Morning Coffee: The peculiar hypocrisy of the male finance CEO allegedly having an affair with a subordinate. How to get paid in private equity now

The story of John Neal, until recently CEO of insurance market Lloyds of London, is cautionary one for all concerned. But it's particularly illuminating for anyone working for a boss who says one thing while seeming to do another.

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Last week, the Financial Times reported that Neal's new $17m job at AIG had been withdrawn over "concerns" about an allegedly "close personal relationship" with a woman he'd promoted. Now it seems that people at AIG suspected what was going on, even as Neal and his newly promoted subordinate went around proselytising for corporate sanctity.

The Times reports that 61 year-old Neal's alleged object of desire was Rebekah Clement, a media relations specialist 17 years his junior. Clement already worked for Lloyds of London when Neal arrived in 2018, but she rode the ranks and was promoted to head of corporate affairs in 2022, reporting directly to Neal. 

In this role, Clement was tasked with broadcasting Lloyds of London's good behaviour. Clement and her team were about sustainability and Enviromental Social and Governance (ESG) issues. They were also behind things like Lloyds' sustainability report, which celebrates inclusivity, diversity and culture. Neal himself reinforced this happy message with interviews about his dissipation of Lloyds' dubious past in which women were reportedly known as "box bitches" and "hot totty".

However, Clement's promotion was Neal's undoing. There were alleged procedural irregularities. The Times says external candidates weren't considered. Clement herself insists that due process was followed. 

Both Clement and Neal are also understood to deny any particular partiality for each other, but Lloyds of London's then-chairman, Bruce Carnegie-Brown, had suspicions. The Times reports that Carnegie-Brown asked the two not to stay in the same hotels when travelling for work in 2023. Lloyds' HR team is understood to have made a similar request. 

Now Clement and Neal can stay in the same hotels as much as they like. Clement left Lloyds in June 2025, shortly after Neal's departure in May. In his parting LinkedIn post, Neal praised Carnegie-Brown for his "unwavering support and commitment."  If nothing else, it's a sign that words don't always match reality.

Separately, private equity funds have discovered a fine way of generating the money to pay themselves carried interest. 

Bloomberg notes that dividend loans, in which private equity companies take out additional loans secured against portfolio companies in order to pay themselves, have expanded dramatically. They're currently $28.7bn and are on track to exceed the previous target of $28.8bn from 2021. 

The loans are used both to pay investors and to pay carried interest to employees. However, they leave underlying companies more indebted than ever. In this circumstance, Matthew Mish, head of public and private sector credit strategy at UBS, says private equity firms don't want to buy one another's investments; the only real exit option is then selling to "a less credit discriminate investor, which is a CLO.”    

Attentive people will recall that CLOs have already been having some issues of their own.

Meanwhile...

Lawrence Summers asked Jeffrey Epstein for advice on pursuing an extramarital relationship with a female mentee. (Financial Times) 

Summers appeared to refer to macroeconomist Keyu Jin ’04, a tenured professor at the London School of Economics at the time. (Harvard Crimson)

Morgan Stanley wins technology deals with the help of its 50 person "innovation team." Every year, the team meets 1,000 innovative companies that might be able to sell interesting tech the bank. Some, like OpenAI, also go on to become banking clients. (Bloomberg)

It's not easy to get a job as a doctor. This year, 33,100 doctors applied for 12,800 specialist training posts in the UK. There were 92,000 total applications. Junior doctors who applied for 20 jobs got no interviews; some are becoming bankers instead. (Financial Times) 

DWS dismissed its private credit team in Asia. (Bloomberg) 

HSBC is having to pay people more in its Swiss private bank to stop them from leaving. (Bloomberg) 

Bill Ackman wants to list Pershing Square Capital Management early next year. (Financial Times) 

Jamie Dimon had a birthday party for King Charles in JPMorgan's head office. The king was not there but Tony Blair stopped by to cheer “Long live the king” – after first cheering for President Trump. (NYPost) 

Meta is going to start a power trading business. (Bloomberg) 

Insurers won't insure against mistakes made by AI chatbots. (Financial Times) 

The cost of basic self-sufficiency for a family of four—housing, childcare, healthcare, transportation—is $140,000. (GiveaFig) 

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