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00:00So I did go back and listen to some of the interviews you did with us at the beginning
00:03part of the year in Davos with Jonathan and Lisa. Essentially, you're saying risk is on
00:08and that there are a lot of tailwinds. And you said U.S. at the epicenter of all negotiations
00:14as the deal flow. Looking back, are there a little bit more headwinds now than there were then?
00:20We hadn't gone into the Trump administration yet. We hadn't seen the ferocity, if you will,
00:25of the tariff regime. How is your assessment going into 2026 differing from that?
00:30On the face of it, a lot of the headwinds seem to have more clarity. So remember,
00:35coming into this year, tariffs were kind of a main feature. It looks like we've landed kind of
00:40on most of the tariff framework, if not, it's work in progress. Net-net, the market is taking a lot
00:46of comfort that every country will land in some zone which will be palatable to the U.S. and to
00:53that nation and net-net, life goes on. So I think those tariff headwinds, there is an element of
00:58kind of acceptance in the market and an expectation in the market that, you know, we will get to a
01:04good place. And then if you look at the other headwind we talked about, it was all the geopolitics.
01:11You had the Middle Eastern war, you had Russia, Ukraine. Some of those things have still got to play
01:15out. But generally, it looks like, you know, there is at least, you know, peace in the Middle East or
01:20we are in the process of peace in the Middle East. So I would say, you know, given the amount
01:24of liquidity that is out there, I'm quite, you know, reasonably optimistic on the outlook.
01:29And you're bullish on the AI trade as a whole for deal flow and also internally as well,
01:35what you guys are going to be doing with AI. But again, where does that take the M&A train going
01:41into 2026? If it's still, if AI, some have called it a bubble in the markets, but where does that take
01:48us for deal flow into 2026? I think AI is becoming almost existential to most corporates, you know,
01:55the transformative powers of AI. I mean, everyone realizes it's, you don't quite know what's around
02:00the corner, but everyone knows, wow, this is going to just, you know, change the way we consume,
02:04the change the way we live. And this is beyond data centers and, you know, compute and, you know,
02:09water, power and all the rest of the stuff. Companies today are all evaluating what does AI mean for me?
02:16And that means, you know, compute for yourself. It means, you know, R&D. It means apps. It means,
02:24you know, how do you re-engineer your own processes in an AI world, all of which is, you know, capital
02:30heavy. You know, you need to spend money, you need to invest to harvest and harness the power of AI.
02:36So beyond just the kind of the capital needs that the tech industry is needing to build all these
02:43infrastructures and data centers and the like, every corporation is sitting now and saying,
02:48okay, what does this mean for me? What is it going to cost me? What are the efficiencies?
02:53What does it mean for my, you know, top line? What does it mean for my cost of goods sold?
02:58And more importantly, you know, what does it mean for my workforce?
03:00What does it mean for deal flow? Again, you have a reputation for being a relentless dealmaker,
03:04and I think you've pushed your team. Now you've been on the job about 17 months, right? Just about
03:09a year and a half. So what does that mean for deal flow within AI? And how, what does that look like
03:14in 2026? I mean, this is going to be, you know, absolutely hectic. I mean, just when we look at
03:18our own pipeline, our M&A pipeline, looking forward to next year, it is one of the richest it's ever
03:24been. If you look at this year, I think it's like the second biggest M&A year on record. I mean,
03:30we've had over $4 trillion of M&A announced or prosecuted, you know, during the course of 26.
03:36Roughly a trillion or plus, 1.3 trillion of other ones was sponsor-led. And we forget the
03:43sheer amount of dry powder that the financial sponsor, the private capital pool is. It's
03:50like they got about $2.5, $2.7 trillion waiting to deploy, and they incentivized to deploy.
03:57So they're paid to put that to work. So for M&A, there's a lot of tailwinds with regard
04:03to, you know, just the ability to power activity. AI is going to be a big part of that. I think the
04:13other key driver in M&A, and this is an important one, is valuations. So when you look at how equity
04:19markets have performed, you know, share prices have gone up and up and up. And with that comes
04:24responsibility. So if you're a board, you're basically saying, you know, I need to justify
04:29the share price. I need to show growth. And if that growth is not forthcoming, investors
04:34are going to work with their feet. Activists are going to be knocking on my door. So boardroom
04:38CEOs are saying, okay, where am I going to get that growth from? And if it's not coming
04:42organically, I need to go buy and effectively, you know, buy that growth. And that has been
04:46a big driver because we talked a bit about the sponsor dry powder. This year has been a
04:53mega, you know, corporate M&A, good old fashioned company A buying company B has been incredibly
04:59dominant in the market. So how obsessive are you looking at the tables, the ranking tables?
05:04The latest Bloomberg ranking put Citibank this year for the first time since 2019, number
05:09four in M&A advisory work. How important is that to you? Obviously coming over from JPM,
05:16which is oftentimes the top of the table. I think this is a barometer, you know, for good
05:24or bad, in the investment banking business, you have a daily mark to market. When a deal
05:29hits the tape, you know, there's another mark to market. So, you know, you have to be all
05:33over, you know, whatever deals happening, not just for league table or, you know, revenue
05:39kind of reasons. But deals that happen are very often indicative of the direction of travel.
05:46So when one deal happens, very many are likely to follow. So you want to be kind of early,
05:52you want to be kind of the lead indicator of themes and trends. But very often when one
05:58company in a peer group moves, it's very likely that the rest in that peer group are also going
06:03to be likely to move. So you want to be absolutely on top of it.
06:06I can guarantee everybody who's watching this that's in the banking industry is wanting to
06:10know about bonuses this year. How is this going to translate? If this deal flow, if it's going
06:15to go into, you know, strong tailwinds into 2026, what are bonuses going to look like for
06:21you and for your industry?
06:23I think it looks like every other bank. We pay for performance. And, you know, where there's
06:27performance, you know, you absolutely end up, you know, paying for it. So I think it's
06:32those themes are, you know, almost kind of it's a doctrine. And that is something that,
06:37you know, culturally institutions really adhere to.
06:41What's your overall plan for China?
06:42Obviously, a few years ago, you guys did withdraw from your retail banking, along with other
06:48nations as well. You still have the security license, a wholly owned security license application
06:54that is still pending. What's your overall strategy for you, how you want to tackle this
06:59market? You've brought a big presence here to this China conference this year.
07:03Look, I mean, you know, you can see the energy in the room here, right? I mean, you have over
07:072,700 clients, investors. I mean, there's a buzz. I think there have been over 7,000 one-on-one
07:13meetings and the like. I mean, the energy is palpable. I mean, it's not just in this room.
07:18Just, you know, meeting clients and, you know, just kind of looking at their aspirations and
07:22ambitions. I mean, this market is just absolutely, you can see the energy and the vigor.
07:27This market is absolutely going to, you know, going to flourish. And we are, you know, we
07:32are absolutely everywhere our clients are. So, we serve Fortune 500 globally and their
07:41desires and their needs into China. And same way, we service our China clients into their
07:47global ambitions. So, it's a very key market. I think you can see the energy here. And they're
07:52going to be a key part of the entire kind of global tech boom that you're seeing.
07:57What kind of employment footprint would you like to see? I know some of the tech staff
08:01have been withdrawn from here. You got rid of the retail banking about three or four years
08:05ago. But are you looking at really building up Hong Kong because of the IPO boom that we've
08:10seen there? Also, wealth management. I think you sold your retail wealth portfolio to HSBC a
08:17few years ago as well. So, does wealth management and also the IPO underwriting emphasis really
08:24focus on Hong Kong and to another degree Singapore?
08:26So, look, our expansion will totally mirror Jane's, you know, mission around the five
08:34clear lines of business. And each of those businesses have incredible kind of corporate
08:38clarity, ownership, accountability. And the idea is, as we grow, those will be the pillars
08:44along which we grow. And you talked about the Hong Kong market. I mean, you know, the market
08:50has had, you know, it was up, what, 28% or thereabouts, the Hang Seng Index this year. And when you look
08:56at the valuation of the market, it's trading at 13 times forward PE, 13 times forward PE, just so
09:03you can imagine the amount of inward interest and the upside it is going to attract. So, I think there
09:09are multiple kind of tailwinds. And, you know, and in the region, I think, you know, China is slowly
09:16having a renaissance. And as, you know, all the kind of the, you know, the global, you know,
09:26streams, et cetera, calm down and the like, I think, once again, you'll see, you know, a lot of Chinese
09:31companies want to access international capital. And you're seeing the beginnings of that capital
09:35formation happening already.
09:36How confident are you, though, and I know you don't want to get ahead of regulators, of getting that
09:41A-share securities license fully owned here?
09:44We are super committed to China. You said exactly, you know, where we are. And I think
09:49nothing more to report on top of that.
09:51Japan also has seen a new prime minister, pro-stimulus kind of candidate. You've seen
09:57the market react upwards as well. What's your outlook there as well as on the deal flow as
10:02well in other markets?
10:03No, I was just in Tokyo yesterday. So, I came over from Tokyo. Similar theme. I mean, you know,
10:09we had our global TMT conference in Pebble Beach over the, you know, last weekend. And
10:15you thought, you know, you could see the energy in the valley on, you know, the whole kind
10:22of AI, you know, tech wave that is coming. You follow that through to Asia. It's almost
10:29a continuum. Because for every company, you know, absolutely at the forefront of that AI wave,
10:36there is another company in this part of the world that is part of that whole ecosystem.
10:41I think Japan is really having its moment. The whole drive towards corporate clarity
10:48in where companies are now focused on optimizing their net asset value and looking at, you know,
10:55either, you know, sweating their assets better or de-merging. You have activists now who are
11:01mounting campaigns if you see a sleepy company. Private equity is all over Japan. I mean, you know,
11:07first there were like three or four players. This year, I've seen 10 more come in and, you know,
11:12open shop. So I do think that, you know, Japan is going to be very interesting to watch. It's got some...
11:20The foreign interest there is quite strong right now with the yen at 155.
11:25Spot on. It's very, it's a bit nuanced too. There's an aging demographic. Most Japanese corporates
11:32cannot entirely look organically or domestically for acquisitions. So you will see more and more
11:39Japanese corporates and, you know, look abroad to effectively get their acquisition. And we saw
11:45that. We advise Nippon Steel on buying U.S. Steel, for instance. So you'll see more of that.
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