Morning Coffee: Tragedy of the gentle Citi VP who asked a colleague to lunch. Bad news is good news for PwC partners

Some stories have lessons for us all to learn, and some are just incomprehensible and sad things that happened to people in the banking industry. A court in London has been hearing about the death of Citi vice president (VP) Henrik Slotsaa , which is very much the second kind.

Slotsaa was very well liked in Citigroup's UK office; he worked on the operations team for loan capital markets, and colleagues told us previously he was "a nice and gentle guy." 

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Slotsaa was in a relationship with Joanna Cierpka, who he'd been with since 2011. The court heard that Cierpka became depressed after being made redundant from her job outside financial services, and that she feared that Slotsaa would leave her. 

The case is ongoing, but the court was also told this week that Henrik shared some of his problems at home with a colleague at Citi whom he regularly met for lunch. The court heard that Cierpka found out about this friendship. The precise details of what happened after that are still coming out in court, but the prosecution's case is that Cierpka stabbed Slotsaa multiple times, and that his body was not found for around a week. 

Joanna Cierpka denies murder but has pleaded guilty to manslaughter on grounds of diminished responsibility; one psychiatrist called by the prosecution has told the court the killing followed jealousy and the breakdown of the relationship, against a backdrop of Cierpka's alcohol use. 

When the news of Henrik's death came out earlier this year, Citigroup told us that "We are deeply saddened by the tragic loss of our colleague. Our thoughts are with Henrik's family and friends during this difficult time." It's slightly sobering to think that there are so many people we work with and whose company we value through the working day, but have no idea what might be going on in their private lives. Be kind to one another is probably the only thing remaining to say.

Elsewhere, it is not a great time for accountants and professional services firms.  Although their fortunes usually tend to wax and wane alongside the investment banking industry, this year has seen a significant concentration of revenue – the aggregate figures are very much driven by a small number of sectors and a small number of big deals, and that means that they have mostly accrued to a small number of banks. 

It’s been particularly difficult for PwC’s UK practice, because that is where the global firm also holds its Middle East operations, and these are also suffering from a slowdown in deals, which has come after a lot of investment went into the region.  A 15% fall in MENA revenue in the 12 months to June was more than enough to offset the 2% increase in domestic business, meaning that PwC saw revenues fall 3% over the period, the first annual decline for more than twenty years.

You might think this would be reflected in partners’ pay.  It wasn't. The average PwC partner got £935k ($1.25m) for the year, up 8%.  This might be because PwC partners own the business. In good years, payouts can be low as partners use profits to invest in the business.  In a year like the one we’ve just had, there’s much less reason to do this.

This is a theme that’s likely to be repeated across the big professional services firms as they follow PwC in reporting on the last year’s business; KPMG is already consulting on compulsory redundancies in its advisory business because natural attrition isn’t moving headcount fast enough.  

Meanwhile …

David Solomon says Goldman Sachs’ FICC business is going to be “a little softer, on a relative basis” in Q3.  He also noted that “there are still a few weeks left in September” implying that it’s close enough that a really good last fortnight could save the quarter. Since some analysts were forecasting 11% sequential declines, things might actually be a bit better than expected. Equities trading is still “very strong”. (Reuters)

It’s perhaps a little hard to get your head round the idea that there might be unexploited alpha in a global weather phenomenon that everyone has known about for months.  But Zulfiqar Ali, who started his own hedge fund ZAMS two years ago at the age of 32 after leaving Balyasny, thinks that the market is underestimating the effect of a strong El Nino this year and that with the help of accurate weather forecasts and a commodity trader’s nerve, he can boost returns. (Bloomberg)

Litigation funding is a fascinating niche of the hedge fund industry, but it’s more of a people business than anything else.  Tempers are always likely to run high when an investor and a lawyer disagree about the most sensible way to deal with a settlement offer. (FT)

“You don’t want to start planning for an engine failure when you’re at 24,000 feet”.  This is how wealth managers try to get across the concept of investment risk and diversification to airline pilots. (WSJ)

Miami has a great beach, Dubai is tax efficient, Athens has the Parthenon … but when you’re serious about attracting hedge fund talent, the location feature that they are most interested in is often “somewhere convenient for my house”. That seems to be the rationale behind Brevan Howard’s decision to open up an office in Greenwich, Connecticut. (Business Insider)

Adrian Cudrig an equity capital markets banker at Morgan Stanley is apparently driving around Sydney in a Maserati Ghibli with the license plate “ECMGUY”.  All one can say is to agree with the AFR columnist; “Hell yeah, brother”. (AFR)

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