The Jefferies and Adani love affair

One thing to start: Italian lender Banco BPM has dismissed a bid from rival UniCredit, calling the value of the offer “completely unusual” and saying it failed to reflect the bank’s profitability and future prospects.

In today’s newsletter:

• Jefferies stays quiet on Adani

• Telegram makes a killing on crypto

• Citi slashes promotions 

Jefferies ❤️ Adani . . . now what?

Earlier this year Jefferies chief executive Rich Handler was celebrating a very important milestone.

It had been one year since his bank had brokered a deal to help shore up Gautam Adani’s beleaguered empire after short seller Hindenburg Research accused the founder and his company Adani Group of fraud, which the group strenuously denied.

“One year ago we began a business relationship with @gautam_adani. Today we are proud to be true partners,” Handler posted on X.

By Thursday that post had disappeared as US prosecutors charged the Indian tycoon over an alleged $256mn bribery scheme. Adani described the charges as “baseless” and said that “all possible legal recourse would be sought”.

Jefferies has been the only major international bank to openly court Adani since Hindenburg released its report in January last year.

As recently as a month ago, bankers were privately touting how successful the relationship had been — and they weren’t wrong. The bank has helped the Indian group raise billions of dollars, including from Florida-based firm GQG. It’s the only US bank that has helped Adani companies raise equity since Hindenburg’s report.

Jefferies quickly ascended dealmaking league tables in India. It leapt to second place in equity raising fees, figures from Dealogic show, behind only India’s ICICI. It ranked eighth last year and in 2019 as low as 32nd.

Internally, executives have prided themselves on sticking by their client through tough times.

But people with knowledge of Jefferies’ workings say it’s hard to imagine the bank sticking by its client while Adani faces US charges.

Yet despite companies such as France’s TotalEnergies saying it had suspended fresh investment in joint projects with Adani Group, Jefferies has been silent on the issue.

Telegram’s crypto side-hustle

For a company in the business of social media, there sure are a lot of curious crypto goings-on at Telegram, according to confidential financials obtained by the FT.

In the unaudited disclosures, Telegram booked more than half a billion dollars in revenue and turned a healthy post-tax profit of $335mn in the first half of 2024.

The figures dwarfed the $342mn in revenues it booked for the whole year of 2023 on losses of $173mn. That’s a positive sign for Telegram’s full-year profitability goals — and possible IPO ambitions.

It also insisted that the detainment of its chief executive Pavel Durov in August over alleged moderation failures has had no “material impact” on its business since then.

To be expected, advertising revenue roughly doubled to $120mn while subscriptions to its premium offering brought in $119mn, up from $32mn in the same period last year.

But most intriguing was the huge chunk of revenues — $225mn — that came from a one-off crypto side deal with an unnamed party, which has since been terminated.

Here, Telegram “received remuneration” for allowing the cryptocurrency Toncoin, which its team initially developed before handing it over to the open source community after getting targeted by US securities regulators in 2020, to be the exclusive method for small businesses to buy advertising on the app.

Confused? Sadly, Telegram wouldn’t share more information on the deal, citing confidentiality agreements.

The company also made $353mn in proceeds from the sale of digital assets in the first half. It has sold $348mn in Toncoin since then and enjoyed gains simply from holding crypto assets on its balance sheet.

Those assets rose to $1.3bn in value compared with nearly $400mn at the end of last year. Telegram to the moon!

Promotions become elusive at Citi

Citigroup’s management team has come up with a solution to its knotty expense and regulatory issue: Curb promotions, reports the FT’s Stephen Gandel.

Late last year, Citigroup unveiled a massive restructuring that it said would simplify the bank, but was also meant to significantly bring down costs and boost returns by laying off 20,000 employees.

The bank seemed to be on pace with that effort, eliminating 10,000 positions in the first six months of this year.

Lay-offs lately have slowed. The problem: Regulators in June fined Citi $136mn for missing deadlines connected to long-running risk and controls issues that the bank has been ordered to fix.

Regulators have warned Citi against further cuts, especially in its tech, compliance or other back-office staff that have been tasked with fixing the bank’s control issues.

So Citi is turning to other methods to keep expenses down, the latest of which is to slash year-end promotions.

At issue is “in-seat promotions”, in which the bank awards pay increases and title boosts without any change in role or responsibility. The US’s fourth-largest lender has traditionally handed out thousands of these promotions before the end of the year — prior to handing out annual bonuses.

In the past few weeks, unit heads have held meetings with direct reports to manage expectations. The staffers were told promotions this year were only available to those who are taking on new roles or responsibilities.

But even in these instances, pay raises for promotions are expected to be limited to 15 per cent, which one person described as a “guidepost”, and not a cap.

The changes are understandably not going down well with Citi’s bankers, already traumatised by the restructuring, which may not be completed until 2026.

“The morale is pretty low,” said one Citi staffer whose team had a town hall in early November. “Recent town halls have directly addressed toxicity and stress even with HR dialled in.”

Job moves

• Rentokil Initial has named Paul Edgecliffe-Johnson as chief financial officer beginning in January. He succeeds Stuart Ingall-Tombs, who is retiring after 17 years with the company.

• Dye & Durham chief executive Matthew Proud is stepping down. He will remain in his role for about three months, or until the board has found a successor.

• Covington has hired Phil Cheveley as a partner in the firm’s corporate practice in London to focus on cross-border M&A. He previously worked for Sidley Austin.

Smart reads

Risky clients Morgan Stanley’s wealth management business has grown into an empire, the Wall Street Journal writes. Internal company documents show weak controls allowed the bank to court shady customers.

‘Future of finance’ Shanghai was supposed to be a financial capital, something akin to China’s answer to New York, the FT reports. Trade tensions and changing domestic priorities have taken a toll on its grand plans.

Robot revolution In the future, robots won’t be programmed to solve certain tasks, the New Yorker reports. Artificial intelligence will allow them to teach themselves.

News round-up

Vauxhall owner Stellantis blames EV rules for plan to close UK van factory (FT)

Senior UK bankers to receive bonuses faster under new rules (FT)

UK financial watchdog fines Macquarie Bank £13mn for fictitious trades (FT)

Oil producers warn Trump tariffs on Canada will push up US petrol prices (FT)

ArcelorMittal delays green investments in Europe over policy uncertainty (FT)