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Bill Demchak guns for the top of Wall Street

JPMorgan Chase’s Jamie Dimon is, undoubtedly, the Sun King of banking: chief executive of the largest US bank, symbol of the industry and, in effect, the chief spokesman for American capitalism. 

It’s possible, however, that the spot below Dimon in the bankers’ league table is not the leader of one of the other huge universal banks, such as Brian Moynihan at Bank of America, nor the chief at one of the big investment banks, like David Solomon at Goldman Sachs

Industry insiders point, instead, to Bill Demchak of PNC Financial, a regional bank headquartered in — of all unlikely places — Pittsburgh. 

Bill Demchak

It is no coincidence that when the job of turning round Wells Fargo came open, Demchak was one of the first names mentioned by banking insiders. His career has fallen into two very distinct parts, and he has made a big impact in both.

In the first act, he led the team at JPMorgan that developed the modern derivatives market. In the second, starting in 2002, he led PNC — the very opposite of New York high finance. 

PNC is a classic, highly conservative, consumer deposits and business loans bank. Demchak has quite deliberately kept it clear of capital markets. He has focused, instead, on growing its core. PNC’s $11.6bn purchase of BBVA’s US operations completed its ascent to the top of the regional bank pile, with well over half a trillion dollars in assets.

Two things were instrumental in getting PNC to where it is today. The first was its decision to purchase, while the financial crisis was still roaring, National City bank. 

Column chart of Total assets, $bn showing PNC Financial under Bill Demchak

National was a mess few others would have touched. But the deal gave the PNC team opportunities to cut costs and invest the proceeds in growth. 

The second was PNC buying a stake in BlackRock decades ago, before it became the world’s largest fund manager. PNC’s $17bn sale of the stake in May paid for the BBVA deal.

So, was Demchak lucky? The government helped PNC buy National, and he had nothing to do with the BlackRock investment. 

The FT’s Robert Armstrong put this question to Brian Klock, bank analyst at KBW, who replied: “You know, people watch pro golfers on TV . . . And when they get a hole in one, they say ‘What luck!’. But great golfers get lucky a lot more than the rest of us.”

Line chart of Price performance, rebased showing PNC has outperformed the US banking sector over the past 20 years

Whether or not Demchak has hit a hole in one with BBVA, he is a banker to watch — especially when it comes time for Dimon to pick a successor.

Taylor Swift hits mute on private equity

When music manager Scooter Braun bought Taylor Swift’s former record label last year, it seemed like a fearless bet that recorded music revenues would hit their longest streak of growth since the turn of the millennium.

That bet has paid off. The FT reported on Monday that Big Machine Records sold the master recordings of six of Swift’s eight multi-platinum albums for $300m, about the same price that Braun paid for the entire label last year.

While the Swift songs were among its best assets, the Big Machine jukebox remains well stocked. Rascal Flatts, Thomas Rhett and other acts account for more than half of the label’s business in some years.

The new owner of the Swift rights is Shamrock Capital, a Los Angeles-based investment group founded by the late Roy Disney, which called Swift a “transcendent artist with a timeless catalogue” and said it “hoped to formally partner” with the singer.

Taylor Swift © Chris Pizzello/Invision/AP

That idea swiftly went down in flames. Swift announced she would soon re-record the songs on her new label, a move that would “diminish the value of my old masters” which Shamrock had acquired.

The reason, according to Swift, is that Braun “will continue to profit off my old musical catalogue for many years”. She called that proposition a “non-starter”, the latest episode in a long-running feud that has divided the top echelons of pop royalty.

Among the handful of artists that have re-recorded songs after falling out with their labels are English rock group Def Leppard and singer-songwriter JoJo. But streaming is now a huge deal, and Swift’s fortunes depend on whether she can reprise those old songs in a way that electrifies her fans anew.

For Shamrock, which ​in effect took the opposite side of that bet, it must have been a tough item of due diligence. And among the lyrics Swift may soon be revisiting is a warning: “There is nothing I do better than revenge.”

Job moves

  • FinnCap chairman Jon Moulton will step down after 11 years in the role. He will be replaced at the start of next year by Robert Lister, a former banker at Barclays de Zoete Wedd and Dresdner Kleinwort Benson

  • Freshfields has hired Colin Costello to its national security practice based in Washington as an adviser on the Committee on Foreign Investment in the United States. Costello joins from the Office of the Director of National Intelligence

  • Law firm CMS has hired Babita Ambekar as a corporate partner in its Singapore office. She joins from DWF where she was global head of its India practice. 

Smart reads

Defunct dealmaker The WSJ takes a look at a low-key consultant who helped Wirecard on at least 10 separate deals. Some of those transactions are being studied in depth by German prosecutors. (WSJ)

Ant Financial podcast If you are looking for some good audio to liven up your day, the latest edition of the FT’s Behind the Money Podcast tells the story of how the world’s biggest listing was cancelled and what comes next for Ant Financial. (FT, Apple, Acast

Drain the Swamp The Trump administration heralded the rise of a new group of lobbyists close to the real estate mogul. Now the corporations and countries that cozied up to the outgoing president are racing to find Democrats with links to the new Biden administration. (NYT)

News round-up

Vet group IVC Evidensia considers London listing amid petcare boom (FT) 

BA to launch coronavirus tests on some transatlantic flights (FT) 

Insurer RSA accepts £7.2bn bid from Intact and Tryg (FT + Lombard

Deutsche Börse/ISS: saints go marching in (FT Lex) 

Norwegian Air Shuttle files for protection from creditors (FT) 

Jack Ma’s investment firm raises $3bn as foreign capital chases China (The Information)

UK electric vehicle group Arrival to list in US through Spac deal (FT + Lex

UK chemicals group Croda to buy Iberchem for €820m (FT) 

Due Diligence is written by Arash Massoudi, Kaye Wiggins and Robert Smith in London, Javier Espinoza in Brussels, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde and Francesca Friday in New York and Miles Kruppa in San Francisco. Please send feedback to due.diligence@ft.com

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