Disillusioned ex-J.P. Morgan analyst is helping young bankers find homes

August 6, 2018, 10:06 am

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Three years ago, Denzel Matsaudza was an intern at J.P. Morgan in London. As part of the team in investor operations services, he worked on client fund accounting. When the internship ended, Matsaudza was offered a full time job. His parents were overjoyed: they thought he’d be at J.P.M. forever and ever.

“My parents are African,” says Matsaudza. “They think that you have a job and you stay there for 20, 30 or 40 years. It was their encouragement that got me into J.P Morgan in the first place- my mum would call it J.P. Morgan Stanley – but when I got there, I realized it wasn’t for me.”

After 15 months as a full-time employee in J.P. Morgan’s back office, Matsaudza decided that operations jobs in banking didn’t match the hype. “It wasn’t what I’d expected,” he says. “It was like J.P. Morgan hired the best talent from across the country, but when you got there they didn’t have the jobs to match.”

Matsaudza is coy as to what he did exactly at J.P. Morgan, saying only that it’s confidential and that he was working on the bank’s implementation of Blackrock’s Aladdin risk management system. He claims there was a discontinuity between the internship and the graduate programme (“Things that were supposed to have been delivered weren’t delivered – the programme changed in structure”) and that the work he was doing in any case seemed fundamentally lacking in meaning.

“It didn’t feel to me that what I was doing would have a real life impact,” says Matsaudza. “- There was no sense that I would make a difference to anyone’s life – it just felt like I was collecting a cheque at the end of each month. My director said I was doing a great job, but that didn’t seem like enough.

“I guess the problem is that I’m not really strongly motivated by money alone,” he muses.

Matsaudza quit J.P. Morgan in October 2017, but only after hitting on a way of making money helping young people like himself when he first joined. While still at J.P. Morgan he set up the website likemindedliving, which matches young professionals with similarly-thinking people in affordable rooms in central London. His target market includes junior finance professionals who have just moved to London. He currently rents rooms to 60 people and has plans to rent out more.

“There were definitely some graduates with amazing roles at J.P. Morgan,” says Matsaudza, adding that one of his friends is working on the bank’s Brexit preparations. “But mine wasn’t one of them. Now that I’ve left banking, I’m doing something much more rewarding,” he adds.

Even his parents have come to terms with his new venture.

Have a confidential story, tip, or comment you’d like to share? Contact: sbutcher@efinancialcareers.com
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Morning Coffee: Why you waste your 20s working 70+ hour weeks in banking – or not. A feud breaks out at Citi

August 6, 2018, 11:38 pm

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Brutally-long working hours may not be the chief reason many junior bankers burnout, even if that’s their own belief. Rather, it’s the intensity of the work that takes more of a physical and mental toll, according to a new study.

Researchers from Cass Business School and ESCP Europe found that work intensity – tight deadlines and a relentless pace – are a bigger predictor of negative health and career-related outcomes than long working hours. The study suggests that banks’ recent efforts to cap working hours and limit weekends spent in the office may be counterproductive, as the measures make for more prolonged work intensity – a marathon that is run at full speed. The benefits of a slightly shorter week are undone by constant pressure to produce at a fast pace, according to the study.

After three years of overwork, a human body begins to “take revenge” on itself, beginning with physical signs of anxiety – fingernail biting and insomnia – and then graduating to bigger health concerns. What’s more, the researchers found that work intensity – not hours – led to worse career prospects, including missing out on promotions. The problem is that time spent at work is easy to quantify and value, blinding some managers of which employees are really facing levels of stress that are unhealthy and counterproductive.

This can be particularly true in banking culture, where long hours are often looked at as badge of honor. Some juniors and interns have acknowledged wasting time at their desk with no real work to do while waiting for their boss to leave for the night. Others may work the same number of hours but are putting their body through hell, likely with no one the wiser.

All that said, one expert believes the perceived importance of a proper work-life balance – for the success of the individual and the company – is nothing more than a false narrative created by those who can’t keep up. “These individuals aren’t willing to or are unable to perform at those levels, so want to pull down others who can and will,” Marc Effron, author of “Work Smarter, Not Harder,” told the FT.

Elsewhere, we now know why Citi’s global head of cash trading suddenly exited the bank in March. Armando Diaz and his boss, Citi’s global co-head of equities, Dan Keegan, didn’t agree on the strategy behind the bank’s central risk book (CRB) – an emerging cog in today’s sell-side trading operations that allow banks to increase liquidity while also hedging against risk, according to Business Insider. The axing of Diaz, who helped turn around Citi’s struggling cash trading business, shows the growing importance of central risk books now that dark pools have been squeezed by MiFID II. CRBs quietly hold plenty of influence at big banks.

Meanwhile:

HSBC may be suffering from a bit of bad timing. The bank’s adjusted costs for the first half are up 8% as it continues its expansion into Asia. An escalating trade war between the U.S. and countries like China isn’t helping. (Bloomberg)

Barclays is the latest bank to dip its toe into cryptocurrencies. The U.K. bank has created a “digital assets project” led by its global head of energy trading, Chris Tyrer, to explore possible crypto trading strategies. (Financial News)

What exactly is Gary Cohn up to? The former Goldman Sachs president and ex-economic advisor to the Trump administration is still looking for new opportunities but has spent around two-thirds of his time working on his golf game. The most interesting thing Cohn said during the interview is that he sees no merit behind Treasury Secretary Steven Mnuchin’s idea to cut taxes on capital gains. “It was an idea he came up with that got killed in 30 seconds or less, and it won’t last 30 seconds again,” Cohn said. (Bloomberg)

Of the big five U.S. tech companies – Apple, Amazon, Facebook, Google and Microsoft – Amazon’s interview process appears to be the easiest. Roughly 30% of candidates said the process was “easy” or “very easy.” Just 5% of Microsoft candidates said the same. (Business Insider)

U.K. chancellor Philip Hammond is privately urging financial services heads to develop “alternative pathways for growth” in anticipation of a possible loss of access to European markets post-Brexit. He believes the EU may bury London with red tape to the point that U.K. banks will need to look to emerging markets for revenue. (FT)

Bank of America is planning to move some of its London-based research analysts to Paris as part of its post-Brexit plans that could result in at least 200 new seats in the French capital. (FT)

A group of Wells Fargo employees from California won the $543 million Mega Millions jackpot last month. Meanwhile, the bank just admitted that a “calculation error” may have led to the foreclosure of 400 homes whose owners were wrongly denied a mortgage modification. (NY Post)

Brevan Howard plans to launch a new $750 million macro fund on Sept. 1. (Reuters)

Follow @BeecherTuttle

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Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by actual human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t).

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Return of the structurer as Barclays makes a major hire from Goldman Sachs

August 7, 2018, 2:33 am

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After years in the deep freeze, structurers are suddenly basking in the warmth of a preternatural hiring wave: they’re hot all over again.

The latest manifestation of structurers’ desirability is on display at Barclays. The British bank just recruited Dean Galligan, a managing director at Goldman Sachs, and the firm’s former head of insurance structuring for EMEA. Galligan is joining Barclays as a managing director after a sixteen year career at GS.

Barclays isn’t the only bank with an interest in hiring structurers. Stacy Selig, the head of Goldman Sachs securities division’s Americas equity structuring group, said last week that the firm is stocking up on structuring talent as clients demand increasingly complex hedging tools based on so-called “factor investing” (eg. size, volatility, value and momentum) as well as on macroeconomic conditions.

Citi’s London office recently hired an equity derivatives structurer from Bank of America in the U.S. and recruiters who work with structurers say they’ve been busy for months.

For Barclays, Galligan is merely the latest in a long line of senior recruits as the British bank seeks to rebuild investment banking revenues. Barclays has hired over 30 managing directors to its global markets business since the start of 2017, prompting a few complaints from some existing staff that too much emphasis is being placed upon outsiders (although these may have been quashed by Barclays’ recent exemplary results).

For its part, Goldman Sachs seems to have been losing more staff than usual last year as it too increases hiring from outside. Galligan’s exit seems curious to the extent that this is a biannual ‘partner year’ at Goldman, when the firm promotes partner managing directors, and he might have been in with a shot. Then again, after being promoted to MD in 2009 and not making partner yet, Galligan probably decided he was better off availing himself of the money on offer at Barclays.

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The IQ test you may have to pass if you want to work for a hedge fund

August 7, 2018, 3:31 am

≫ Next: Here’s how much you really earn as an MD at Credit Suisse and UBS in London

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Faced with a growing number of junior applicants, banks, hedge funds and other financial firms have begun relying more on technology to help pare down the thousands of interested students to a reasonable number for in-person interviews. Some utilize software that can screen resumes, while others have incorporated recorded video questions as the first step in the interview process for prospective interns and analysts. Steven Cohen’s Point72 Asset Management even uses an online IQ test of sorts as part of its assessment process for juniors.

Those who apply for internships or full-time positions within the hedge fund’s Point72 Academy will be asked to complete an online version of the Wonderlic Test, which assesses an applicant’s cognitive abilities through logic and problem-solving questions. The Wonderlic is utilized by thousands of organizations to help screen candidates, though its pervasiveness among financial firms is somewhat unclear. A few posts on forum Wall Street Oasis mention the Wonderlic as part of the interview process at a couple lesser-known buy-side firms, but recruiters we spoke to say it’s not an industry-norm, at least at the moment. One equities trader said they used the Wonderlic as part of an “Intern Olympics” competition this summer.

The test is perhaps most well-known for its use by the National Football League on prospective players. Polarizing scores tend to find their way into the hands of the media, which often creates a PR firestorm. A source close to Point72 said the test is used as one data point in assessing candidates, though it’s not near as important as a student’s GPA, board scores or interview performance.

The traditional Wonderlic Test includes 50 multiple-choice questions that need to be answered within 12 minutes, so the ability to think quickly yet critically is a must if you want to score well. Many of the questions are math-based, though it’s more of a test of reasoning than accelerated math skills. A few examples from online practice tests:

What is the next number in the sequence: 4, 11, 25, 53…?
A gallon of gas costs $3.80. How many gallons of gas can be purchased with $19?
Two women start at the same point. They walk in opposite directions for 3 meters, then turn right and walk another 4 meters. How far apart are they?
The square footage of a room is 1,400 ft. If the one side is 25 ft long, what is the length of the other side?

We’re told the Wonderlic Test is only administered for junior applicants: prospective interns and candidates interested in joining the Point72 Academy, the 10-month paid training program launched in 2015 that the firm uses as an incubator for investment talent. The hedge fund formerly known as SAC Capital is said to hire most of its junior talent from the academy.

Click here to try your hand at a practice Wonderlic Test. The average score for an investment analyst is around 27 out of 50, according to one test prep site. That’s bested by teachers, accountants, programmers and engineers (29). Systems analysts (32) are the Wonderlic kings.

Follow @BeecherTuttle

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Here’s how much you really earn as an MD at Credit Suisse and UBS in London

August 7, 2018, 6:53 am

≫ Next: Morning Coffee: Goldman Sachs’ new-old way of cutting staff costs. Would you take retirement in the middle of your career?

≪ Previous: The IQ test you may have to pass if you want to work for a hedge fund

Do you really earn less money working for a European than for a U.S. bank in London? Popular opinion would have it that you do. But popular opinion may be wrong: our analysis suggests that if the European investment bank you work for is either Credit Suisse or UBS, you’ll be paid on a par with people at U.S. houses. – Or at least, this appears to have been the case for last year.

Both UBS and Credit Suisse issued UK specific remuneration reports for 2017. They’re not new, but they are buried on the Swiss banks’ websites and we’ve only just come across them. If you’re weighing-up whether to join either bank in London, they are both informative.

Firstly, it turns out that Credit Suisse and UBS pay senior staff in their London investment banks very similarly. The average pay per head figures in the chart below are not for managing directors per se, but for material risk takers or code staff. These include both MDs and individuals with the ability to expose a bank to significant risk, but are a reflection of senior pay. UBS has 419 of them in its investment bank in the UK.Credit Suisse has 351 in its combined Credit Suisse International and Credit Suisse Securities Europe businesses (which house its global markets and investment banking operations in Britain).

Secondly, it seems that neither Swiss bank pays especially badly compared to big investment banks in London. U.S. banks haven’t all released their UK remuneration reports for 2017 yet, so the figures in the chart below are drawn from our analysis of their 2016 figures instead. However, even if pay increased by a few percentage points last year, the pay discrepancy between Swiss banks and U.S. banks would not be huge.

So how can you optimize your pay at a Swiss bank in London? As the chart below shows, Credit Suisse looks like the place to go if you want a big bonus – or at least it was in 2017. If you really want to get paid though, you’re advised to aspire to a management function in the investment bank at UBS. – Last year, there were nine senior managers in UBS’s UK investment bank and they earned an average of $5.8m each.

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Morning Coffee: Goldman Sachs’ new-old way of cutting staff costs. Would you take retirement in the middle of your career?

August 8, 2018, 12:19 am

≫ Next: J.P. Morgan and Goldman Sachs are adding algo-trading VPs

≪ Previous: Here’s how much you really earn as an MD at Credit Suisse and UBS in London

if you’re working on Wall Street, how far from the physical Wall Street can you actually be? According to an article in Business Insider today, Goldman Sachs reckons that the definition of the financial district can stretch as much as 2,200 miles (32 hours by Uber, if the traffic is good), to Salt Lake City and that’s about to get stretched further still. Goldman’s also begun hiring in Richardson Texas (24 hours cab ride to NYC) and Utah (33 hours). 30% of Goldman Sachs’ headcount already works in these kinds of ‘high value’ locations and it’s about to get even higher still.

The impetus behind the push into ever more widely dispersed offices is of course costs, and cutting them. Goldman’s high value locations are anything from 45% to 75% cheaper than places like New York City or London. Utah has lower local taxes than New York, and a combination of low living costs and cheap real estate make it an attractive option for a number of financial services firms. “Near-shoring” is in many ways the new “offshoring” and considerably less politically sensitive. Alliance Bernstein have a large centre in Nashville, Tennessee, while Deutsche Bank, for example, carries out a considerable amount of both back office and front office business in the UK from its “Brumsourcing” location in Birmingham. Even the Canadian banks have got in on the act by transferring treasury and back office functions to Nova Scotia and Newfoundland.

The choice of location is part of the key to success. By becoming big local employers in otherwise economically deprived areas, banks can cut back costs nearly as much as by moving to offshore processing centres in Asia, while preserving time zone advantages. They can also, importantly in the current climate, broaden the base of their political support beyond a narrow region.

But what about the employees? There are lifestyle benefits to living outside a polluted and overpriced major financial city, but the stigma of the proverbial “Equities in Dallas” from Michael Lewis’ book “Liars’ Poker” will always be there for anyone being asked to consider a move from New York. Goldman are being somewhat cagey about their plans for Salt Lake City, neither confirming nor denying reports until employees have been informed. For the moment, though the Goldman’s new near-shoring push into Utah, Salt Lake and Richardson seems to be focused on compliance. With luck it will stay this way. – As revenue producing employees at Deutsche Bank’s Jacksonville office have discovered physical proximity to senior management who decide promotions and determine bonuses is crucial to your career.

On the general subject of balancing lifestyle choices against career ambitions, the Financial Times has an interesting and provocative longread on the subject of what retirement might mean for a new generation. Sarah O’Connor suggests that, in an economy that is likely to be characterized by greater longevity (and therefore bigger pension liabilities) but also by technical change, disruption and robots replacing human employees, we should be thinking not only about working more years before retirement, but about taking some of the leisure time people usually save up for the end of their lives and using it when we are young and able to enjoy it.

The idea would be that we might start with a presumed retirement age of 70. Then, if at the age of 35 you found your job becoming obsolete, you could take 2 or 3 years to retrain for a new career and add them onto your retirement date. The same could be done for family leave, or even just taken as a sabbatical.

The idea of taking regular career breaks without necessarily damaging your career progression is enticing. People who work in the financial industry and move jobs frequently already experienced a minor version of this phenomenon due to gardening leave; if you move jobs four or five times over the course of a career, that’s like having a year off on full pay. Bankers often have extravagant ambitions for doing something productive with their gardening, which usually tend to founder on the reality of the fact that you can’t write a novel or learn French cooking in 3 months. Maybe if this was a more normal part of working life, would get closer to being the people we imagine ourselves being.

Meanwhile…

Morgan Stanley analyst have put together a table of companies exposed to “key man risk”. Of course the most dubious use of this list, and therefore the one to which it will certainly be put, is to look for which bosses make the most difference and compare it to their compensation. Jamie Dimon comes out very near the top. (Business Insider)

The 1MDB case rolls on, with the NYT reporting that Brooklyn prosecutors are considering an indictment against Goldman Sachs, after individual criminal charges against Goldman banker Tim Leissner were dropped earlier in the year. (New York Times)

The trend for high value startups to remain private as long as possible rather than heading straight for IPO has spread from the USA to Europe, with consequent significant expansion of private capital teams in European investment banks. JPM, Rothschild and Goldman Sachs have all built up European private market capabilities. (Financial News)

Market makers are being asked to help train AI bots to recognise patterns and route orders, with the ultimate aim of doing the human beings out of a job (Risk)

Perhaps at a slightly lower level of ambition, Mosaic Data is a FinTech start-up which aims in the fullness of time to provide real-time analytics on customer profitability, but which currently promises an artificial intelligence rule to spot fat finger trades.(Financial Times)

Brexit announcements continue to rumble on, with HSBC choosing its French legal entity to be the new head of the European group. (Les Echos)

If you were delayed in Frankfurt Airport yesterday, it was because of a mistake by a security guard who allowed a French family to go through security despite having triggered an explosives alarm. Everything had to be shut down until the family could be found and the alarm determined to be a false positive (Bloomberg)

For fans of the prurient and tabloid end of financial life, the New York Post has a long run down of the ins and outs of the Bill and Kate Gross divorce case, detailing all the practical jokes played by the bond King and his ex on each other (New York Post)

Academic research has shown that people react badly to vocal characteristics associated with under privileged minorities. A university professor was able to show that he got offered better properties by real estate agents simply by using his “white voice” on the telephone. (The Economist)

Do you have strong self-control? Or do you just get less tempted because you feel less hungry? New psychological research suggests that it’s likely to be the second. (BPS Research Digest)

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J.P. Morgan and Goldman Sachs are adding algo-trading VPs

August 8, 2018, 2:44 am

≫ Next: The unexpected investment bank that offers the best work-life balance

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Structurers aside, one type of finance professional is particularly popular this year: the systematic or algorithmic (algo) trader. Whether it’s to work on the central risk book or creating algos for customer trades, banks are busy looking for algo trading talent.

Both Goldman Sachs and J.P. Morgan have recently added vice president (VP) level talent in the area. Goldman Sachs hired Tim Rohkemper from Credit Suisse. J.P. Morgan hired Fabian Mehmke from Deutsche Bank. Both joined in London.

Rohkempter arrived in Goldman’s systematic trading strategies team in July after two years in quantitative investment strategies at Credit Suisse. Credit Suisse insiders say Rohkemper had been accelerated to vice president at the Swiss bank after joining only three and a half years previously.

Mehmke arrived at J.P. Morgan this August. He’s working as an algorithmic trader at the U.S. bank, after five years trading eurobonds at Deutsche Bank.

Goldman Sachs is building out its electronic and algorithmic trading capabilities after years of under-investment in the area. Returns can be significant. Barclays, which has also been investing in electronic trading (and hiring heavily from Credit Suisse), achieved a 30% year-on-year increase in its equities revenues in the first half of this year.

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The unexpected investment bank that offers the best work-life balance

August 8, 2018, 3:37 am

≫ Next: Bank by bank, here’s where the hiring and firing will happen now

≪ Previous: J.P. Morgan and Goldman Sachs are adding algo-trading VPs

If you want to work at an investment bank that carries plenty of clout within the industry, the usual suspects will be your best bet. For the fourth year running, Goldman Sachs, Morgan Stanley and J.P. Morgan have ranked as the three most prestigious investment banks, according to the latest survey from Vault. But while big-name banks look great on your resume, they don’t always provide the best work-life balance.

Boutique investment bank Greenhill & Co. dominated Vault’s quality of life rankings, finishing first in over half of the categories, including work-life balance, hours, culture, relationships with managers and overall satisfaction, among others. Fellow M&A-focused boutiques like Centerview Partners, Perella Weinberg and PJ Solomon also fared well in the quality of life categories.

Digging into the employee reviews, one phrase kept popping up at Greenhill: face time – or a lack thereof. Nearly a dozen bankers noted that Greenhill doesn’t promote the all-too-familiar culture where juniors are made to feel obligated to stick around until 2 a.m. for no particular reason. Interns, analysts and even associates at other banks often complain about the pressure they feel to remain in the office late at night and on weekends just because their boss happens to be there or other juniors have yet to go home. However, showing your face for the sake of it appears to be frowned upon by management at Greenhill.

“Hours can be unpredictable but management cares about work/life balance and long hours are usually linked to active deals,” said one M&A banker. Other reviews tout Greenhill’s culture, management and collegial atmosphere. Even some non-five-star reviews mention the “great hours” and “great lifestyle” at the boutique, though employees who work outside of Greenhill’s New York headquarters – in cities like San Francisco, Chicago and Houston – were more likely to boast about working hours. Greenhill operates in 15 cities globally and actually generates more revenue from clients outside the U.S.

Beyond work-life balance, Greenhill bankers mentioned some of the more common pros for boutiques: working on live deals rather than always pitching along with early exposure to MDs and clients. The downsides were also somewhat predictable. Like most boutiques, Greenhill is an advisory specialist that doesn’t have the financing arm and resources of bulge-bracket banks, which can sometimes limit deal flow.

Greenhill’s march up the overall rankings likely has something to do with its recent success. M&A revenues increased 30% during the second quarter, driving first-half compensation up $15 million, or 18%. However, compensation as a percentage of revenue at Greenhill still doesn’t match that of bigger-name boutiques like Evercore and PJT Partners, which is probably why the bank ranked 9th in satisfaction over pay, finishing below several other boutique investment banks.

The overall rankings, which include non-quality of life categories like prestige, leadership and training, are below. There was very little movement inside the top 10, with Goldman hanging on to the top spot for the last three years while Greenhill leapfrogged Moelis. Guggenheim Securities represents the only new member of the top 10, pushing aside PJT Partners.

Follow @BeecherTuttle

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Bank by bank, here’s where the hiring and firing will happen now

August 8, 2018, 8:15 am

≫ Next: It looks like most banks had a terrible July

≪ Previous: The unexpected investment bank that offers the best work-life balance

Bank by bank, this is what’s happening this summer – and what will ensue as summer draws to an end.

ABN AMRO

From hiring to firing: This time last year, ABN Amro was busy letting everyone know that it was building out its corporate and investment bank. 12 months on, it seems to have had a change of heart: the Dutch bank said today that it wants to cut 250 jobs from its corporate and investment bank and to shrink back to its domestic market as it seeks to increase its return on equity. Let this be a warning to anyone would join a European bank in the midst of an expansionary outburst.

Barclays

Big hiring, small firing: Barclays was the big hirer of 2017 and Barclays is also turning out to be the big hirer of 2018. In the 18 months to June 2018, the UK bank says it recruited over 30 managing directors to its global markets division, including – most recently – Dean Galligan – an MD from Goldman Sachs. Barclays has been busy building its equities sales and trading division under new global head Stephen Dainton, but there’s a push into corporate finance too with an “aggressive” push to hire bankers to cover continental Europe. Oh, and there’s also been some firing of late – both in credit and in equities.

What next? Barclays is reallocating capital to high yielding parts of its investment bank and while there’s not much talk of overt hiring, more of the same seems likely. During the bank’s second quarter results call, CEO Jes Staley said Barclays is now, “In a position to contemplate new investments and opportunities to grow the top line and bottom line.”

Bank of America

A seeming need to hire some more M&A bankers: Bank of America didn’t exactly say so, but a cursory look at its second quarter results suggests it could probably do with hiring some new M&A bankers to cover the American market. Bloomberg said in June that BofA had lost 14 managing directors from its advisory division, of whom 10 were in the U.S. For some reason, BofA’s M&A revenues were down 36% year-on-year in the first half, while rivals like J.P. Morgan and Morgan Stanley achieved 20% increases.

Bank of America CEO Brian Moynihan didn’t say anything specific about M&A hiring in the bank’s second quarter investor call. Instead, Moynihan said: “We know we can do a better job there and the team is working on it.”

BNP Paribas

Supposed to be hiring, could benefit from firing: BNP is going for growth in its corporate and investment bank. As we noted last week, the French bank aspires to a 4.5% compound average rate of revenue growth there each year thanks to things like cross-selling, deeper penetration of global markets products with corporate clients and deeper client relationships in general. Instead, revenues are shrinking.

Hiring is happening at BNP. The French bank just recruited James Moi, a structured credit trader from Credit Suisse, for example. It’s also been hiring for its equity derivatives sales team. However, BNP also aims to make €1.1bn of cost savings across the bank in 2018. With the Corporate and Investment bank the main target until now (42% of existing cuts have hit the CIB), with the global markets division under-performing and with talk of pursuing “efficiencies”, some redundancies seem inevitable.

Citi

Adding ‘talent’, eliminating inefficiency: As per its most recent investor day, Citi is supposed to be growing revenues in its institutional clients group (investment bank) by investing in “talent” to work on deals in the technology, financial institutions and energy sectors. In July, it hired two UBS M&A bankers for France, based out of Paris.

The investor day presentation also spoke of “leveraging the global network” in fixed income and “capitalizing on [existing] investments in talent and technology” in the equities sales and trading division. In equities, things appear to be going to plan: Citi’s equities sales and trading revenues were up 29% in the first half of this year – second only to Barclays’ increase of 30%. Things didn’t work out so well in fixed income, though. Here, Citi’s revenues fell 7% in the first half, putting the bank on a par with BofA. Only Deutsche was worse (fixed income revenues down 19%).

Like most banks, Citi is cutting costs. During the investor call accompanying the second quarter results, CEO Mike Corbat noted Citi’s intentions of making $2.5bn of efficiency savings across the bank by 2020. $1.5bn of these are due to come from the consumer bank, by the Institutional Clients Group is unlikely to prove immune to what Corbat later said includes ‘optimization, streamlining and business process reengineering.’

Credit Suisse

Equities gaps, mysterious disappearance of hundreds of markets staff: Credit Suisse is cutting costs in its global markets division. The Swiss bank has long aspired to reduce costs there to below CHF4.8bn annually. They were CHF2.5bn in the first half of 2018, down only 1% from last year, suggesting there is still some way to go.

As it cuts costs, there are indications that Credit Suisse is hacking away at staff. – Or is it? As we observed previously, the bank’s second quarter results presentation said very clearly that headcount in global markets fell by 350 people in the three months to June, even though insiders are insistent that only “tens” of people were let go.

Either way, there doesn’t seem much hiring happening: net headcount fell in every division of CS in the three months to June, with the exception of the corporate centre where 10 people were added.

Hiring seems to have tapered off in Credit Suisse’s equities division, where newish head of global equities Mike Stewart presided over a 1% fall in revenues during the first half, despite heavy recruitment last year and a push to achieve a top five position globally. This doesn’t mean equities hiring is entirely done though: Stewart will need to replenish his team after various exits to Barclays, where ex-Credit Suisse man Stephen Dainton is busy hiring his ex-colleagues, including – most recently Mathew Cousens and Kevin O’Connor. Chris Marsh, Credit Suisse’s head of advanced execution services for Europe, also recently left for UBS.

Credit Suisse therefore has several big gaps to fill in its equities electronic equities team. Meanwhile, CEO Tidjane Thiam is all for the bank’s International Trading Solutions division, where global markets staff provide products to private wealth clients. The people here are very ‘happy and excited,’ said Thiam. Whether the bank is adding to their numbers is another question.

Deutsche Bank

Thousands of job cuts to come, especially in the back office: Deutsche Bank is, theoretically, done with the job cuts in the front office of its corporate and investment bank (CIB). It is not done with cuts elsewhere.

CEO Christian Sewing said in May that he planned to finish cutting front office jobs at the German bank by the end of July 2018. At the end of June 2018, Deutsche revealed that it had cut 1,700 people from the bank as whole in the previous three months, including 983 from the CIB. July’s cuts not withstanding, it therefore looks like Deutsche has rather a lot more redundancies to go before hitting Sewing’s target of 7,000+ job cuts in total. Middle and back office staff will be next.

Meanwhile, there’s very little evidence of hiring at DB’s investment bank this year – except when it comes to the inflated graduate class.

Goldman Sachs

Still hiring executive directors, electronic traders and engineers: Despite the imminent arrival of a new chief executive, Goldman Sachs’ strategic playbook remains enshrined in the presentation given by then COO- Harvey Schwartz in September last year. – The firm is pursuing an extra $1bn a year of fixed income revenues, $500m each in equities and investment banking (M&A, ECM, DCM), and is hiring in more staff than before from outside.

External hiring remains a focus at Goldman in 2018, with the firm making plenty of new recruits at executive director and vice president level, plus the addition of various new managing directors in areas that have seen departures – like the European macro desk. During the bank’s second quarter investor call, CFO Marty Chavez said Goldman is still ‘pursuing opportunities’ to gain markets share in low touch execution (ie. electronic trading).

New CEO David Solomon may be expected to make some small changes to Goldman’s emphasis in light of his background in the investment banking division. However, early indications of Solomon’s intentions suggest he’s going to keep pushing into systematic trading and flow products, while also expanding Goldman’s coverage of mid-market investment banking clients globally.

J.P Morgan

Ever such quiet hiring: J.P. Morgan seems to be hiring for its corporate and investment bank, but it’s keeping pretty quiet about it. The U.S. bank added 109 CIB staff globally in the second quarter. The U.S. bank is busy hiring in China, where it wants to expand its investment banking team by 40% to 50%. Although J.P. Morgan’s cash equities hiring is mostly past, the bank is also open to building its European business with selective hires. It added two former Citigroup traders – Mark Coetzee and Gil Peleg in June.

Morgan Stanley

Stealth mode: If Morgan Stanley’s hiring, it’s not saying much about it. After delivering persistently strong sets of results, the most that is typically uttered by CEO James Gorman is that Morgan Stanley is the right size for the market and that if, “the market is doing well, we’re doing well in that market.” Even so, Morgan Stanley has been busy restocking its U.S. infrastructure team and very quietly hired a Credit Suisse crypto enthusiast to be head of digital asset markets in Zurich this month.

SocGen

Digesting Commerzbank: SocGen is in the grips of what it describes as a “group refocusing” involving some “strict cost control” in its investment bank. There are distinct signs of pain: second quarter revenues in the French bank’s equities division were poor and fell two percent even as European rivals like Barclays saw big increases. SocGen said equity derivatives were particularly weak during the quarter, in contrast to Credit Suisse which highlighted equity derivatives as a source of strength.

Even so, changes to SocGen’s investment bank in the next six months are likely to be limited to the assimilation of Commerzbank’s equity markets and commodities business. In SocGen’s second quarter results presentation, the bank said it plans to use the acquisition to become a leading player in Germany and to become a global player in flow products trading.

UBS

UBS isn’t everyone’s cup of tea. We know this because Andrea Orcel, head of the investment bank, said so himself to Financial News in July. “I accept that UBS investment bank and its culture is not for everybody. But if you choose to work here, the expectation is that you are fully committed to the vision, the strategy and the culture,” declared Orcel.

It might be a good thing that not everyone likes working at UBS, because the Swiss bank has been laying a few people off. There were cuts to the rates sales desk last month, including David Steckl, the former institutional head of U.S. rates sales who only joined from Deutsche Bank in mid-2017.

UBS is also hiring though. The Swiss bank is having a big push into the Americas, where it has a “very aggressive plan” for expansion and wants to hire lots of “old fashioned bankers'” with relationships. This might take a while though: Orcel said previously that the bank likes to hire slowly by word of mouth and to give people time to settle in.

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It looks like most banks had a terrible July

August 8, 2018, 11:44 am

≫ Next: Morning Coffee: The big bad dark cloud hanging over Barclays. Terrible fate of London bankers who survive Brexit

≪ Previous: Bank by bank, here’s where the hiring and firing will happen now

Traders and investment bankers that celebrated impressive second quarters at most banks may want to put the cork back in the bottle. July was a very slow month.

Within investment banking, equity and debt capital markets revenue fell off a cliff in July, with projected fees dropping 42% and 28% month-over-month, respectively, according to Buckingham Research. And the sequential drop isn’t due to an unusually stellar June. Year-over-year, ECM and DCM revenues were down 19% and 40%, respectively.

In need of a strong second half to justify cuts elsewhere, investment bankers at Deutsche Bank had a particularly rough July, with global equity fees down a projected 60% compared to the month previous and 39% year-over-year. Same tune, different song in DCM, where projected revenues were down 41% compared to June (-18% Y/Y). Not the start Deutsche Bank was looking for to kick off the second half.

Activity was a bit stronger across the board in M&A, though projected fees for announced and completed deals were still down both sequentially and year-over-year. With most banks faring rather well in M&A during the first half, all eyes are on the one that floundered: Bank of America. The firm saw M&A revenues drop 36% during the first half of the year, and it looks like things haven’t improved much to start the second half. Bank of America has booked just $60 million in M&A fees during the start of the third quarter, on pace to fall well short of the $264 million it recorded in Q2 and the $283 million last year, according to Buckingham and Thomson Reuters.

Like investment bankers, traders were also stuck sitting on their hands more than they’d like during July. U.S. equities volume was down 16% year-over-year and 18% sequentially. Equity trading volumes in Europe and Asia were a bit stronger but still down double-digits compared to a year ago. FICC trading slowed as well, particularly in interest rate derivatives (35% M/M and 6% Y/Y).

It’s just one month – typically a slow one – but revenue totals are down across the board compared to July 2017. All the compliments over second quarter performances have likely dried up by now.

Follow @BeecherTuttle

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Morning Coffee: The big bad dark cloud hanging over Barclays. Terrible fate of London bankers who survive Brexit

August 9, 2018, 12:06 am

≫ Next: Meet the trading star who just made associate at Goldman Sachs, aged 20

≪ Previous: It looks like most banks had a terrible July

As we noted in yesterday’s big roundup of banks’ hiring and firing intentions for 2018, Barclays looks like the place to get a new job now. The British bank has added 30 managing directors to its markets division since the start of 2017 and is focused on reallocating capital to its investment bank in an effort to increase returns. Between the second quarter of 2017 and the second quarter of 2018, equity allocated to Barclays International rose 17%. Assets in the trading portfolio of Barclays International rose 40% over the same period (although risk weighted assets were up a mere 3%). In equities, if not fixed income trading, the bank had an excellent second quarter.

But what if this all proves transitory? Waiting in Barclays’ wings is, needless to say, Edward Bramson, the activist investor who owns a 5.4% interest in the bank and is one of its biggest shareholders. Bramson has been lurking since March 2018, but seems determined to make his presence more felt. The latest manifestation of this is Bramson’s reported determination to have a say in who replaces Barclays’ chairman John MacFarlane. MacFarlane dismissed talk that he was leaving in May 2018, saying that he would remain in his post for at least another year. Bramson seems to want him to go sooner.

This matters. MacFarlane presided over Staley’s appointment as CEO and has repeatedly praised him for doing a good job as Staley rebuilds Barclays’ investment bank. Bramson’s choice of chairman would unquestionably be less easy for Staley to live with: there have been claims that Bramson wants to break up and sell Barclays’ markets arm, and the Financial Times says he wants to return much of the £26bn of capital in the investment bank to shareholders and to shrink the unit. If Bramson gets his chairman, then, the recent revival of Barclays’ investment bank will be in jeopardy. It’s probably something to bear in mind if you’re joining as a managing director with a guaranteed one year pay deal.

Separately, if you’re a London banker and you maintain your job in the City following Brexit, you may suffer the sort of fate that makes dinner parties vibrate with disquiet: house prices could fall considerably. Bloomberg reports that London prices are already suffering the side effects of EU nationals leaving the City. Things are only likely to get worse after Brexit happens for real.

Meanwhile:

Nomura has written to its clients asking them to prepare for a chaotic no deal Brexit. (CityAm)

Salespeople are leaving for bitcoin. Amy Yu, who previously worked in sales for synthetic products at JPMorgan, joined BitMEX to head up institutional sales. Lauren Abendschein, formerly a director at Credit Suisse, has joined Coinbase as a manager of institutional sales. (Business Insider)

Amir Khandani, a systematic trader at Morgan Stanley, left for Millennium Management. (Financial News)

Jeffrey Schackner, former head of consumer investment banking at Citi, joined Ardea partners – a boutique set up by Goldman alumni. (Financial News)

ABN AMRO is cutting 250 jobs and paring back its business in trade and commodity finance and other business in which earnings are volatile. (Bloomberg)

‘Overfitting is the curse of anyone who tries to use the past to predict the future. Forecasting is a delicate balance between two extremes: at one end we risk creating a model which is too simplistic to be of practical use, whilst at the other the model is too complex and closely fitted to the past.’ (RiskyFinance)

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Meet the trading star who just made associate at Goldman Sachs, aged 20

August 9, 2018, 4:42 am

≫ Next: Barclays said to make three major equities trading hires in the U.S.

≪ Previous: Morning Coffee: The big bad dark cloud hanging over Barclays. Terrible fate of London bankers who survive Brexit

If you’re good at Goldman Sachs, you will get promoted fast and you will get promoted early. – The archetype is Kunal Shah, the Goldman Sachs macro trader who joined the firm aged 21 and became partner aged 27. Now it looks like another young macro trader is following in Shah’s footsteps.

Wajih Ahmed, a trader on Goldman’s London inflation desk has just been made associate in this year’s junior promotion round. Ahmed, who joined Goldman Sachs two years ago is just twenty years old.

Making associate after two years on Goldman’s securities programme is unusual – although the firm usually promotes after two years in the investment banking division, promotions in the securities business are made on merit. In securities, advancement after three years is more common. Ahmed is therefore special, but this has long been the case.

Ahmed was notable for his exceptionalism long before Goldman Sachs. Aged 10, he scored 99% in his maths A level. Aged 11, he scored 97% in further maths A level. Aged 13, he got an A in his chemistry A level. Aged 14, he got an A* at physics A level. He began studying economics at Southampton University aged 14, and aged only 17 was the university’s youngest ever graduate, with a first class degree and an 86% overall pass rate. He then completed a masters in finance at the London Business School, all before his 18th birthday.

Ahmed’s first encounter with Goldman was in the summer of 2015 when (aged 17), he was an intern in the London securities division. In those three months he managed to achieve a mythical status among other interns and analysts after completing a project that was supposed to have taken an entire week in only two hours.

Ahmed is still only an associate at Goldman. If he wants to emulate Shah, he’ll need to become a vice president, executive director, managing director and then partner. None of this is easy. But if the past is any indication of the future, Ahmed is definitely someone to watch – particularly around the time of the 2024 partner promotion round.

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Barclays said to make three major equities trading hires in the U.S.

August 9, 2018, 5:56 am

≫ Next: The investment banks with the best vacation policies

≪ Previous: Meet the trading star who just made associate at Goldman Sachs, aged 20

The hiring is still coming thick and fast at Barclays. Fresh from recruiting a team of five equity research analysts from SocGen in London, the British bank is understood to have hired three equities traders in the U.S. – two of whom are thought to be joining at managing director level.

Barclays hasn’t confirmed the moves, which are said to include Mike Lewis from Morgan Stanley, and Andrew Rouff and Justin Kantrowitz from Credit Suisse. All three are thought to be joining in New York.

Neither Lewis nor Morgan Stanley responded to a query on Lewis’s plans, but he is no longer present on the bank’s switchboard. Similarly, Rouff and Kantrowitz didn’t respond to LinkedIn messages, but have left Credit Suisse.

Headhunters and colleagues of three men said they’re off to Barclays.

The moves look like a coup for Barclays as it builds out its equities business under global head Stephen Dainton, who joined after leaving Credit Suisse in July last year. Lewis began his equities career at Lehman Brothers in 1998 and had worked at Morgan Stanley for 12 and a half years; colleagues say he had a very high profile on the desk. Rouff joined Credit Suisse twenty years ago. Kantrowitz joined Credit Suisse from Bluecrest in 2015. He previously spent five years at Jefferies.

As we noted last week, Barclays’ equities sales and trading business is having an exceptionally good 2018 after stocking up on staff, predominantly from Credit Suisse. The British bank has hired 30 managing directors across its markets division since the start of 2017, but is under pressure from activist investor Edward Bramson, who wants to withdraw capital from the investment bank and shrink or spin-off the trading unit.

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The investment banks with the best vacation policies

August 9, 2018, 8:51 am

≫ Next: How soon really before you become an associate at a U.S. bank? Well…

≪ Previous: Barclays said to make three major equities trading hires in the U.S.

For most prospective investment bankers, paid time off (PTO) isn’t likely a key factor in deciding between firms. But once the job starts and the long hours begin adding up, a bank’s vacation policy can take on a new level of importance. So which investment bank is most generous with its employees over PTO? That would be Chicago-based William Blair, according to a new study from Vault.

A mid-market investment bank with around 1,500 employees globally, William Blair is rather unique because it is independent and employee-owned, providing plenty of motivation for a good vacation policy. The firm has a rating of 9.5 out of 10 for its policy, a full point better than second-ranked Bank of America.

“Vacation policy is the best on the street,” said one junior M&A banker. The rationale isn’t because William Blair gives employees months off at a time or anything like that. Rather, the bank has a mandatory three-week vacation policy for new hires. And the firm apparently takes the word mandatory literally. One reviewer said that senior managers can see their compensation reduced if their direct reports don’t take the full three weeks.

Founded in the Midwest, most employees say they enjoy the “family” culture, though many working in the investment banking division acknowledge that the hours are still plenty long. William Blair also scored well in several other quality of life categories, including culture and work-life balance. Plus, they offer free snacks, apparently.

Some of the common critical comments posted on Vault and Glassdoor include a lack of upward mobility, likely due to the employee-owned partnership structure that entices management to stick around. Several reviewers on Glassdoor referred to the firm as an “old boys club,” and knocked the bank for its lack of diversity.

The rest of the banks that fill out the top 10 are all boutiques, with the exception of Bank of America. BAML offers 16 paid weeks of maternity and paternity leave – plus an additional 10 unpaid weeks if needed. Employees can also purchase additional time off beyond their normal days of allotted vacation. William Blair didn’t immediately get back to us with more specifics of their vacation policy. We will update if they do. The full top-10 is below.

Follow @BeecherTuttle

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How soon really before you become an associate at a U.S. bank? Well…

August 9, 2018, 9:23 am

≫ Next: Morning Coffee: Ex-Goldman Sachs MD alleges bizarre goings-on and sues for $50m. Ongoing fruit trauma at Deutsche Bank

≪ Previous: The investment banks with the best vacation policies

Theoretically, it’s become much quicker to get off the bottom rung in an investment bank. Ever since UBS and Citi first began promoting their analysts to associate after two years instead of three, most other banks have begun doing the same. These days, Goldman Sachs, Deutsche Bank, UBS, Credit Suisse and – as of January 2018 – Bank of America, all claim to expedite their analyst promotions. But if you think early promotion is a given, you might be disappointed.

U.S. investment banks have just converted analysts to associates for 2018. Most people were promoted after two years. Some were not.

Goldman Sachs looks like one of the best bets for early promotion. The U.S. bank consistently promotes analysts to associate after just two years in its investment banking division (IBD), and sometimes promotes after two years in securities sales and trading too.

This year’s new associates at Goldman include the likes of Timo Seidl in structured finance in London, Suraj Dash in real estate financing in New York, and Jonatan Andersson on the industrials M&A team, also in London – all of whom joined in the 2016 analyst class. As we noted earlier, the firm has also expedited Wajih Ahmed on its London inflation trading desk. He’s now an associate too, despite joining two years ago and only being twenty years old. Even at Goldman, though, we found people who were only just promoted to associate after over three years as an analyst in the firm’s London investment banking division.

At some banks, the speed of promotion this year is more patchy. At Citi, for example, there’s an equity capital markets associate who only just promoted from being an analyst after three and a half years.

Morgan Stanley is understood to have begun promoting early for the first time. Members of Morgan Stanley’s 2016 analyst class say the base case is now to promote analysts after two years (examples of new associates include Sotiris Mavrikoglou and Edward Smith in IBD in London). There’s even an example of someone who made associate in only 1.5 years in the New York fixed income strats team (Zihan Zhou). However, around six people in the MS 2016 London analyst class are understood to have been held back, and will have to wait another year to make associate.

The upshot then is that early associate promotion is not a given.

Andrew Pringle, a corporate finance recruiter and director at Hudson Beck recruiting in London, says early promotions only go to the “super stars”. When a bank promotes you to associate, Pringle points out that it has to pay you an associate salary. In London, this means a hike from £60k ($77k) to £80k ($103k). Most banks are in no rush to spend extra money without good reason.

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Morning Coffee: Ex-Goldman Sachs MD alleges bizarre goings-on and sues for $50m. Ongoing fruit trauma at Deutsche Bank

August 10, 2018, 12:42 am

≫ Next: Deutsche Bank is still cutting front office bankers (as well as fruit)

≪ Previous: How soon really before you become an associate at a U.S. bank? Well…

It’s a story that seems to have everything: a Mediterranean superyacht, a dubious businessman with a Germanic accent, Goldman Sachs and $1bn. If you were writing a script for a movie, you couldn’t ask for more.

The brief plot summary runs as follows: Goldman Sachs allegedly wanted to ingratiate itself with the businessman with $1bn to invest, so two of its senior bankers (Michael Daffey and John Storey) went to go and meet him on his yacht. Despite his dubious history, they allegedly ushered him past the firm’s client vetting process and subsequently agreed to issue $700 million in bonds on his behalf, thereby earning millions in fees. People at Goldman were briefly “ecstatic.” But then a client introduced by the businessman didn’t pay a bill, leaving Goldman temporarily on the hook for $85m. At this point, the firm allegedly looked about for someone to blame, alighted upon a senior banker only tangentially related to the entire affair, and suspended him.

So says Christopher Rollins, a former managing director who spent 16 years at Goldman Sachs, latterly as co-head of European execution services in London, before being fired for his apparent part in the matter in February 2017. Rollins, who is now the chief executive of BTIG, wants to be compensated: he’s looking for $50m.

Goldman Sachs, needless to say, doesn’t agree with Rollins’ version of events. It maintains that Rollins, “executed certain trades involving a previously restricted party without obtaining appropriate authorization,” and says his employment was terminated accordingly. Rollins says the firm “whitewashed” its records to make it look like he was the sole source of business with the client relating to the businessman, that he always complied with protocols, faithfully reported trades to his superiors and raised concerns about, “massive compliance failures.” He claims that Goldman tried to tie him up in a, “Kafkaesque disciplinary process,” where by he was pressured to confess to violating compliance restrictions without those restrictions being identified. Oh, and he had millions in deferred equity bonuses confiscated.

Rollins’ ire isn’t restricted to Goldman itself. He’s also going after Jim Esposito, the new co-head of Goldman’s securities business. Esposito chaired Rollins’ disciplinary hearing and Rollins is now suing him personally.

Hell hath no fury like an ex-Goldman MD who feels himself wronged. Rollins filed his lawsuit in Manhattan on Thursday.

Separately, the disappearing fruit bowls are still a thing at Deutsche Bank. Bloomberg prods the pimple of Deutsche discontentment with another story about the effects of cost-cutting at the German bank. The fruit has gone. So has first class travel. So has travel to conferences. The bank is also said to be looking at how much it spends on compliance staff. Although the cuts are being orchestrated by new CEO Christian Sewing, the fruit hatchet man is actually Deutsche’s new COO ,Frank Kuhnke. Frank has become known as “Frank the Tank.” An alternative might be, “Frank the banana slayer.”

Meanwhile:

The Financial Conduct Authority will be fine with back-to-back and remote booking after the UK leaves the EU. “We are aware that some authorities elsewhere in Europe have set out specific requirements as regards business models. We are open to a broad range of legal entity structures or booking models.” (Financial Times)

The Financial Conduct Authority has hired at least 30 people since February and is now advertising four senior Brexit-related roles. (Financial News)

Barclays has now hired more than 50 equity traders and analysts since last year. (Financial News)

Lots of students think KPMG internships are the best. (CNBC)

People with a high IQ seem to age more slowly. (BPS)

The joys of commuting. (BBC Capital)

This year’s CFA exam results will look a bit different. (300 Hours)

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Deutsche Bank is still cutting front office bankers (as well as fruit)

August 10, 2018, 3:30 am

≫ Next: Now Credit Suisse’s head of small cap trading has left for Macquarie

≪ Previous: Morning Coffee: Ex-Goldman Sachs MD alleges bizarre goings-on and sues for $50m. Ongoing fruit trauma at Deutsche Bank

It’s not over at Deutsche Bank. Not only is the in-office fruit not coming back, but the front office layoffs are still happening – albeit with less vigour than before. In latest round of exits, Deutsche insiders say a managing director in London debt capital markets has left the bank.

The MD in question is Virilo Moro, ex-head of Deutsche Bank’s financing and solutions (FSG) group for Spain and Portugal. Moro joined Deutsche Bank from Dresdner Kleinwort Wasserstein in 2002. Headhunters suggest his long service at DB made him a prime candidate for the chop as the German bank seeks to cut costs. Additional junior layoffs are also understood to be on the cards.

Deutsche Bank didn’t respond to a request to comment on Moro’s exit. Moro himself didn’t immediately respond to a comment on LinkedIn.

Deutsche Bank is in the process of cutting 7,000 jobs from across its investment bank. In the three months to June 2018, the bank removed 1,700 people, including 983 from the corporate and investment bank. In May, CEO Christian Sewing promised to complete front office redundancies at DB by the end of July. That they’re still going on suggests either that there were some stragglers, or that Sewing has decided more cuts need to be made after Deutsche’s miserable second quarter.

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Now Credit Suisse’s head of small cap trading has left for Macquarie

August 10, 2018, 5:05 am

≫ Next: The Confucius of LinkedIn exits Cantor Fitzgerald

≪ Previous: Deutsche Bank is still cutting front office bankers (as well as fruit)

If it’s not Barclays, it’s Macquarie. Credit Suisse equities traders have a distinct tendency to leave and head for one of the two banks.

The latest departure is understood to be Jason Maniloff, the former head of small cap equity trading at the Swiss bank in London. Maniloff is thought to be going to join Daniel Kaye at Macquarie. He was a director at Credit Suisse.

Credit Suisse confirmed Maniloff’s exit, although Maquarie declined to comment and Maniloff didn’t respond to an enquiry regarding his destination.

Ex-Credit Suisse trader Kaye has been building out Macquarie’s London equities business since late 2017. Maniloff wouldn’t be his first hire from Credit Suisse. Other ex-CS recruits at Macquarie include Jan Asboth (who left after six months for Barclays) and Kenneth Kane, Credit Suisse’s former managing director of program trading. Kaye has also hired from Deutsche Bank and BTIG.

Credit Suisse’s equities sales and trading business didn’t have a great start to 2018: revenues declined 1% year-on-year in Swiss franc terms, while revenues at banks with greater exposure to the U.S. market (eg. Barclays, Bank of America and Citi) were up around 30% over the same period.

Macquarie’s equities sales and trading business is tiny. The Australian bank doesn’t release quarterly results, but for the year to March 2018 its equities revenues were just AU$359m (US$263m). By comparison, Credit Suisse’s equities business generated CHF920m ($925m) in the year ending December 2017. Macquarie is said to be building out its equities sales and trading business in London and paying handsomely to attract new staff.

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The Confucius of LinkedIn exits Cantor Fitzgerald

August 10, 2018, 7:13 am

≫ Next: Morning Coffee: Is the Turkish crisis good or bad for bonuses? College kid gets into BlackRock by knocking on the right door

≪ Previous: Now Credit Suisse’s head of small cap trading has left for Macquarie

A managing director in charge of debt and equity sales has left Cantor Fitzgerald to join boutique broker-dealer Odeon Capital Group in New York. Herb Lust, a veteran MD who has managed sales, trading and research teams on both the buy-side and sell-side, also has a part-time gig of sorts: disseminating poet-like words of wisdom to his massive following on LinkedIn.

Lust has gained nearly 20k followers on the social network without being a CEO or face of a company. His popularity likely stems in part from his posts, which are equal parts Shakespeare and Milton Friedman. Some recent posts include:

“It is a mistake to equate who you are with your strongest emotion. You are what deliberates between your emotions. Feelings are merely signals. It is up to you to pick which one has most value. Choose wisely!”

“Never conflate memorization with sound judgement. Some of the worst investors know every single number. Simply knowing the facts does not imply, at all, that your conclusion is correct. There are a lot of idiot savants out there. Pattern recognition is more important than data collection. As Montaigne says, ‘Experience is a second intelligence.’”

“Tenacity distinguishes the successful from the ordinary. Tenacity also distinguishes the blithering idiot from the ordinary. Perspicacity without perseverance is empty. Perseverance without perspicacity is blind. You can recognize defeat without being a defeatist. Adaptive people change. Neurotics repeat. The distinction between tenacity and self-delusion is common sense.”

“Good risk management means never having to say you’re sorry.”

Lust’s passion for prose may be due to his rather atypical educational background for a career on Wall Street. While he has his MBA in economics and finance from NYU, he was a philosophy and art history major during his undergraduate years. Lust left Cantor Fitzgerald for Odeon in July. He earlier declined comment on his status at Cantor.

Follow @BeecherTuttle

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Morning Coffee: Is the Turkish crisis good or bad for bonuses? College kid gets into BlackRock by knocking on the right door

August 13, 2018, 12:59 am

≫ Next: How machines producing ‘cognitive content’ will displace banks’ research jobs

≪ Previous: The Confucius of LinkedIn exits Cantor Fitzgerald

Turkeys, as they say, don’t vote for Christmas. But the country of Turkey might spoil a few people’s Christmases if its ongoing debt and currency crises manage to put a big hole in bank profits for 2018. The lists of banks most at risk have began to be compiled by the sell side, and once more it appears to be the European players rather than the Americans with most to fear. Unicredit and BNP Paribas both have material Turkish subsidiaries, and the harsh truth is that even though this sort of business has very little to do with the trading franchise, if a bank is losing money or seeing its capital impaired, the bonus pool is the first source of funds that both management and regulators will look to. So there is potentially some reason to fear at the houses with the biggest direct exposure.

The rule of emerging market crises, however, is that the second and third round effects are nearly always bigger than the immediate ones. After all, nobody has mistaken Turkey for a low-risk proposition for quite some time – people have been predicting some sort of blow up for more than seven years. Big banks with big positions or subsidiaries there are likely to have made detailed plans to manage their risk. Often the most vulnerable players are those with related or semi related exposures which they believed to be safe, or even to be a hedge against risks elsewhere.

If there is contagion from Turkey into a full-blown emerging markets liquidity crisis, then, there is no one on the street who is 100% safe from having a bad enough quarter in their EM business to prompt one of those awful “town hall meetings” where the heads of debt and equities start telling everyone that although most of the business has performed well relative to budget, “expectations need to be revised downward” because of “the situation that everyone can read about in the Financial Times”. You’d normally think that the banks most vulnerable to this sort of disaster would be those with the biggest EM franchises, but in fact bitter experience has taught us that the size of the profits an emerging markets debt business makes in good times are a surprisingly poor guide to the size of the losses it’s capable of making when the bottom falls out.

On the other hand, we have to consider the possibility: what if a medium-sized emerging markets crisis was…good? There is always a sweet spot in the markets when newsflow is volatile enough to drive trading volumes and client business, but not quite extreme enough to leave the trading desk with losses. After a patchy Q2 for some houses and a more than usually pronounced summer lull, the return to business after Labor Day could be the make or break period in terms of the difference between a pretty good year and an exceptional one. So from the point of view of financial sector employees, we would like Mr Erdogan to do enough to keep things exciting, but not so much as to blow the thing up. Luckily, that seems to be exactly what many expert fund managers seem to expect to happen. Turkey might make it a happy Christmas after all.

Anyway, let’s also start the week with a feel good story. Reggie Nelson was a teenager from East London studying at a further education college when he came up with an idea to set himself apart from the crowd and improve his career prospects. He went to Kensington and started knocking on the doors of the multi-million-pound houses there, asking the residents “what skills and qualities they had, that allowed them to live in the wealthiest area in the UK?”

He was lucky that one of the first doors he knocked on was the house of Quintin Price, who was able to live on that street because he was the head of alpha strategies at BlackRock, responsible for managing just under a trillion dollars worth of funds. (Quintin has since retired, so maybe don’t knock on his door any more). The conversation they had led to a mentoring relationship, and to Reggie getting an internship at BlackRock. He went on to university and to a career in the financial services industry (according to LinkedIn, he’s currently at LGIM). Obviously, this isn’t a full solution to the problem of diversity in the City, but at least it shows that initiative and willingness to work can still help you break in, as long as you’ve got a good doorstep pitch and a fair slug of luck.

Meanwhile

Legal firm White & Case has decided it would be good if partners and associates could meet every now and then for informal coffees, to allow junior colleagues to make contacts and get a broader overview of the firm than they might get from the one or two principals to whom they are assigned. Since they are lawyers, they have decided the best way to achieve this is to have a formal process to oversee the informal coffee dates. Human resources will assign the dates to one another, wild the senior partners’ PAs will be responsible for scheduling them, monitoring them, and providing a short report to the informal coffee dates oversight committee. This is a law firm that is not scared of the stereotypes, clearly. (RollOnFriday)

Hedge funds come, hedge funds go. Certain Capital, a long-distance equities fund which launched last year with blue-chip investors including David Einhorn, has now closed in what the Wall Street Journal analyses as another example of the tough conditions for raising enough funds to reach critical mass. But Viewforth Partners is launching with its own blue chip investor, Michael Spence, aiming to take advantage of the reduced information environment in European mid cap stocks where research coverage has been hit by MiFID. (WSJ, Financial Times)

Nestor Paz-Galindo will be the new head of M & A for UBS in Europe. He comes from a private equity / financial sponsors background and joined from JP Morgan in 2016. (Financial News)

J.P. Morgan is the latest bank to have revised its training programme for IT staff to be a little bit more like a tech firm and attract the best graduates and programmers. From now on, JPM tech guys will be allowed to call themselves “engineers” and will benefit from a relaxed dress code and offices with foosball tables. More substantially, they will be assigned to real tasks at an earlier date under the oversight of named managers. (Reuters)

Ever since David Solomon took over, people have been noticing a potential cultural change at Goldman Sachs with more recruitment from outside at the top levels. This continues with the hiring of Kurt Simon, brought in from JP Morgan to lead tech advisory, at the coveted partner level. How many of these kinds of hires can be made before it starts having an effect on Goldman employees’ perception of the way the firm works? (WSJ)

The head of compliance for Americas at BNP Paribas want all of his staff to be at least basically competent in data analysis – “data comfortable” rather than “rocket scientists”. (Reuters)

And Charles Brennan at Credit Suisse has kicked off a good old-fashioned analyst versus company battle over the subject of accounting treatments for customer receivables at Atos SE. (Bloomberg)

Image credit: CasPhotography, Getty

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