fundamental is energy for data centers, and
23:50
Speaker 3: that part of the world becomes super fundamental from that
23:54
Speaker 3: point of view too.
23:56
Speaker 2: We used to think of finance centers as New York
23:59
Speaker 2: Lund in Hong Kong. Do we add Dubai to it
24:03
Speaker 2: is Dubai in that.
24:05
Speaker 3: I think you need to add Dubai and for sure
24:08
Speaker 3: Singapore two. You cannot forget Singapore, And to a certain extent,
24:13
Speaker 3: I think Tokyo still is a fundamental player, especially in
24:17
Speaker 3: the equity markets globally. Those are the ones that in
24:23
Speaker 3: my mind I would consider fundamental. And then if you
24:26
Speaker 3: allow me, there is also Europe continent to Europe, and
24:31
Speaker 3: so there are a few centers there.
24:33
Speaker 2: So we're going to circle back to Europe also. But
24:36
Speaker 2: last question about this area, I have to ask about Africa.
24:41
Speaker 2: We all know about rare earths and other minerals. Africa
24:45
Speaker 2: stands out as one of the few regions who isn't
24:48
Speaker 2: going through the same sort of fertility crisis that we're
24:52
Speaker 2: seeing in the rest of the world. Is that a
24:54
Speaker 2: driver or is it something more fundamental than that.
24:57
Speaker 3: I think you have what you said, demographics and urbanization
25:02
Speaker 3: are super fundamental. Then you have the richness in critical minerals.
25:08
Speaker 3: And I would add that Africa to a certain extent
25:11
Speaker 3: has probably been not ignored, but not on the radar
25:16
Speaker 3: screen of the Western world for too long, to the
25:20
Speaker 3: point that Africa, as the influence in Africa is heavy
25:25
Speaker 3: from Russia, by Russia and China. So I think it's
25:29
Speaker 3: now our interest to make sure that the Western world
25:33
Speaker 3: understands Africa and operates over there. For a variety of
25:37
Speaker 3: different reasons, Africa is the southern border of the European Union,
25:43
Speaker 3: and it is fundamental, and it is not well understood.
25:46
Speaker 3: For instance, how at times Russia does not only create
25:55
Speaker 3: problems for Europe from an eastern border standpoint, it creates
25:58
Speaker 3: problem to Europe from southern border standpoint by operating in
26:02
Speaker 3: some of the Sahara in Africa African countries and pushing
26:06
Speaker 3: immigrants towards the shores.
26:08
Speaker 2: Of Europe, which has been a problem in Europe. It
26:11
Speaker 2: LEDs to Brexit. It's a problem here in the United States,
26:14
Speaker 2: whereas I should say it's an issue, not so much
26:16
Speaker 2: a problem, but.
26:17
Speaker 3: It's starting from the assumption through the Europe as an
26:20
Speaker 3: aatality or a demographic issue, and therefore we need to
26:25
Speaker 3: figure out a way to increase population or accept that
26:35
Speaker 3: Europe needs a certain degree of immigration. How to do
26:40
Speaker 3: that it is not well understood.
26:42
Speaker 2: It seems to be a function of wealth that when
26:45
Speaker 2: a country hits a certain per capita income, people have
26:50
Speaker 2: options and they tend to have less less children. Is
26:53
Speaker 2: anything going to change at or is that just the
26:56
Speaker 2: way it is?
26:57
Speaker 3: I think some components of it the results. So I
27:00
Speaker 3: don't think it's only wealth. It's also cultural. If I
27:05
Speaker 3: look at Italy, which is a wealthy country in itself,
27:12
Speaker 3: although relatively small if you think about it, less than
27:16
Speaker 3: sixty million people live in Italy. Italy has been in
27:22
Speaker 3: a demographic crisis now for forty years and at the
27:27
Speaker 3: current pace, there will be no more Italians in just
27:31
Speaker 3: over a century. And Italy is also losing a lot
27:36
Speaker 3: of talent. Every year, between one hundred and fifteen, two
27:39
Speaker 3: hundred thou young Italians leave the country to go and
27:43
Speaker 3: work somewhere else. So there is a lot of it
27:46
Speaker 3: that is cultural too.
27:48
Speaker 2: Really really interesting. Coming up, we continue our conversation with
27:52
Speaker 2: Filippo Gorri, co head of Global Banking at JP Morgan,
27:56
Speaker 2: talking about the growth of JP Morgan into a powerhouse.
28:01
Speaker 2: I'm Barry Ridults. You're listening to Masters in Business on
28:05
Speaker 2: Bloomberg Radio. I'm Barry Redults. You're listening to Masters in
28:20
Speaker 2: Business on Bloomberg Radio. My extra special guest today is
28:24
Speaker 2: Filippo Gory. He's co head of Global Banking at JP Morgan,
28:29
Speaker 2: having joined the firm in London in nineteen ninety nine.
28:33
Speaker 2: He has since relocated through Hong Kong to New York.
28:38
Speaker 2: So you've had really such a unique perspective. You've led
28:43
Speaker 2: businesses in Asia Pacific, in emerging markets, in London and
28:48
Speaker 2: now in New York. Do you have to adapt your
28:51
Speaker 2: leadership style or your strategy when you move from one
28:55
Speaker 2: region to another.
28:56
Speaker 3: Absolutely, this part of the exercise of going into the job.
29:03
Speaker 3: One of the things I've learned early on in my career.
29:05
Speaker 3: You cannot have the same leadership style with every colleague.
29:09
Speaker 3: That was particularly true in Asia, where if you use
29:13
Speaker 3: the same tone, tone of approach to a Japanese colleague
29:19
Speaker 3: or an Australian colleague, for sure you missed, you get
29:23
Speaker 3: it wrong in one of the two cases. So you
29:25
Speaker 3: need to adjust how you react to your colleagues and
29:28
Speaker 3: your clients. And you're just your your communication, your delivery,
29:35
Speaker 3: what's important, how you delivered the importance of certain things
29:39
Speaker 3: and so and so forth. I'm still trying to figure
29:40
Speaker 3: out the US full disclaim.
29:42
Speaker 2: Well, I'm curious, I'm going to assume New York is
29:45
Speaker 2: more like Australia than Japan. Absolutely, but I would also
29:49
Speaker 2: imagine a lot of differences from London.
29:52
Speaker 3: Absolutely. London is very much understated and it's there is
29:58
Speaker 3: a way where a way in which you say something
30:01
Speaker 3: but without really saying it out right.
30:04
Speaker 2: And New York is pretty much the opposite. Absolutely, no
30:08
Speaker 2: mencing words.
30:09
Speaker 3: Yes, so it's been interesting so far.
30:12
Speaker 2: I can imagine. So your charge is global banking, yes,
30:17
Speaker 2: And when I think of that department, that's everything from
30:22
Speaker 2: investment banking to corporate services to commercial banking. How do
30:27
Speaker 2: you get all those lines of businesses to collaborate as
30:30
Speaker 2: opposed to compete. It seems like all horses are pulling
30:35
Speaker 2: in different directions.
30:36
Speaker 3: It's actually the other way around. So it's Global banking
30:40
Speaker 3: is three lines of business corporate banking, sorry, commercial banking,
30:44
Speaker 3: corporate banking and investment banking. They have been put together
30:49
Speaker 3: under these global banking umbrella that spans forty six countries,
30:54
Speaker 3: around two hundred major locations around the world, and let's
30:57
Speaker 3: call it around seventy thousand clients give or take. And
31:03
Speaker 3: the idea is you cover all the wholesale banking businesses
31:08
Speaker 3: under one umbrella. So from every corporate that makes at
31:13
Speaker 3: least twenty million dollars of revenues and above less than
31:16
Speaker 3: twenty million dollars, it's called business services, business banking, and
31:20
Speaker 3: it belongs to Chase. So you're still using the branches
31:24
Speaker 3: the moment you qualify, let's say, from a revenue standpoint
31:28
Speaker 3: or size of business standpoint to the wholesale part of
31:32
Speaker 3: the firm, so you become part of JP Morgan. Then
31:37
Speaker 3: the whole client continuum is covered by the same management team,
31:42
Speaker 3: the same group of leaders, with the same group of
31:45
Speaker 3: the same rules, the same capital location, and so on
31:47
Speaker 3: and so forth. So it is becoming particularly important, especially
31:53
Speaker 3: in this day and age. Think about the innovation economy,
31:56
Speaker 3: whereby a corporate or a startup up graduates to become
32:02
Speaker 3: a multi billion dollar corporation supremely fast nowadays. In the
32:06
Speaker 3: past it could take twenty years thirty years for a
32:09
Speaker 3: corporate to grow through the various stages of life. Here
32:13
Speaker 3: it's kind of from cradle to infinite at the speed
32:16
Speaker 3: of light. At the speed of light, so it is
32:19
Speaker 3: important that the transition and the support happens within an
32:23
Speaker 3: homogeneous management and the same way of looking at the clients.
32:29
Speaker 2: So JP Morgan emphasizes technology investment and the importance of
32:35
Speaker 2: artificial intelligence. What parts of banking is AI changing, What
32:42
Speaker 2: is very much ahead of the curve? And what do
32:45
Speaker 2: you think are the areas that are most ripe for disruption?
32:48
Speaker 3: So it is very difficult to assess whether you are
32:51
Speaker 3: ahead of the curve or ahead of the park, or
32:53
Speaker 3: whether you're just doing what everyone else is doing because
32:56
Speaker 3: things are changing so rapidly. That is, I would not
33:01
Speaker 3: dare to say, oh, we are ahead of the curve.
33:04
Speaker 3: We are investing is a giant liap of mankind in
33:08
Speaker 3: terms of revolution that is happening under our eyes. There
33:12
Speaker 3: is clearly efficiency that can be achieved through the use
33:17
Speaker 3: of AI processes and procedure and tools so that you
33:21
Speaker 3: can provide better client service or best better customer service
33:27
Speaker 3: while being more efficient, which means that you can probably
33:31
Speaker 3: cover more clients. And our ambition is to cover more clients,
33:36
Speaker 3: let's say, to reach one hundred thousand clients by twenty
33:38
Speaker 3: thirty in a more efficient way. So technology and quote
33:43
Speaker 3: unquote AI are helping us scale in the business through
33:50
Speaker 3: much faster than before and ideally without having to increase the.
33:54
Speaker 2: Costs really interesting. I think we all are aware that
34:00
Speaker 2: AI is changing everything so rapidly. Where do you think
34:05
Speaker 2: human judgment is irreplaceable? What part of the businesses? Hey,
34:10
Speaker 2: we could become more efficient with AI, but the ultimate
34:14
Speaker 2: decision maker has to be a person.
34:17
Speaker 3: It's fundamental that the human is in the loop because
34:21
Speaker 3: for a variety of different reasons. Ultimately, I would simplify
34:25
Speaker 3: this way, you are dealing with clients. Clients are human
34:30
Speaker 3: beings and at the end of the day, I think
34:32
Speaker 3: a client wants to hear, wants to be dealt with
34:38
Speaker 3: through a client, through a person. So the human in
34:41
Speaker 3: the loop remains fundamental. It can help speed up some processes,
34:45
Speaker 3: can help achieve better scale, but the individual remains fundamental
34:52
Speaker 3: in our business.
34:54
Speaker 2: So when you join JP Morgan back in nineteen ninety nine,
34:59
Speaker 2: you mentioned was not in the top of the league tables.
35:04
Speaker 2: What was the reason that it managed to break into
35:08
Speaker 2: the top tier? Was it this emphasis on technology investment?
35:12
Speaker 2: Was it a strategy? What led the firm to becoming,
35:17
Speaker 2: you know, a global top tier back?
35:20
Speaker 3: Okay, So I think there is an obvious answer and
35:26
Speaker 3: then there is a less obvious one. I would say
35:28
Speaker 3: the obvious answer is Jebby Morgan Chase went through a
35:32
Speaker 3: series of merger including acquiring Bankwan in two thousand and four.
35:37
Speaker 3: They brought to the firm a certain Jimmie Diamond who
35:40
Speaker 3: changed the way in which the firm operated. I think
35:45
Speaker 3: back then the Jebby Morgan Chase Bankuan merger was still
35:50
Speaker 3: a conglomerate of institutions that I merged together over the
35:54
Speaker 3: previous twenty years, and many of those mergers have not
35:58
Speaker 3: actually been fully execute You had many Handey merging into
36:03
Speaker 3: Chemical merging into Chase. You have First Chicago merging into
36:07
Speaker 3: Bank One. You had Jami Morgan and a variety of
36:10
Speaker 3: different things. I forgot Cousin of there was Cousinov in
36:12
Speaker 3: the middle too, so you integrate. The integration of all
36:17
Speaker 3: of these was a fundamental piece that made us who
36:24
Speaker 3: we are today. And Jamie was the leader and the
36:31
Speaker 3: individual that could see could have the vision of how
36:35
Speaker 3: to do this and create the fortress balance sheet and
36:38
Speaker 3: everything else that came with that. They made us who
36:40
Speaker 3: we are today. I think the less obvious answer is
36:44
Speaker 3: we went through two thousand and seven, and I hope
36:48
Speaker 3: I'm not being controversial here, but probably we were still
36:53
Speaker 3: busy with the merger and everything else, that we didn't
36:56
Speaker 3: have time to focus on some of the other staff
37:01
Speaker 3: that then cause the problems. And Jamie's view was very clear,
37:08
Speaker 3: we do things that make sense for the customers, We
37:11
Speaker 3: do things that make sense for the firm, fortress balance sheet,
37:16
Speaker 3: and so on and so forth.
37:17
Speaker 2: If I recall correctly, I want to say it was
37:19
Speaker 2: around five There was a minor little subprime issue with
37:26
Speaker 2: JP Morgan, long before it was a problem everywhere else.
37:30
Speaker 2: And if I remember correctly, Diamond said, get all that
37:33
Speaker 2: crap off our balance sheet. We don't play in that
37:36
Speaker 2: sort of speculator of waters. So when the real troublehead
37:40
Speaker 2: in eight oh nine, they had a very clean balance sheet.
37:45
Speaker 2: So that's a factor.
37:49
Speaker 3: And then since then, investing, investing, investing, investing, and investing again.
37:54
Speaker 3: Through the cycle, you invest, you keep growing. You're growing
37:59
Speaker 3: not because you like it per se by, you're growing
38:03
Speaker 3: because you can provide best, better customer service. You work
38:08
Speaker 3: towards the betterment of the communities where you operate, and
38:12
Speaker 3: you keep investing, investing, absolutely through the cycle. So when
38:15
Speaker 3: I arrived in Asia in twenty thirteen, the firm wide
38:19
Speaker 3: revenues that we made in that year are less than
38:22
Speaker 3: what we made in this quarter in the first quarter
38:26
Speaker 3: of this year. What has happened there has definitely been
38:29
Speaker 3: the growth of Asia. In the meantime, that's been also
38:33
Speaker 3: US investing in the region across products, countries and jurisdiction,
38:38
Speaker 3: so that if you build the infrastructure, then you are
38:41
Speaker 3: there to serve the clients, the business will come interesting.
38:46
Speaker 2: What does one firm mean in practice? The big motion
38:50
Speaker 2: towards JP Morgan one firm? At what point are you
38:56
Speaker 2: in the middle market when it's become a global enterprise
38:59
Speaker 2: or public market markets to explain the thinking behind it.
39:02
Speaker 3: So, the thinking is you want to make the organization
39:06
Speaker 3: is huge. It's three hundred and thirty thousand people. So
39:10
Speaker 3: the idea is to make the company feel small to
39:14
Speaker 3: our clients and to a certain extent to our employees.
39:17
Speaker 2: In other words, you don't want scale to be a disadvantage.
39:20
Speaker 3: Absolutely, because when you have three hundred and thirty thousand
39:24
Speaker 3: people may be dejected that you associate with us is
39:27
Speaker 3: not nimble. But we try to be make the firm
39:33
Speaker 3: feel small to our clients, to our employees, to the
39:36
Speaker 3: communities and everything else. So we try to maintain a
39:40
Speaker 3: personal and human angle in everything we do.
39:43
Speaker 2: And you've now been at JP Morgan twenty six almost
39:47
Speaker 2: twenty seven years. Kind of unusual these days people staying
39:51
Speaker 2: with one firm.
39:51
Speaker 3: I'm one of the new kids on the block at
39:53
Speaker 3: the firm that people that have been really Yeah. Absolutely,
39:57
Speaker 3: that pattern I think is going thirty seven and many
40:01
Speaker 3: of the other seniors my co had, John Simmons, I
40:04
Speaker 3: think is just it's crossing thirty four and many of
40:09
Speaker 3: the other folks around me are in the same zip code,
40:12
Speaker 3: if not spent more time than me.
40:15
Speaker 2: So what keeps you and these folks at the firm
40:19
Speaker 2: for so long?
40:19
Speaker 3: I think the people and the culture. So you'll for me,
40:25
Speaker 3: Jopy Morgan became part of me and my family. And
40:29
Speaker 3: you stay because you like the people, You like the environment,
40:32
Speaker 3: like the you like what you do on your day
40:34
Speaker 3: to day. But fundamentally, I think the people.
40:37
Speaker 2: And you mentioned three hundred and thirty thousand people. How
40:40
Speaker 2: big can JP Morgan chase sked? Is this going to
40:43
Speaker 2: be a half a million employer sometime soon?
40:49
Speaker 3: I think from a scale standpoint, we are where we
40:52
Speaker 3: need to be in terms of people. The idea is,
40:55
Speaker 3: can we use AI to grow the business without having
41:00
Speaker 3: to grow the footprint much more.
41:02
Speaker 2: So this is probably it for the next decade.
41:06
Speaker 3: I would I mean, I'm not Jamie, so you should
41:08
Speaker 3: ask the question to Jamie. But from a global banking standpoint, yes,
41:12
Speaker 3: I think that they had come that we have. Now
41:14
Speaker 3: we are trying to try to keep it stable for
41:16
Speaker 3: the next few years.
41:16
Speaker 2: Huh really really interesting. Coming up, we continue our conversation
41:21
Speaker 2: with Filipo Gory, co head of Global Banking at JP Morgan,
41:26
Speaker 2: discussing the state of capital markets today. I'm Barry Ritolts.
41:30
Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm
41:48
Speaker 2: Barry Ridolts. You're listening to Masters in Business on Bloomberg Radio.
41:52
Speaker 2: My extra special guest today is Filipo Gory. He's co
41:56
Speaker 2: head of Global Banking at JP Morgan, where he been
42:00
Speaker 2: working since nineteen ninety nine in London, Hong Kong and
42:05
Speaker 2: now New York. So we touched on this earlier about
42:10
Speaker 2: resiliency in the face of all this macro volatility. But
42:16
Speaker 2: it's not just the economy. It's been a ton of
42:19
Speaker 2: m and A and deal making, and this year we've
42:22
Speaker 2: seen a lot of IPOs and giant IPOs at that
42:26
Speaker 2: why is all this holding up so well despite all
42:30
Speaker 2: of the geopolitical turmoil, We say, I.
42:35
Speaker 3: Think there is a variety of different things. For a
42:37
Speaker 3: certain extent, there was a little bit of a pipeline
42:41
Speaker 3: that have built over the years that needed to find.
42:46
Speaker 2: It had slowed down post pandemics.
42:48
Speaker 3: A wow, exactly so IPOs. We thought twenty twenty four
42:51
Speaker 3: they were going to come back. Then twenty twenty five
42:53
Speaker 3: finally we see the return of the IPOs, which is
42:56
Speaker 3: kind of as good as a component of cyclicality. It's
43:00
Speaker 3: the right time for this to help M and A.
43:03
Speaker 3: I think there is probably an extent of what we
43:06
Speaker 3: discussed earlier on boards are observing the resiliency of the economy,
43:12
Speaker 3: of the global economy. They think it's the right time
43:15
Speaker 3: to make strategic decisions. They're probably getting comfortable that the
43:22
Speaker 3: cost of capital will not go much lower than where
43:25
Speaker 3: it is now. Probably there's a sense of higher for
43:28
Speaker 3: longer to a certain extent, and therefore people are getting
43:36
Speaker 3: the hands thirty in terms of dealing, and we are
43:40
Speaker 3: just witnessing what could be from a wall let standpoint,
43:45
Speaker 3: in pure investment banking, if not the best every year,
43:49
Speaker 3: which was twenty twenty one, very close to be the
43:53
Speaker 3: best evy in terms of volumes.
43:56
Speaker 2: Probably the biggest change over the past decade has been
43:59
Speaker 2: the rise of private capital, whether it's private debt, private credit,
44:04
Speaker 2: private equity. How is that changing a global bank? Do
44:08
Speaker 2: you guys look at this as competition or is it
44:11
Speaker 2: expanding the range of solutions you can offer the clients.
44:15
Speaker 3: It's it's a little bit of both. So private capital
44:18
Speaker 3: as plays definitely a rule in the everyday economy in
44:23
Speaker 3: the sense of after the GFC, for traditional banks, a
44:29
Speaker 3: certain sector in certain cases became harder to deploye capital
44:34
Speaker 3: and therefore to a certain extent, there is a group
44:39
Speaker 3: of clients that are right to be the beneficiary of
44:43
Speaker 3: the private credit because simplicity of solution, the unit trunche
44:48
Speaker 3: and so on and so forth. So that has caused
44:51
Speaker 3: the growth of that sector. And we have been operating.
44:58
Speaker 3: We've been doing loans, a private loan is just another
45:03
Speaker 3: form for two hundred and twenty five years. So we
45:07
Speaker 3: launched our own initiative, our loan private created business back
45:13
Speaker 3: in a few years back, but we increased it last
45:18
Speaker 3: year officially around Februar last year to fifty billion dollars
45:21
Speaker 3: of our own capital are located to it. And the
45:23
Speaker 3: idea is, when you go through a client, you try
45:26
Speaker 3: to offer an agnostic set of solutions. We can do
45:31
Speaker 3: anything you want, from the traditional private lending solutions to
45:36
Speaker 3: more innovative solutions to the traditionals syndicated financing facilities, and
45:42
Speaker 3: so on and so forth. So the idea is to
45:45
Speaker 3: offer the clients all the potential tools in the GP
45:49
Speaker 3: Morgan armory.
45:51
Speaker 2: So these private transactions have been rising really since after
45:56
Speaker 2: the financial crisis. What does this tell us about public
46:02
Speaker 2: market m and A. How do you look at the
46:06
Speaker 2: difference between all these public companies or I should say
46:10
Speaker 2: these few public companies and this rising number of private companies.
46:14
Speaker 3: It's a trend that that's been going on since the
46:17
Speaker 3: nineteen eighties. The number of public companies in the US
46:20
Speaker 3: or around the world has reduced substantially since then. There's
46:25
Speaker 3: a couple of there's various reasons for that. Part of
46:28
Speaker 3: it could be the cost associated with being a public company.
46:32
Speaker 3: Part of it could be the fact that some of
46:35
Speaker 3: the companies have grown in size and have acquired some
46:39
Speaker 3: of the smaller companies and so on and so forth.
46:41
Speaker 3: I am absolutely in favor of unhealthy public market because
46:48
Speaker 3: it's one of the greatest strengths of the United States,
46:52
Speaker 3: the fact that there is a market out there where
46:54
Speaker 3: you can raise capita, you can finance yourself. There is
46:58
Speaker 3: a discovery price mechanism which I enormously love if I can.
47:04
Speaker 3: If I look at other countries where I've operated, and
47:06
Speaker 3: the size of those public markets are small, you see
47:10
Speaker 3: that those economies a struggle to gain scale, struggle to
47:15
Speaker 3: gain opportunity. So for me, the public market in the
47:21
Speaker 3: US is a treasure that must be.
47:24
Speaker 2: Cherished fair enough. We've seen a number of mega deals
47:30
Speaker 2: happen over the past couple of quarters, including the giant
47:34
Speaker 2: SpaceX IPO. We have Enthropic coming up, there's a bunch
47:38
Speaker 2: of other ai IPOs coming up. But there's also been
47:43
Speaker 2: a lot of merger activity in that space. What's driving
47:48
Speaker 2: these big transformative.
47:50
Speaker 3: Deals, as I mentioned to a certain extent, is perception
47:59
Speaker 3: of stability of the cost of financing, opportunity for the
48:04
Speaker 3: regulation that will make some transaction possible, and I think
48:09
Speaker 3: the backlog that are been created over the years, But
48:12
Speaker 3: in general, the boards are very sanguine around it is
48:17
Speaker 3: the right moment let's take the opportunity, let's transform. Many
48:22
Speaker 3: boards are also looking at what's happening with the eye
48:24
Speaker 3: and thinking that, okay, it's a copernical revolution that is happening.
48:30
Speaker 3: Therefore I better be ahead of it and take the
48:34
Speaker 3: opportunity with this and so on and so forth.
48:37
Speaker 2: Otherwise you're behind. So your charge is global. You get
48:41
Speaker 2: to look around the world at opportunities. I'm curious, how
48:45
Speaker 2: do you measure where opportunities are greatest? Is there specific
48:51
Speaker 2: data points you're looking at, like volume of I pos
48:54
Speaker 2: or mergers? How do you look at the world reagion
48:59
Speaker 2: by re then figure out, hey, we need to spend
49:02
Speaker 2: more time and capital in region XS.
49:06
Speaker 3: So what we do is this is a constant process
49:09
Speaker 3: whereby we challenge ourselves consistently as cib Commercial Investment Bank
49:14
Speaker 3: Management team, and we say, okay, we operate in forty
49:17
Speaker 3: six countries. Should we operate in five more? And if so, okay,
49:23
Speaker 3: which one do we look at? What is the opportunity?
49:26
Speaker 3: Why does it strategically make sense to invest more in
49:29
Speaker 3: that country versus another? Or why don't we invest more
49:33
Speaker 3: in an existing country? And so and so forth, Betting
49:35
Speaker 3: in mind that one of the fundamental ways in which
49:38
Speaker 3: we look at the world is the following. We have
49:41
Speaker 3: never left a single country since we enter it. So
49:45
Speaker 3: being in a country it is not the same thing
49:48
Speaker 3: as owning a share or a stock. You don't like
49:52
Speaker 3: it anymore, you sell it. Once you make the decision
49:55
Speaker 3: to enter a country, you are there forever because you're
49:58
Speaker 3: there for the employees, for the clients, for the communities,
50:01
Speaker 3: the regulators and so on and so forth. So we
50:04
Speaker 3: think about that very carefully. We look at some micro trends.
50:08
Speaker 3: We try to understand where the world is going, where
50:11
Speaker 3: the opportunities are coming. We ask our clients. Some of
50:15
Speaker 3: our clients are some of the largest companies in the world,
50:17
Speaker 3: and you try to see they think how they operate.
50:21
Speaker 3: Can we support them everywhere around the world where they
50:25
Speaker 3: operate or not? Or similarly, there are companies that are
50:31
Speaker 3: developing some of these countries. They want to go global.
50:33
Speaker 3: Can we support them in that case? So that's kind
50:36
Speaker 3: of the exercise that we do, and we look at
50:40
Speaker 3: it collectively as CB management team across the various products,
50:44
Speaker 3: whether it's banking, whether it's payments, whether it's markets, security services,
50:48
Speaker 3: and we collectively make a decision on where to invest,
50:51
Speaker 3: and we do it on a quasi regular business. We discusses.
50:57
Speaker 2: So I want to talk about the EU and a Asia.
51:00
Speaker 2: But before we dive into those areas, any other areas
51:05
Speaker 2: of the world that are presenting a great number of opportunities.
51:10
Speaker 3: Well, Latin America for sure, we have America. Yeah, we
51:13
Speaker 3: have not discussed about it. But if you think about
51:15
Speaker 3: Brazil and Mexico for sure are super interesting market, super
51:20
Speaker 3: important for us, and and they are at the doorsteps
51:24
Speaker 3: of the United States. So uh, it is fundamental that
51:28
Speaker 3: we have a critical presence over there and that and
51:31
Speaker 3: we keep on growing it.
51:33
Speaker 2: And you mentioned earlier you think the European area is
51:38
Speaker 2: almost overlooked, that they're on the verge of the next
51:44
Speaker 2: phase of growth.
51:46
Speaker 3: So what it meant is there is generically a degree
51:50
Speaker 3: of pessimism around Europe. The pessimism comes from the fact
51:54
Speaker 3: that the growth of the European Union in terms of
51:57
Speaker 3: GDP growth theory, has been anemic for now, call it
52:01
Speaker 3: twenty five years. It grows zero point five, zero point seven,
52:04
Speaker 3: maybe one percent, and we consider ourselves lucky. And that
52:11
Speaker 3: has been one of the challenges. Because growth brings jobs,
52:18
Speaker 3: growth brings wealth, growth brings all the things that I
52:21
Speaker 3: see here in the United States at the same time
52:25
Speaker 3: as a European I always want to remind folks that
52:29
Speaker 3: Europe at times is not widely understood. The European Union
52:35
Speaker 3: concept was not born out of idea of an economic union.
52:42
Speaker 3: It was born out of the dream of the founding
52:44
Speaker 3: fathers of the European Union not to have war on
52:47
Speaker 3: European soil.
52:48
Speaker 2: Ever, again from a securities perspective, not economically.
52:52
Speaker 3: It was actually they were visionaries. If you think about
52:56
Speaker 3: the gas perty in Italy at an hour in Germany
52:59
Speaker 3: and some of the others. The Second World War had
53:02
Speaker 3: just finished, the Carbon and Steel Treaties of the beginning
53:09
Speaker 3: of the nineteen fifties. The idea was, if we are
53:12
Speaker 3: intertwined from an economic standpoint, it is less likely that
53:16
Speaker 3: we go to work together.
53:17
Speaker 2: And it's mostly worked.
53:18
Speaker 3: And this worked, and the next thing was the Treaty
53:20
Speaker 3: of Rome, and that was the beginning of the European Union,
53:23
Speaker 3: as we know in the Masters and everything. So I
53:26
Speaker 3: just want to remind people that europe does exist. The
53:30
Speaker 3: European Union exist first and foremost not to have water
53:35
Speaker 3: in European soil, and we need to grow. Don't get
53:37
Speaker 3: me wrong. Less bureaucracy, more growth. But we should not
53:42
Speaker 3: lose the sight of what the founding fathers gave us.
53:45
Speaker 2: So let's talk about the perspective from the United States
53:49
Speaker 2: about Europe is lovely place to visit, but a challenging
53:53
Speaker 2: place to do business. Great place to live because much
53:59
Speaker 2: of Europe there's guaranteed healthcare, there's guaranteed paid education, paid retirement,
54:07
Speaker 2: but it makes it expensive to do business there. It's
54:11
Speaker 2: very hard to fire anybody. Is that American bias accurate
54:18
Speaker 2: or so?
54:19
Speaker 3: What is the criticism that is laid that at the
54:24
Speaker 3: steps of the European Union is perfectly valid? All of
54:28
Speaker 3: the things you just mentioned and more I can the
54:33
Speaker 3: least is forever long. What I'm trying to say, though,
54:36
Speaker 3: is something different. You can't expect. And this year we're
54:42
Speaker 3: celebrating two hundred and fifty this week, two hundred and
54:45
Speaker 3: fifty years of the United States of America. Europe has
54:50
Speaker 3: over three thousand years of history. Okay, so you can't
54:53
Speaker 3: expect the three thousand years of history get wiped out
54:57
Speaker 3: and everyone route they all rule in the same direction.
55:03
Speaker 3: We have come from having had war every ten years
55:09
Speaker 3: to not having had war since nineteen forty five, we
55:12
Speaker 3: have strengthened that we have culturally enormous social nets. And
55:19
Speaker 3: my concern is if the economies don't grow and we
55:22
Speaker 3: have a problem of demography in the future, we will
55:26
Speaker 3: not be able to afford those social nets. So things
55:29
Speaker 3: have to happen in Europe. I'm perfectly fine, and former
55:34
Speaker 3: President Dragy in his white paper told us what we
55:37
Speaker 3: have to do. We don't need to invent the world.
55:39
Speaker 3: We just need to un implement what it all does.
55:42
Speaker 3: Will we do it? Yes? Will it take us a
55:44
Speaker 3: long time? Absolutely yes, because it's Europe. But Europe exists
55:51
Speaker 3: for a variety of different reasons and we should never
55:54
Speaker 3: forget that.
55:55
Speaker 2: Really interesting, so we've talked about regions, let's talk about
56:00
Speaker 2: sectors AI in technology. Obviously a big sector manufacturing and
56:06
Speaker 2: industrial resharing is going on, infrastructure changes, financial services, energy
56:13
Speaker 2: and renewable energy, healthcare, defense, So many different areas seem
56:18
Speaker 2: to be going through massive transitions. What do you do
56:22
Speaker 2: with such a target rich environment like that? How do
56:25
Speaker 2: you decide where to focus or does the market? Do
56:31
Speaker 2: the companies reveal themselves and it becomes self evident.
56:37
Speaker 3: So we had and we have an accounting plan year
56:41
Speaker 3: by yeah, by sector by sector by region where we
56:45
Speaker 3: looked at the virus sectors. And while you mentioned that
56:48
Speaker 3: all of them in one go, not every sector is
56:53
Speaker 3: hot at the same time. So the focus is within
56:58
Speaker 3: all the sectors in every count and B subsector. Do
57:03
Speaker 3: we have the twenty eight subsectors? Do we have enough bankers,
57:07
Speaker 3: do we have enough resources are located? Can we do more?
57:10
Speaker 3: Should we do more? What's they if we have to prioritize,
57:14
Speaker 3: how do we prioritize those asks? And that's what we do.
57:18
Speaker 3: So there is an enormous amount of account planning, which
57:20
Speaker 3: if you do well, then the results will come.
57:25
Speaker 2: And you know, the drug y white paper sort of
57:29
Speaker 2: veers into government driven industrial policy. Obviously that's big in China,
57:37
Speaker 2: it was big in the United States up until about
57:39
Speaker 2: forty years ago. It seems like it's coming back. How
57:43
Speaker 2: do you think about government involvement in these private company
57:48
Speaker 2: decision making and growth?
57:50
Speaker 3: So Europe does have already a larger component of the
57:57
Speaker 3: economy that are state owned or partialist own companies. So
58:02
Speaker 3: from a European standpoint in itself, is not so rare
58:08
Speaker 3: to have concept like that. Concepts like that. The idea
58:12
Speaker 3: to me is more, can we have Pan European champions.
58:19
Speaker 3: We have done that in the automotive sectors. We have
58:22
Speaker 3: done that in the airline industry. We have not really
58:26
Speaker 3: done that in other sectors. So Europe has freedom of
58:29
Speaker 3: movement for people, for capital, but there is no real
58:36
Speaker 3: freedom of movement for services yet. So that's one of
58:39
Speaker 3: the things that we should try to implement and therefore
58:45
Speaker 3: facilitate the growth of European champions in the various sectors
58:51
Speaker 3: that some of them you mentioned, so that we will
58:53
Speaker 3: be able to compete better with the US on one side,
58:59
Speaker 3: or or with Asia on the other side. Europe suffers
59:03
Speaker 3: not softwares. Europe is still a little bit of a bias.
59:06
Speaker 3: And then small is good because more protects the consumer
59:16
Speaker 3: from an economic standpoint, thinking about oligopolice and everything else.
59:22
Speaker 3: I think it's a stage where right now size matters,
59:25
Speaker 3: and therefore large we should facility the creation of larger
59:30
Speaker 3: European companies pan Europeans, not country specific, but pan Europeans.
59:38
Speaker 2: Like air Bus. That's that's the model.
59:41
Speaker 3: Air Bus could be one could There are plenty of
59:44
Speaker 3: other examples in in consumer there are a few in cars,
59:53
Speaker 3: Stellantis as an example. We should do that in financial services,
59:58
Speaker 3: for instance. I think it's fundamental that Europe does have
1:00:02
Speaker 3: larger financial services player and so on and so forth.
1:00:06
Speaker 2: What's fascinating to me about Europe. So I appreciate what
1:00:10
Speaker 2: you're saying about smaller companies need to get big. In
1:00:14
Speaker 2: the US, where we used to enforce any trust rules
1:00:18
Speaker 2: but kind of stopped in the nineteen eighties, not only
1:00:21
Speaker 2: have these companies gotten big, but they've become mega companies
1:00:25
Speaker 2: that dominate their space. To be clear, that's very unlikely
1:00:31
Speaker 2: to happen in Europe, right. You want them large and
1:00:33
Speaker 2: global and competitive, but not necessarily at least if I'm going.
1:00:38
Speaker 3: By yes, that would be a step too far from
1:00:42
Speaker 3: a European Union fundamental way in which the Europeans look
1:00:46
Speaker 3: at the business. But larger companies absolutely right.
1:00:51
Speaker 2: I was curious because they seem to be very I
1:00:55
Speaker 2: don't want to say hostile, but very specific about regulating
1:01:01
Speaker 2: the facebooks and apples and Googles of the world versus
1:01:06
Speaker 2: smaller companies that are trying to get a toe hold
1:01:09
Speaker 2: in the global marketplace. All right, So before I get
1:01:12
Speaker 2: to my favorite question, one last question, what do you
1:01:16
Speaker 2: think most people in investment banking and or and or
1:01:20
Speaker 2: commercial or corporate banking aren't thinking about but really should
1:01:25
Speaker 2: be what what What's the important topic that's not getting
1:01:29
Speaker 2: enough focus.
1:01:32
Speaker 3: H that's a good question. I think there is a
1:01:35
Speaker 3: ton of focus on AI, geopolitics, inflation and other things,
1:01:42
Speaker 3: and I think we don't spend enough time in focusing
1:01:49
Speaker 3: more on the people and how we prepare the people
1:01:53
Speaker 3: for the future that is coming.
1:01:55
Speaker 2: So is that education, is that corporate training or everything?
1:01:59
Speaker 3: It's a little bit of everything. How do we explain
1:02:02
Speaker 3: to folks how we see the future? So we should
1:02:05
Speaker 3: do more from that point of view and prepare them
1:02:09
Speaker 3: for a future that is coming. But that starts with
1:02:12
Speaker 3: academia and how we recruit people and so on and
1:02:16
Speaker 3: so forth.
1:02:17
Speaker 2: So let's jump to our favorite questions we ask all
1:02:20
Speaker 2: our guests, starting with tell us about your early mentors
1:02:23
Speaker 2: who helped shape your career.
1:02:26
Speaker 3: So I had I've been lucking to I had many
1:02:29
Speaker 3: people looking after me over the years. I've been lucky
1:02:34
Speaker 3: to work to have worked for the same individual for
1:02:36
Speaker 3: nineteen years I joined that was his analyst, it was
1:02:39
Speaker 3: the associate on the desk, and nineteen years later we
1:02:41
Speaker 3: were to senior managing directors, but I was still working
1:02:44
Speaker 3: for him. But there are a couple that I think
1:02:49
Speaker 3: the trip that I would like to mention. One is
1:02:51
Speaker 3: Mattel Delfante. When I joined in London, it was the
1:02:55
Speaker 3: most senior Italian at the firm and is now the
1:02:58
Speaker 3: CEO of paste in Italy. Is as a friend as
1:03:00
Speaker 3: somebody has looked after me and helped me guide me.
1:03:04
Speaker 3: He's from Tuscany too, And then probably Mark Patricchiani, who
1:03:08
Speaker 3: retired in twenty twenty four and was running the markets business.
1:03:13
Speaker 3: And Carlos Hernandez who was running banking before me, and
1:03:18
Speaker 3: I still remember when he was. When I was in
1:03:22
Speaker 3: Hong Kong during COVID, he used to call me twice
1:03:25
Speaker 3: a week, religiously, every week, without booking a meeting, just
1:03:29
Speaker 3: call him and say, how how's everything going? All good?
1:03:32
Speaker 3: Tell me what's happening. So that human element was really, really,
1:03:37
Speaker 3: really really important for me.
1:03:39
Speaker 2: Let's talk about books. What are some of your favorites?
1:03:41
Speaker 2: What are you reading currently?
1:03:43
Speaker 3: So I'm reading an avid reader, so I read lots
1:03:47
Speaker 3: of stuff, nothing financial driven. Right now I'm reading three
1:03:52
Speaker 3: Italian books at the same time, which is a little
1:03:54
Speaker 3: bit complicated. But one book that I read that recently
1:04:02
Speaker 3: I like novels, I like fiction. But the one book
1:04:06
Speaker 3: that I read quite recently that impressed me was a
1:04:09
Speaker 3: book called The Wealth of Shadows Wealth, The Shadows of
1:04:16
Speaker 3: Wealth Sorry by Graham war and it explains in a
1:04:21
Speaker 3: fictionalized way, how the US during the Second World War
1:04:28
Speaker 3: used its economy to cripple the German economy and you
1:04:32
Speaker 3: have individuals like Cairnes play to this, and how ultimately
1:04:36
Speaker 3: this became bread on woods and the role of how
1:04:39
Speaker 3: the dollar overtook the pound and so on, and so
1:04:42
Speaker 3: that was fascinating. And I read another book called a
1:04:46
Speaker 3: Girl called run A Sampson that it's about the Revolutionary
1:04:52
Speaker 3: War here in the United States and a woman that
1:04:56
Speaker 3: it's a real history a woman that for.
1:05:01
Speaker 2: In the in the.
1:05:03
Speaker 3: Continent I think you called Continental Army and the Washington
1:05:06
Speaker 3: dressed as a boy. Oh really, yeah, those are two.
1:05:10
Speaker 3: But I also use a lot audible So audiobooks have
1:05:15
Speaker 3: been literally my my saving grace because I can listen
1:05:20
Speaker 3: to them while I'm traveling on planes, so I don't
1:05:24
Speaker 3: need to carry the books, the physical books with me.
1:05:27
Speaker 3: It's been has been I'm a heavy user of Audible.
1:05:31
Speaker 2: Besides Audible, what else are you streaming? What are you
1:05:34
Speaker 2: either watching or listening to and.
1:05:37
Speaker 3: Watching apart from your program? Obviously, my wife and I
1:05:43
Speaker 3: love The Outlander on Netflix, which is just stream the
1:05:47
Speaker 3: last season or start I think it will starts here
1:05:50
Speaker 3: in the US and then drops of God About Wine.
1:05:58
Speaker 3: It's a fan fascinating in series. And a few others.
1:06:02
Speaker 2: Huh, really interesting. We watched off Lander until the previous
1:06:08
Speaker 2: season kind of like all right, we're good right here
1:06:11
Speaker 2: when they were stuck in the United States, But it
1:06:14
Speaker 2: was really fascinating show. Final two questions what sort of
1:06:18
Speaker 2: advice would you give to a recent college graduate interest
1:06:23
Speaker 2: in a career in either corporate, commercial or investment banking.
1:06:28
Speaker 3: It's not as printed Samarathon, So take your time, understand
1:06:33
Speaker 3: the environment in which you operate. Try to focus on
1:06:37
Speaker 3: the biggest important things. Don't be to focus on just
1:06:41
Speaker 3: on the product, but understand the environment in which you operate. Remember,
1:06:45
Speaker 3: it's a people business, both internally and externally, so make
1:06:50
Speaker 3: sure that you invest in creating human relationships.
1:06:53
Speaker 2: And our final question, what do you know about the
1:06:55
Speaker 2: world of investing? Investment banking today might have been useful
1:06:59
Speaker 2: back in nineteen ninety nine when you were first getting started.
1:07:05
Speaker 3: It's a marathon, it's not a sprint. So never never
1:07:14
Speaker 3: take things for granted the end above all, don't make
1:07:18
Speaker 3: personal sacrifices that too that you're gonna later. At times,
1:07:23
Speaker 3: I've been not as present as I would have likeded
1:07:26
Speaker 3: with my family.
1:07:28
Speaker 2: Interesting enough, Felipo, thank you so much for being so
1:07:31
Speaker 2: generous with your time. We have been speaking with Filipo Gory.
1:07:35
Speaker 2: He is co head of Global Banking at JP Morgan.
1:07:40
Speaker 2: If you enjoy this conversation, well check out any of
1:07:43
Speaker 2: the six hundred and fifty we've done over the past
1:07:46
Speaker 2: twelve years. You can find those at iTunes, Spotify, Bloomberg,
1:07:51
Speaker 2: Apple Podcasts, YouTube, or wherever you get your favorite podcast.
1:07:57
Speaker 2: I would be remiss fund and thank the Crack team
1:07:59
Speaker 2: that helped us put these conversations together each week. Alexis
1:08:03
Speaker 2: Noriega is my video producer. Sean Russo is my researcher.
1:08:09
Speaker 2: Hannah Luke is my podcast producer. I'm Barry Ridholtz. You've
1:08:13
Speaker 2: been listening to Masters of Business on Bloomberg Radio.