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Welcome back to Due Diligence, your must-read dealmaking briefing. To kick off the first newsletter of the year, here are some of Wall Street’s most influential names in 2020.

As the new year unfolds, Financial Times reporters have compiled a list of the 10 people set to shape Wall Street in what will undoubtedly be an eventful year. Calls on American chief executives to tackle inequality are getting louder, deals are getting bigger and there’s a looming election that could change the face of the world’s financial centre. 

Some names, like Goldman Sachs CEO David Solomon and Democratic presidential candidate Elizabeth Warren, below, will be familiar to readers of DD.

Nothing strikes fear in the heart of Wall Street executives like the potential of a Warren presidency. The US senator has spent years crusading against big banks and their misdeeds. 

Warren’s bold campaign agenda includes sweeping reforms that would curb bankers’ pay, reverse the recent easing of bank capital and liquidity rules, reintroduce the separation of commercial banks and investment banks, and end “useless speculation” by private equity groups.

Unlike his predecessor Lloyd Blankfein, Solomon has managed to escape a war of words with Warren, but he is facing other pressures this year. The part-time DJ has to set the record straight on the bank’s alleged involvement in the 1MDB scandal and kick-start a strategic plan that will finally be unveiled at Goldman’s first-ever investor day at the end of January.

The bank’s makeover under Solomon could alter the make-up of Wall Street. 

One man Solomon knows well but DD readers may not is Brian Benczkowski, head of the US Department of Justice’s criminal division. He is overseeing an investigation of Goldman’s involvement in the 1MDB corruption scandal in a landmark case that will be a measure of the toughness of enforcement on Wall Street in the Donald Trump era.

Also included in the list is Charles Schwab chief executive Walter Bettinger,below, who executed one of the most cunning deals last year. He weakened his rivals by slashing fees to zero then went in for the kill with a $25bn bid to buy TD Ameritrade. Now, everyone from JPMorgan Chase to Goldman will be watching how Bettinger handles a combined 24m client accounts holding some $5tn in assets.

Hedge fund manager Ken Griffin’s market-making business, Citadel Securities, has emerged as a powerful player on Wall Street with a determination to grab business from retreating banks. With $3.5bn of revenues last year, the group is hot on the heels of Wall Street rivals. 

Wall Street will also be watching who Larry Fink, CEO of BlackRock, will pick to step into his shoes. One of the candidates for the top job — Mark Wiseman — is no longer in the running after being ousted for failing to disclose a romantic relationship with a colleague. 

Capping off the list are Christiana Riley, head of Deutsche Bank Americas, Paul Taubman, founder, chairman and CEO of PJT PartnersDwight Scott, president of GSO Capital Partners and David Marcus, head of Facebook’s digital currency project Libra

You can find out more about the people on the front line of Wall Street here

Can the class of 1984 create a European bank champion? 

For many of us, the year 1984 is associated with George Orwell’s political dystopia. But for France’s business elite it is a graduation year that has played a remarkable role in European banking. 

The group of graduates from École Polytechnique’s class of 1984 includes Tidjane Thiam, Jean Pierre Mustier and Jean-Laurent Bonnafé, who run Credit Suisse, UniCredit and BNP Paribas, respectively. 

It also includes Frédéric Oudéa, the Société Générale boss who is Europe’s longest-serving chief executive of a big bank.

As the men occasionally enjoy games of golf together, the opportunity for dealmaking is rife. And everyone knows that Europe needs a banking champion to rival Wall Street behemoths, who have had a much better decade than their peers across the pond. 

Oudéa is ready to take the plunge. 

For the Parisian lender, a merger with a continental rival would make a lot of sense, report the FT’s Stephen Morris and David Keohane. With a historically recalcitrant Germany dropping its opposition to a common deposit insurance scheme in November, things could be looking up. 

But first SocGen has to get its house in order. In an unimpressive field it languishes near the bottom in most financial metrics and is worth 40 per cent of book value. Of the region’s largest lenders, only Germany’s troubled Deutsche Bank and Commerzbank trade at a lower ratio. 

During Oudéa’s leadership, the French lender has seen a 59 per cent fall in the share price and endured more than its fair share of misconduct scandals. If SocGen can get itself into shape, the likes of Dutch lender ING and Switzerland’s UBS have indicated an interest in cross-border deals.

Bill Michael wants KPMG back in the good books

After construction group Carillion collapsed in 2018, one UK MP declared that he “wouldn’t hire KPMG to audit the contents of my fridge”. It was a scathing statement that dealt a reputational blow to one of the world’s biggest accounting firms. 

But KPMG’s embattled UK chairman, Bill Michael,below, isn’t one to cry over spilled milk. Instead, he wants to fight to restore the accounting and advisory firm’s reputation and profits, which is easier said than done. 

Michael, who one KPMG partner said was brought in as “a wartime leader”, is now fighting battles on three fronts: boosting KPMG UK’s bottom line, battling the suggestion that parts of it have a “toxic” culture and improving the quality of its audits. 

The Big Four have found themselves in the bad books of UK politicians for a range of offences and calls have been made for them to be broken up due to conflicts of interest — critics say it is difficult for accounting firms to adequately scrutinise companies’ books that also line their pockets with huge advisory fees. 

KPMG has, for its part, stopped providing non-audit services for the FTSE 350 companies it audits under instruction from Michael, but that has made the company more exposed to a fall in audit fees compared with its peers PwC, Deloitte and EY, all of which have relatively larger consulting practices. 

With both a lawsuit and a likely hefty regulatory fine over its audits of Carillion, as well as expected government intervention to overhaul how the biggest audit firms operate on the horizon, the relentless public inspection of KPMG shows no sign of abating. 

Read the full report from Tabby Kinder here and if you missed the FT investigation into the toxic culture at the world’s leading accounting firms, you can find it here

Job moves

  • White & Case has hired Megren Al-Shaalan, a former senior legal adviser at the Saudi Royal Court, as a partner. He is based in Riyadh.

  • Victoria Rosamond has rejoined White & Case’s New York office as a partner in its M&A practice. She was previously at Katten Muchin Rosenman.

  • Squire Patton Boggs has added three partners from Winston & Strawn to its Dubai office. Campbell Steedman and Christopher Skipper have both joined the law firm’s corporate practice while Shibeer Ahmed joins the firm’s financial services division. 

  • Baker Botts has hired Robin Melman as a partner in the executive compensation section in the law firm’s New York office. Melman joins from Jones Day.

  • Credit Suisse has hired Michelle Lim, a former senior prime broker at Deutsche Bank, as a managing director to lead China prime sales and business development.

  • Dennis Cornell, the co-head of energy investment banking for the Americas at Morgan Stanley, is leaving the bank after two decades, Bloomberg reported.

Smart reads 

Awards season “Here’s what would happen if Marie Kondo had been raised by a family of Casio FX-991EX scientific calculators” is one of the descriptions in Alphaville’s unmissable Person of Interest list for 2019, which includes some of this year’s most talked about individuals. (Alphaville)

Storm clouds Some of the world’s largest tech companies are hot on Amazon’s heels for a slice of the ever-expanding $266bn cloud-computing market. Microsoft, which last year won a coveted cloud-computing contract known as Jedi with the Pentagon, is turning up the heat. (WSJ)

Losing sleep After the fallout from WeWork last year, SoftBank is hoping for better luck with some of its other investments — including Oyo — one of India’s most valuable start-ups. But the company, which has ambitions to be the world’s largest hotel chain, has come under fire for a “toxic” culture and questionable growth practices. Sound familiar? (NYT)

News round-up

Wall Street banks ramp up research into quantum finance (FT)

Data’s the secret weapon for Rappi, SoftBank’s big bet in Latin America (Reuters)

Private equity managers scoop bigger pay and bonus awards (FT)

Bed Bath & Beyond strikes real-estate deal (WSJ)

NMC Health seeks to confirm cash levels after Muddy Waters attack (FT)

News Corp to sell UK video ad company Unruly (FT)

China tech start-ups go bust in 2019 ‘capital winter’ (FT)

Saudi Aramco slumps 10% from peak on mounting Mideast jitters (FT)

Topgolf IPO could value company at $4bn (BBG)

Deal agreed on selling Flywheel Sports spin cycle studios (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, Lindsay Fortado and Mark Vandevelde in New York, Miles Kruppa in San Francisco and Don Weinland in Beijing.

Please send feedback to due.diligence@ft.com

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