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It has happened: Alasdair Warren, head of the corporate finance business for EMEA at Deutsche Bank, has left Deutsche Bank to, “pursue other opportunities.”

Deutsche announced Warren’s exit internally this evening. In a memo seen by eFinancialCareers, head of the investment bank Garth Ritchie said Warren will be replaced by Mark Fedorcik, head of Americas corporate finance, who will add EMEA to his remit. At the same time Adam Bagshaw and Nick Jansa will become co-heads of corporate finance for EMEA excluding Germany, and Berthold Fuerst and Patrick Frowein will remain co-heads of corporate finance for Germany, Austria and Switzerland.

Warren’s exit comes less than three years after he joined from Goldman Sachs, allegedly on a large two year guaranteed bonus. That guarantee is thought to have expired.

There have been numerous mutterings about Warren’s performance at Deutsche Bank: insiders pointed to Deutsche’s failure to make much headway in corporate finance league tables under his leadership and complained that he had made numerous expensive hires from rival firms. Earlier this year, Warren is understood to have asked Deutsche’s M&A bankers to cut back on excessive travel costs, which infuriated some who both suggested they had been asked to attend additional meetings by Warren and alleged that the highest costs had been run up by his new recruits.

Deutsche is in the process of cutting 7,000 jobs under new CEO Christian Sewing, with most front office cuts due to happen before July. As we noted earlier, Deutsche has already cut its oil and gas corporate finance team and merged various other teams as it refocuses its corporate finance investment on Europe and Germany.

It’s not clear what Warren intends to do next, but absent another big banking job he may yet retire to the British coastal town of Bridport, where he owns an art deco cinema which has so far cost him £1.5m in upfront costs and repairs and is now, “cash break even,” according to Warren himself.

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Like some clichéd science fiction movie from the 80s, many people who work in banking are looking over their shoulder, worried that the machines are coming for them – or at least coming for their jobs. Indeed, the fear of automation has become one of the biggest narratives in the industry. But that general angst isn’t based on reality, says one top banking executive, who pointed the blame over stoking the fear of automation directly at the feet of those in the C-suite.

“A lot of the fear that we’ve created in our workforce has been exactly that: fear we’ve created,” Cathy Bessant, Bank of America’s chief operations and technology officer, told Bloomberg. Instilling worry in staffers over automation isn’t some kind of twisted motivational tactic, but rather the byproduct of executives touting their technology innovations, Bessant said.

Bessant reiterated the alternative narrative: that the general concept behind automation is to free up human capacity to tackle other, more important challenges, not to replace people. “It’s our belief that there’s not some concept of job decimation that has to happen as a result of robotics,” she said.

Recent headlines provide somewhat mixed evidence for her claims. Morgan Stanley, for example, is using predictive analytics and machine learning to scour research reports and market data to provide additional investment insights for advisors. It’s even using artificial intelligence to comb through social media profiles and other online mediums to send automated yet personalized emails to clients so advisors don’t have to. But the bank has no plans to cut headcount within its wealth management division. Various banks are also automating some of their underwriting processes to take pressure off junior bankers, yet analyst classes aren’t getting any smaller.

That said, it’s impossible to ignore how automation and AI have cut into the number of securities roles available today. Bank of America itself cut headcount by 1,400 in the first quarter, despite adding more engineering talent, like every other firm. Even so, there are certain advantages to talking up the threat from artificial intelligence – liking making expensive bankers thankful they simply have a job when their bonuses are smaller than they anticipated.

Elsewhere, senior Deutsche bankers in the U.S. are beginning to follow in the footsteps of their European colleagues by jumping ship before they can personally be affected by ensuing job cuts. Chris Blum and Scott Sartorius, co-heads of the bank’s U.S. leveraged finance group, have reportedly vacated their roles for new jobs. Sartorius is joining Citigroup while Blum has taken a position with an unknown rival bank, according to Business Insider. Several high-ranking European staffers at Deutsche Bank have left voluntarily to join competing firms over the last month despite not personally facing redundancies.

Meanwhile:

PwC has banned all-male short lists for jobs in the U.K. as it looks to amend the gender imbalance at the top of the company. (BBC)

Google employees and investors are pushing the search giant’s parent company to address workplace diversity concerns, including proposing linking bonuses for leaders to culture and inclusion goals. (Bloomberg)

For the first time since 2000, job vacancies exceed the number of unemployed Americans. (WSJ)

Canadian hedge fund Castle Ridge Asset Management has hired former J.P. Morgan managing director Edwin Li to help the AI-focused firm expand into the U.S. (Institutional Investor)

HSBC has made a number of major organizational changes within its investment bank, including naming Morgan Stanley veteran Kamal Jabre as its new global head of advisory. The UK bank also promoted several current staffers to more critical roles following a series of recent defections. (Financial News)

John Clements, the former head of Citi’s CLO business, is joining Barclays to run its CLO origination and syndication team in the U.S. Barclays also poached two bankers from Natixis to set up a new middle market CLO platform. (Global Capital)

Hedge fund giant Bridgewater Associates has turned massively bearish on the market. Meanwhile, asset manager Algebris Investments has set up an “end of the world fund” over fears of another economic collapse. (FT)

Men of color are 25% more likely to be turned down for a raise than white workers. Women of color are 19% less likely to get a raise. (Bloomberg)

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MiFID 2 and equity research – don’t forget the internal clients

Equity research has been expecting the worst ever since it became clear last year that the European Commission was not going to compromise on a set of research rules which were widely regarded in the industry as being unworkable. Fund
managers now effectively have to pay for research out of their own P&L, rather than out of trading commissions, and the signs are that they are being more choosy about what they pay for.

At a conference last week, J.P. Morgan’s Dan Pinto suggested that research revenues have already fallen 25%, and that “another leg down” is likely. So does this mean more redundancies and less hiring?

Not necessarily. It is noticeable that despite these projections, Pinto is not currently planning any headcount reductions in J.P. Morgan’s own European equity research. There are two potential reasons why the more pessimistic industry observers might be exaggerating the potential effect of MiFID revenue losses.

First, a lot of the cost cutting work has already been done. When the MiFID unbundling rules were first floated, back in 2013, there were still plenty of marginal players in the industry, and cost bases had not fully adjusted from the pre-crisis days. Five years of falling turnover, ever narrower commissions and spreads, and little primary activity have cut out nearly all the fat from equity research and quite a lot of the lean meat. It’s quite likely that from here on in, the only revenue fluctuations which will make a difference are the ones which drive players out of the industry altogether, as plenty of firms are operating close to minimum efficient scale.

A 25% yoy decline in research revenues in Europe sounds pretty awful, but in many firms it just means that revenues in 2018 are somewhere near 2013 levels, with a lower headcount.

But perhaps more importantly, the measurable revenues for equity research are only the external revenues. And it’s always been the case that many of the most important clients of a bank’s research department are internal. It’s hard to do capital markets deals without analysts, for example, and equity derivatives trading operations are big consumers of research in order to price dividend swaps and other products. Analysts have always provided significant amounts of services to the rest of the bank – if nothing else, they are the keepers and creators of the incredibly valuable consensus forecasts. If you are running a big market making desk or dealing in size with hedge fund clients, you only need to make a few big mistakes from using a stale set of numbers or missing a key insight from a conference call, and you can lose sums of money which would pay a couple of analyst salaries in less than half an hour.

With overall equity sales and trading revenues up by around 10% yoy in Q1 18 and significant investment going into derivatives at places like Credit Suisse, it’s not obvious that the true demand for good equity analysis has fallen anything like as much as the directly attributable revenues might suggest.

Which suggests that for those who kept their jobs, MiFID 2 might actually be good news for the future. It has knocked out a lot of the industry’s structural overcapacity, while locking in a certain “keep the lights on” level of revenue as a baseline from clients who are now committed to pay at this floor level no matter what happens to turnover. And now the direct fees for research are directly attributable to analysts, without necessarily reducing their claim on a share of the profits generated by trading, capital markets, wealth management, prime brokerage and all the other departments who ring up for “a bit of colour” every now and then.

So, when you hear the latest conference speeches and presentations telling you how far and fast equity research revenues are falling, it’s worth remembering a few things before looking for a job in another sector. First, the cost base is lower too. Second, those directed commissions were always shared with sales, and it very much looks like that’s where the worst of the impact is being felt. But finally, and most importantly, any analyst with any sense has always known that her
number one client is her own dealing desk, and it’s the internal clients that the pessimists are missing.

If you’re at JPM equity research and feeling vulnerable then remember – as long as there is just one person who values your opinion, and as long as he’s Dan Pinto, you’re all right.

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Dan Davies, is a senior research advisor at Frontline Analysts and a former banking analyst at Cazenove, Credit Suisse and BNP Paribas.

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Blame J. Aron. The commodities trading firm which formerly housed Goldman Sachs’ CEO Lloyd Blankfein was ground zero for a job that is coming to define the contemporary investment banking industry. – J. Aron gave birth to “the strat.”

J. Aron’s “strategies” team was in fact the progeny of Armen Avanessians, an electronic engineering graduate from MIT and Columbia. Avanessians arrived at J Aron from Bell Laboratories in 1985. He recognized the need for a collaboration between quants and technologists (or so the story goes), and the strats team was born.

Today, Avanessians is developing natural language processing (NLP) programs in his role as head of Goldman’s Quantitative Investment Strategies (QIS) group. But his invention has gone from strength to strength. Thalia Chryssikou, Goldman’s current co-head of global sales strats and structuring across fixed income currencies and commodities (FICC) and equities, said in January that strats now comprise 27% of the firm’s securities division, up from 18% five years ago. Blankfein said in February that strats are a key hiring focus for 2018; Goldman is currently advertising around 100 strats vacancies globally.

It’s not just GS though. In the past few years, strats have caught on elsewhere too. Deutsche Bank now has them. So does Morgan Stanley. So does J.P. Morgan. So does Credit Suisse. And wherever there are strats, there is strat hiring. Morgan Stanley, for example, currently has around 50 strat vacancies. Insiders say Deutsche Bank’s strats team, set up by ex-GS strat Sam Wisnia, has gone from zero to over 100 in four years. “When Wisnia went to DB he hired 20 strats from Goldman Sachs,” says one headhunter, speaking on condition of anonymity. “Deutsche Bank suddenly had its own strats group and other banks followed suite.”

Even so, a strat at one bank is not the same as a strat at another. At Goldman Sachs, for example “strat” applies to anyone using technology to apply mathematical and statistical techniques to problems across the business: there are strats working with the GS Federation (back office) as well as strats working on Goldman’s algorithmic trading systems. At Credit Suisse, the “core strats” team focuses on creating technology for the risk modelling group. At J.P. Morgan, there are business strats working on the bank’s Athena risk pricing system set up by former Goldman technologists…

Natalie Basiratpour, a director at quant recruitment firm Octavius Finance, says strats were traditionally derivative pricing quants, but that the term has come to encompass the hottest area of finance: quant trading specialists, or developers who can actually implement algorithmic trading ideas. Another strat headhunter says “strat” has evolved to mean a highly commercial form of quant developer: “Strats implement the quant models into the system. They need to be able to talk to the developers and to have the commerciality to talk to the traders.”

Strats themselves acknowledge the looseness of their moniker. A strat working in Morgan Stanley’s trading business says his colleagues are far from uniform: “Some strats here prefer to do quant research, whereas others support particular trading desks and become more concerned with trading execution. There are others who work on analytics and portfolio optimization.”

This vagueness makes it difficult to hire. Strats need excellent programming skills in languages like C++ and Python. They also typically need a deep understanding of stochastic modelling techniques used in finance.

As strats jobs proliferate, junior candidates especially are confused. Chryssikou said in January that Goldman is focused on hiring-in both graduates and experienced hires to its strats team, but the Morgan Stanley strat said students often don’t understand the term. “We’re finding it difficult to explain what a strat is when we hire graduates,” he said, adding that it’s also difficult to find someone with the right “hybrid” background. Famously, Goldman CFO Mary Chavez took both the statistics and the programming tests when he first applied to the firm. Few students today have similar breadth. “In grad school, you find a lot of students who’ve done either engineering or mathematical finance,” says the strat at Morgan Stanley. “They either want to be a developer or to work on financial derivative – it’s difficult to find a combination of the two.”

Finding juniors isn’t the only thing keeping strats up at night. At Deutsche Bank, where the strategic analytics team built by Wisnia is now led by David Wayne, a former FX trader who runs the whole of electronic trading, there are complaints that a rarefied, “strats culture,” has been besmirched by “business analysts,” who’ve added in layers of bureaucracy.

There are gripes too about pay. Headhunters say VP-level strats in London earn between £150k and £250k ($201k-$335k) in total compensation. “You’re not going to get much more than £280k as a strat,” says one. “- Unless you’re a head of desk.” While this might sound like plenty to anyone outside finance, strats have seen how much traders earn. “Risk takers have historically been overpaid for what they did,” says one DB strat. If strats are to earn more, pay will need to be diverted from trading desks.

This may happen as strats roles themselves change. Goldman is now recruiting a “new generation” of strats. “The strats we hired 10 to 15 years ago typically specialized in modeling risk and pricing analytics,” said Chryssikou in January. Today, she said Goldman’s more interested in hiring strats who, “specialize in data management and analytics, including machine learning (ML), artificial intelligence (AI), program management and digital product design, in addition to quantitative sciences.”

Having been at the forefront of the last revolution in finance, strats will therefore be at the forefront of the next. Aspiring finance professionals who don’t yet understand the term might want to familiarize themselves. And existing pure quants and pure technologists might want to diversify their skill-sets. At Goldman Sachs and elsewhere, strats roles are the place to be.

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When I accepted my offer to join the investment banking division of Stanford Group Companies, I was thrilled to have landed a six-figure position as a first-year analyst and get to live in South Beach, Miami instead of Manhattan. As I began discussing my upcoming position with family and friends a few conversations stuck in my mind that planted seeds of red flags, but not the warning signs and fire alarms that would come later. I had zero premonitions of an eventual SEC shut down of the firm and the uncovering of a $9 billion Ponzi scheme that would send Sir Allen Stanford to jail for life.

Shortly after accepting my offer of a $60k salary and a $30k-$40k bonus, I called up an old family friend who had helped me get an interview at one of the big banks in New York. Needless to say, I was not offered a job at that bank. Similarly, none of my fellow Stanford analysts had received offers at big banks either, despite their Yale, Georgetown, Cornell, MIT and Emory pedigrees. Getting into banking really isn’t that easy. Getting into Stanford was easier than most.

This family friend did not share my excitement for joining Stanford. He had one big concern: their senior management. “Who are these guys?,” he asked. The answer: friends of Allen Stanford and inexperienced or relatively smalltime investment bankers. Much like my fellow analysts, who may have attended good schools and looked good on paper, no big banks or competitors were fighting Stanford to hire any of these bankers.

The second conversation that caused a little hesitation for me was with an acquaintance who worked both in Miami and Washington as an economic advisor. All he would say was: “Allen Stanford is a very interesting guy. I’ll leave it at that and let you form your own opinion.”

Despite these odd conversations, I went ahead and started working as an analyst. Everything was great. Another red flag. It was a little too great. I moved into a fully renovated floor where everyone got a private office. A private office for a first-year investment banking analyst is unheard of. We had very few live deals: most analysts worked on one or two a year total. The rest of the time we were pitching for business and working on internal documents. We also always had to wear this stupid pin, like a fraternity.

The hours were long but pretty low-stress. They said we were building a brand. And spending a ton to do it. After my first year it was review time. Great news: instead of a $30k-$40k bonus, I received over $60k. More than my salary. The reason? Sir Allen Stanford apparently wanted to match the big banks in NYC and was willing to come out of pocket to do so during this brand-building phase.

The luxurious spending was not isolated to salaries and offices. It was the Stanford way. Stanford Financial Group sponsored PGA tour stops, Stanford One polo field in Wellington, FL, 20/20 cricket in Antigua, and the Stanford Lounge and floor seats at the American Airlines Arena in Miami. As a first-year analyst, I was often invited to sit courtside while Shaq and Dwayne Wade went for the title. Walking from my private office to my courtside seats was all part of my first year analyst experience.

I won’t go into the well-documented details of how Stanford’s $9 billion Ponzi scheme unraveled in the wake of the financial collapse, exposing Stanford for defrauding investors through CD’s sold from his Antigua operation. But this came as little surprise to many Stanford employees who had already begun asking questions about the astronomically high 13% returns that these CDs were paying.

They were not guaranteed but they had always been paid in full. During an annual internal meeting, one of the presenters from the institutional side of Stanford Group was asked directly by a senior member of the investment banking team: “How does Stanford pay the full 13% return on the CD in a year where the market has underperformed?” The answer was an absurd: “Sir Allen Stanford is a very wealthy man and covers the difference in performance from his own finances.” And then no further discussion was allowed.

Investors would talk about how the screening process was the most intensive they had ever seen. Similar stories were said about Bernie Madoff, who was arrested just a few months before the SEC came knocking on Stanford’s door. “What do I know, the company has been around for 75 years,” I thought. Then one day everyone was told to leave their offices as the SEC came and seized the computers. It was all over. If it seems too good to be true, it probably is.

***Jeremy Stevens is a pseudonym

Follow @BeecherTuttle

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No one is safe at Deutsche Bank. Not even the people who were promoted to managing director only three months ago. With CEO Christian Sewing promising to, “significantly slim down,” Deutsche’s ranks of directors and managing directors, recent promotion at Deutsche Bank may even be a leading indicator of redundancy risk. If it likes you, however, Deutsche will do its best to keep you onside.

As Deutsche Bank seeks cut €1bn in costs from the corporate and investment bank by the end of 2019, it is pulling out of entire sectors. In the process, we understand that the bank has put at risk several of the MDs it promoted in London this year. They include MD Michael Zolotas, head of shipping and logistics investment banking, along with Konstantinos Lamprou, a VP on the same team.

Deutsche Bank declined comment on the exits, which come as the bank retrenches its corporate finance business back to what it describes as, ‘global industries closely aligned with the strengths of the German and European economy.’ In pursuit of this, the German bank has also pulled out of oil and gas and merged various corporate finance sector teams, and is understood to be predominantly focused on areas aligned to German industrials. Teams that don’t fit with the new blueprint are being cut, irrespective of their performance.

Yesterday, Deutsche Bank announced that Alasdair Warren, its EMEA head of corporate finance is leaving as part of the cuts. Today, Deutsche CFO James Von Moltke, made a presentation at the Goldman Sachs European Financial Services Conference in which he sought to reassure people that the corporate and investment bank will, “always be the core DNA of Deutsche Bank and will always have at least half of the revenues,” even as senior staff are made redundant.

For anyone at DB wondering where the cuts will fall in the months to come, Von Moltke’s presentation included the helpful chart below. You don’t want to be in the, ‘reduce’ area; you do want to be in ‘grow’.

Following several voluntary exits from Deutsche Bank as staff flee for safety elsewhere, Von Moltke also said today that Deutsche Bank intends to maintain individual bonuses at last year’s high level and to pay retention premiums. It’s not clear whether the latter refers to new retention payments or to the retention bonuses paid in 2017 by John Cryan. – These only pay out if Deutsche’s share price hits €23 in early 2021. Right now, DB shares are trading at €9.56… A reduction in the strike price of the previous bonuses would be good news for their recipients. It may, however, be wishful thinking.

Deutsche Bank strategy chart

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It’s usually analysts and associates in investment banks who work through the night, making last minute changes to pitchbooks or pulling together material for live deals. Despite complaints about the resulting long hours, analysts and associates aren’t badly paid for their efforts: first year compensation in London is £72k ($97k), rising to £113k ($151k) by year three. Thousands of people in their 20s are prepared to give up sleep for that.

Technology staff are a different matter. Firstly they’re paid a lot less (although Goldman increased starting salaries for U.S. engineers to $100k in 2017). Secondly, they’re less likely to put in extra hours simply because internal clients want them to. They may, however, put in extra hours because they’re really excited about a particular project.

It’s this enthusiasm that Goldman Sachs should be able to tap into through some new “cyber-security war games,” being unleashed upon its tech staff. The Financial Times says the firm’s 8,000 technologists are being given access to a platform run by Immersive Labs, a UK-based company that runs, ‘continuously-evolving learning tests and war games on cyber threats.’ For example, Goldman’s technologists might get to break into a fictitious bank to steal credit card numbers. In the process, they’ll be able to test their skills against colleagues and compete on a company-wide league table.

Goldman’s engineers won’t be paid extra for the war-gaming. However, the nature of the platform and of highly competitive top technologists using it, is that it’s highly addictive. – James Hadley, chief executive of Immersive Labs, told that FT that some of the heaviest gamers play on Friday and Saturday nights so that they can be top of the leader board on Monday morning.

Separately, France seems to be try to shoot the City of London in the foot post-Brexit. Bloomberg reports that France isn’t happy with the current “equivalence” rules which say that banks based outside the EU can compete within the EU, as long as their regulatory regime is deemed the same as the EU’s.

Absent the desired “mutual recognition” agreement, whereby the UK and the EU would adhere to jointly agreed regulations, equivalence is still the City of London’s best bet after Brexit. Now, however, France wants to pull the plug on the arrangement: French officials have begun arguing that banks outside the EU will need to serve EU clients from inside the bloc to prevent firms in non-EU countries from being treated more favourably. That’s bad news for the City of London.

Meanwhile:

Deutsche Bank’s CFO says the bank is stuck in a “vicious circle” of declining revenue, “sticky” expenses, a lowered credit rating and rising funding costs. (Bloomberg)

UBS cut 100 asset management jobs. (Reuters)

Susquehanna plans to trade cryptocurrencies that are labeled by regulators as securities. (NY Times)

Asa Attwell is joining Nomura from BNP Paribas as its head of Emea foreign exchange and emerging markets. (Financial News)

Commerzbank analysts say Germany has an 18% chance of winning the world cup. (RT News)

Inside Google employees’ battle against working on a Pentagon project: ‘Every day, this group used Memegen to make memes about Project Maven and shared them widely. They were funny, dark, and often called out leadership directly. ‘ (JacobinMag)

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A corporate lawyer who cut his teeth working M&A deals for Goldman Sachs in London has put up his own shingle in the U.S. David Willard launched boutique advisory 52 Capital Partners in the San Francisco Bay area in May. He’s looking to add a handful of senior M&A bankers as the firm grows its client base.

Willard started his career at Goldman but spent the vast majority as a corporate lawyer in New York at legal giant Cravath, Swaine & Moore, where he said he quarterbacked 42 transactions, including mergers and acquisitions, leveraged buyouts, and debt and equity offerings. Willard’s four career stops include an investment bank, a law firm, a hedge fund and a private equity firm.

Fluent in Mandarin, Willard said the firm will focus particularly on advising North American corporations that have dealings in China, though it will work on transactions on home soil as well. The firm is currently advising former U.S. Secretary of Education Bill Bennett on an intellectual property (IP) matter in China.

Transactions and dealings involving IP law will be another main focus for 52 Capital Partners, along with M&A, Willard said. His biggest claim to fame was helping advise NBA star Michael Jordan on his successful appeal to China’s Supreme People’s Court over trademark infringement in 2016.

Willard said he is currently having conversations with senior M&A bankers and is looking to make a few permanent hires in “the coming weeks and months.”

M&A activity spiked during the second quarter with global advisory revenue up 60% year-over-year as of May. Boutiques have been particularly active in the recruitment of senior M&A bankers in 2018, though big banks have been hiring too.

Follow @BeecherTuttle

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By the end of this month, Deutsche Bank will have finished laying people off at investment bank. So says CFO James Moltke. Any surviving DB staff should be safe; they may even get a retention bonus to help cheer them up. Unfortunately, as things start looking-up at Deutsche Bank, other banks may need to start looking down at their own bottom lines.

It does help that the second quarter did not go well. Banks like J.P. Morgan have said that trading revenues in Q2 were flat on the previous year in the second quarter. Flatness may be manageable if you’re J.P. Morgan, but if you’re a more marginal bank with high costs predicated on ever-increasing revenues, it’s an issue.

Banking research company Tricumen suggests there may be several banks with issues. Deutsche Bank is one of them, but it is not alone.

The big French banks have big cost issues too

The chart below from Tricumen shows how banks’ operating cost/income ratios (in US$ terms) compared globally for all their capital markets (investment banking and sales and trading) activities in the first quarter of 2018 .

It suggests that J.P. Morgan and Citi are the safest investment banks to work for right now: the two big banks are far out-performing the rest in efficiency terms. By comparison, Deutsche Bank, SocGen and BNP are the most vulnerable: they are each far less efficient than the rest.

Deutsche has a plan to deal with its cost issue, but what about BNP and SocGen? The former has been cutting costs and jobs in its investment bank, but is still hoping to grow to glory under “Strategy 2020′, whereby it intends to achieve compound annual revenue growth across the corporate and investment bank of 4.5% over the three years to 2020. SocGen is also promising “strict control on costs” and has been lightly trimming staff in the corporate and investment bank (CIB), but it too is focused on “growth initiatives” and plans to expand particularly in rates, FX and corporate equity derivatives trading.

The chart below suggests both French banks may want to focus less on growth and more on cuts.

This doesn’t mean jobs at the biggest banks are categorically safe. Both Daniel Pinto (head of J.P. Morgan’s corporate and investment bank) and Michael Corbat, Citi CEO, remain highly focused on efficiency. Corbat said last month that Citi’s focus is on using technology to, “hold costs”. Pinto said J.P. Morgan also wants to use technology to cut costs and lower expenses, but that the “low hanging fruit” has already been taken out and things will get harder from here on in.

Operating cost/income, Q118 (US$, all capital markets)

Tricumen Q118

Barclays, UBS and Credit Suisse need to cut some investment bankers (as do BNP and SocGen)

If Tricumen’s chart for overall costs across trading and investment banking divisions suggests French banks most need to cut heads, its chart for “banking” (defined as debt capital markets bonds and loans, securitisation, equity capital markets, and M&A (ie. the traditional investment banking division or IBD), suggests that Barclays, UBS and Credit Suisse were also in trouble in the first quarter. All had elevated costs compared to revenues.

Some are trying to do something about this. Barclays, for example, cut around 100 managing directors and directors in January 2018. Credit Suisse plans to eliminate CHF550m of costs from across the bank in 2018 and was said to be quietly laying people off earlier this year. UBS has started demanding that its its investment bankers attend mandatory client meetings and was seen trimming senior staff in the first quarter.

Tricumen suggests all three have further to go. Meanwhile, bankers at J.P. Morgan and Morgan Stanley look pretty safe by comparison.

Operating cost/income, Q1 2018, (US$, investment banking division)

Tricumen banking Q118

SocGen’s fixed income traders need to be super-afraid

If everyone at SocGen needs to be wary of the comparatively high cost ratio in the CIB (admittedly when stated in US$), the French bank’s fixed income traders need to be especially wary. As the chart below shows, SocGen’s fixed income business is crazily inefficient. Curiously, this is also the business SocGen most wants to grow. In the event that the bank does actually merge with Unicredit, fixed income could be where the cuts happen: Unicredit has a big fixed income derivatives business in Germany under HypoVereinsbank.

Operating cost/income, Q1 2018, (US$, FICC trading)

SocGen fixed income traders

Deutsche Bank’s equities business deserves to partially die. Maybe Wells Fargo’s too

The last chart from Tricumen helps explain why it is that Deutsche Bank is cutting 25% of staff from its equities trading business. Worryingly, it suggests Wells Fargo might want to do the same. There’s little sign of this happening, although Wells Fargo did reportedly cut 10 (or so) U.S. equities professionals in April.

As ever, JPM and Citi staff are sitting comparatively pretty – in equities as elsewhere. Did someone say safe harbour?

Tricumen equities

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Whether out of arrogance or ignorance, bankers are renowned for taking a dim view of their human resources colleagues. But what happens when a banker unexpectedly becomes an HR professional? Sehr Ahmed is a rare case in point.

Back in 2001, Ahmed, now a Hong Kong-based executive coach, had reached the senior ranks in front-office banking. She’d worked in Asia and Canada since 1989 at Deutsche Bank, ANZ and HSBC, and had recently returned to her native Pakistan to manage structured finance for ABN AMRO.

“When the local HR head at ABN was picked up by a competitor, the CEO called me out of the blue and asked me whether I’d consider a move into HR,” Ahmed told eFinancialCareers at the recent CFA Institute Annual Conference in Hong Kong. “He said he thought I was strategic, good with people, understood the business, and would be a great match for the role.”

Ahmed hesitated at first, having never considered HR as a career and being well aware of the negative stereotypes surrounding the function. “But then I thought, coming from the front-office, perhaps I could help reverse some of these unfair perceptions. I got instant credibility with the business because I spoke their language and understood their problems,” she says.

Perhaps surprisingly, Ahmed also saw HR as a way of further progressing her career within her bank. “I spotted an opportunity to build a niche HR skill set and add this to my existing knowledge of the business. This combination has been my unique differentiator over the long term,” she explains.

Her initial assumptions proved correct. Little more than two years after taking the Pakistan HR job, ABN AMRO installed the former banker as head of HR for Greater China. And by 2005, Ahmed was running the team for all of Asia Pacific. “One of my first tasks in HR was to re-align the bank’s local pay structure to the market, and doing this gave me a lot of credibility. As an ex-banker, I was also able to really understand our business strategy and what it meant for our people and culture.”

Ahmed joined BNY Mellon in 2009 as head of human resources for Greater China and Korea. Two years later, she moved to Singapore and took over the HR reins for Asia Pacific at Chartis Insurance, which employed 5,500 people across the region at the time.

Moving to McDonald’s

In early 2012, however, Ahmed found herself spending plenty of time in…McDonald’s. She’d just been headhunted to apply for the Singapore-based job of senior HR director (a key succession role to the chief people officer) at the fast-food chain, responsible for Asia Pacific, the Middle East and Africa.. “To get to know the company better ahead of my interviews, I sat and watched how everything ran in their restaurants,” says Ahmed.

She got the McDonald’s job, her first role outside the finance sector, and soon returned to the restaurants – but on the other side of the counter. “As part of my induction, I spent three months in the kitchen, flipping burgers, shaking fries and hitting every crew station,” she says. “It was brutal being on my feet for nine hours a day, but it gave me total respect and empathy for our staff. In banking, top leaders are a bit removed from employees and customers; it was the opposite in McDonald’s.”

Ahmed is now trying to impart some of the McDonald’s leadership style to her clients – including senior managers in the finance sector – in her new role as CEO of Hong Kong-based coaching and consulting practice Executive Edge.

“Many banks are experiencing high growth rates in Asia, but their leaders are typically younger and less experienced than their counterparts in the West, and are less likely to stay with their employers. This has created a shortage of leadership skills in Asian banking,” says Ahmed. “In this region, becoming a better leader is just as crucial to career success as your technical banking skills, especially when you consider that you’ll probably be managing people remotely across countries with vastly different cultures.”

Follow @simonmortlock

Bank of America and its top executives still have bruises from the financial crisis that have yet to heal. While other U.S. banks are pushing forward with aggressive deal-making, Bank of America is reportedly easing off the pedal for fear of past consequences. Senior bankers who feel they’re being restricted with undue red tape have apparently reached a breaking point and are leaving for firms that are more willing to take risks.

The nexus of the issue reportedly stems from a mix of the continued fallout from the financial crisis and the $300 million that Bank of America lost in December from its dealings with South African furniture maker Steinhoff International. Bankers told Bloomberg that the firm is now scrapping “years-long” plans to expand key lines of business within its investment bank. Those working in advisory and margin lending say they are losing business as the bank’s risk managers scrutinize every aspect of a potential deal, including reputational risk, according to the report. Getting approval for potentially lucrative emerging-market deals has been particularly difficult in recent months.

The anonymous bankers not only paint a picture of a firm reigning in risk-taking, but also one that may be sitting on its hands for too long. Executives reportedly squabbled over who would replace A.J. Murphy as the head of capital markets for a full five weeks before seemingly sitting on the fence and hiring two co-heads with opposing backgrounds.

While Bank of America played down the reported change in strategy, some recent numbers are revealing. The firm saw its advisory revenue drop 27% during the first quarter while emerging-market debt sales have dried up following an internal probe into the failed Steinhoff deal. At least 14 managing directors – including 10 in the U.S. alone – have left Bank of America as of mid-May, with many eyeing a more aggressive culture, according to Bloomberg.

Elsewhere, another firm has been thwapped on the knuckles for reportedly hiring friends and family of potential prospects to win business. Credit Suisse has agreed to pay $47 million to end a probe into whether it hired referrals from government employees in Asia in exchange for contracts and other benefits. J.P. Morgan agreed to pay $264 million to settle similar allegations in 2016, while Deutsche Bank acknowledged in its annual report that it is being investigated for its recruitment practices. J.P. Morgan made particularly splashy headlines by once hiring the son of a Chinese government official that internal recruiters called “the worst BA candidate they had ever seen.”

Meanwhile:

Goldman Sachs and Morgan Stanley are bracing to take more trading risks as the Trump administration eases mandates associated with the current Volcker Rule. (CNBC)

Deutsche Bank has reportedly had talks with top shareholders about potentially merging with German rival Commerzbank. (Bloomberg)

BlackRock’s largest hedge fund has lost two of its deputy chief investment officers and several other senior fund managers over the last several months. (Bloomberg)

There are no industry-wide “systematic issues” similar to the Wells Fargo scandal where employees opened fake customer accounts. Regulators say it’s an issue particular to the bank. (WSJ)

Cryptocurrency could one day take over the U.S. dollar’s role as the world’s reserve currency, according to Lazard CEO Ken Jacobs. (Yahoo Finance)

Famed trader Greg Coffey’s star may have lost a bit of its shine during his six years in retirement. Several former backers have decided not to reinvest their money in Coffey’s new hedge fund. (Financial News)

A former Deutsche Bank trader once made a “ridiculous” request for colleagues to submit a much higher interest rate than what was originally proposed, according to an email read during the Euribor rate-rigging trial. The rate was submitted anyway. (Bloomberg)

Jamie Dimon and Warren Buffett co-authored an op-ed for the Wall Street Journal in which they argued that public companies should eliminate quarterly earnings guidance as it makes executives think too much about the short-term. (WSJ)

Follow @BeecherTuttle

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The on-off marriage of the decade is on again, possibly. Bloomberg reports that Deutsche Bank’s discredited chairman Paul Achleitner has spoken to DB’s shareholders and ‘key government officials’ about merging with Commerzbank. Nothing is confirmed, nothing is imminent, but the nuptials are becoming slightly more tangible. In the meantime, key Commerzbank traders are leaving.

The latest to escape is Brian Jensen, the London head of European corporate credit flow trading, who joined Commerzbank from Mizuho in 2015. Jensen, who made several hires after his arrival, is understood to have resigned last Friday. Insiders say he’s off to Toronto Dominion in London, where he will be building out the credit trading franchise under Mike Murphy, the Canadian bank’s European head of credit trading.

Following Jensen’s exit, Michael Reeb is understood to be the new head of credit flow trading at Commerz in London. Reeb joined only three months ago, having previously worked for Landesbank Baden-Württemberg.

In the event of an eventual merger with DB, Commerz insiders suggest the bank’s fixed income trading business is likely to be particularly vulnerable to cuts. However, the flow credit business at Commerzbank is small: there are just four financial traders in Frankfurt, four emerging market traders (two in London and two in New York) and one lone corporate bond trader left in London.

Commerzbank began moving jobs to Frankfurt well before the word ‘Brexit’ was a thing. The German bank announced it was relocating 340 London jobs to Frankfurt in 2015, of which around 80 were said at the time to be FX and bond traders. Commerz insiders told us then that structured product professionals were mostly left in London, while flow traders were being exported to Germany. Jensen’s subsequent arrival suggests things didn’t entirely go to plan; headhunters said some London traders who moved to Frankfurt subsequently left the bank due to frustration with the comparatively pedestrian set-up in the German financial centre.

Jensen isn’t the only London trader to have left Commerzbank. Arran Rowell, Commerzbank’s global head of London credit trading, quit in November 2016 and became head of credit strategy at BGC Partners. Around the same time, two of Commerzbank’s top emerging market traders – Benjamin Cuddeford and Alejandro Bonano – left for BNP Paribas and Nomura respectively.

“The best people all left,” says one London credit headhunter. “What remains at Commerzbank is just a very small outfit in terms of credit trading.”

Beyond credit trading, Commerz staff are more sanguine about their future. Many of the German bank’s structured equities salespeople and traders are already embroiled in merger talks with SocGen. The French bank made an offer for Commerz’s EMC unit (exchange traded funds (ETF) portfolio, equity derivatives and other market making businesses) in March 2018. “We’re more interested in the outcome of these talks than anything with Deutsche,” says one Commerz equities professional. “Everyone is talking about the Deutsche Bank merger though,” he adds. “It makes sense and we’re all wondering when it will happen.”

Commerzbank’s Frankfurt investment bankers are enthused about a potential DB merger. “It would make a lot of sense,” says one senior debt capital markets banker. “Germany must work on rebuilding a national banking champion that can compete against the best European and U.S. banks in all sectors.

“While Deutsche Bank has neglected its domestic market for years to prioritize its global ambitions, Commerzbank can restore its strength in Germany,” he adds. Under new CEO Martin Zielke, Commerzbank began expanding ts German business beyond its traditional strength in the Mittelstand towards larger German corporates in 2016. Martin Reuther, head of Commerzbank’s corporates and markets unit, and the man who has spearheaded the change, could yet emerge as a senior figure in any DB-Commerz merger.

In the meantime, London headhunters, say Commerzbank’s leveraged finance team is one of the more impressive jewels in its crown. “They’re an excellent mid-market leveraged finance platform,” says one London headhunter, adding that Commerzbank has around 40 leveraged finance bankers in London and around 100 more in Germany. Even so, Deutsche Bank’s business is by far the larger of the two: DB ranked second for all EMEA syndicated loans in the first quarter of 2018 according to Bloomberg, with a market share of 7%; Commerzbank came in13th with a market share of 3%.

Some observers are less certain about the wisdom of a merger of Germany’s finest. “It’s like tying two drunks together to give them more stability,” Roy Smith, emeritus professor of management practice at New York University’s Stern School of Business, told Bloomberg.

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Insiders at Exane BNP Paribas say Vincent Rouviere, head of cash equities trading at the bank, has left, “suddenly and surprisingly.”

Exane BNP Paribas declined to comment on the apparent exit and Rouviere didn’t respond to a request to clarify his position. Rouviere’s phone at BNP Exane goes through to voicemail.

His apparent departure comes after BNP was named”Best Overall Broker”, best house for “Overall Research,” and best house for “Sector Research” at this week’s Extel awards.

It’s not clear what Rouviere might be doing next. Exane insiders say he joined the bank as an intern in the 1990s before becoming head of research and then head of all cash equities.

Exane has dominated Extel’s widely regarded awards for two years, since taking the crown from Morgan Stanley. Rouviere’s apparent exit follows the introduction of MiFID II in Europe in January 2018. Although some equity researchers suggest the rules have benefited research teams, which can prove their worth now clients are paying for their services directly, the rules have coincided with redundancies across the industry in equity sales and what J.P. Morgan investment bank CEO Daniel Pinto recently described as a 25% reduction in research spending.

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“That’s how you’ll get the dolls”, said my mom.

When I was a child, my family was too poor to buy us toys. My dad’s business was struggling. My mom was juggling our resources to make ends meet. As a kid, I was unaware of this, of course. I just badly wanted those Barbie dolls. I often asked for them every time we passed by the store on the way to school, and my mom would shake her head in silence. She was sorry that she couldn’t buy the toys I wanted, but she knew there was little point saying that. Instead, she thought of a difficult challenge to solve the situation.”

“If you get a series of 10/10 grades for all 10 tests in different subjects continuously, you will get the dolls,” she said. “Even if there is one discontinuity and anything but a 10/10 – like a 9/10, the whole process will reset. That’s how you’ll get the dolls.”

My mom was smart. The tests were spaced out every few weeks, meaning it would be months before I got the dolls. As a child, I was excited though: my path to the dolls had become clear. I began working tirelessly to try and get them. I failed, tried again, failed, and tried again. I did everything I could.

This was the start of my propensity to gamify my life as a series of accomplishments.

Eventually, I got the dolls. It took over a year and, like many other games, the prize was less exciting than the process. I moved on and started playing a computer game called Age of Empire instead.

My brother is an avid gamer too. Still now, in his twenties, he spends hours every day gaming without exception. I worry he’s addicted, but a friend pointed out that games can give you a sense of achievement, which can be harder to come by in real life. Her sentences got me thinking: Weren’t my three years in banking – and my years of hard academic work to get into banking – like that too?

As a banker, I worked for perhaps the most prestigious institution. I arrived as a 21-year-old fresh graduate who was overly well paid and who felt could they achieve most things much faster than outside the banking world. It gave me a sense of achievement, and it probably kept me in banking for longer than I should’ve stayed.

The sense of achievement I got as a banker was virtual, like in gaming. The results were fast-paced, partly because of the job itself and partly because of the caliber of the institution I worked for. People trusted and respected me because of the franchise rather than because of me: I had not earned their respect.

It’s hard to stay grounded in banking though. When you work on deals worth millions and billions for years on end, it’s easy to let that go to your head – to feel you’ve achieved everything yourself and to be blown off course by winds of ego. I kept reminding myself that my achievements were a great experience, but that the magnitude of what I was doing was not a reflection of my ability nor my identity. Over time, I saw other people in banking blend their identities with the companies they were working for. Some forgot they hadn’t earned the deals they were working on themselves, and incorporated them into their self-image.

Leaving any game is hard. There are no more fast-paced, quick rewards. There is no more certainty about what it takes to move on to the next level. There are no levels. When you have to use your own ability to convince others of your worth, it is a painfully long process.

Outside of banking, you find yourself in a different reality. You are no longer in a high-speed transactional environment with spreadsheets and email replies expected every five minutes. In the real world, people don’t do business with companies; they do business with people. This requires relationship-building, which is a slow and indeterminate process.

In banking, three to six months seems like an awfully long time to close an IBD deal, but this is the shortest amount of time one can expect when closing a deal with a regular B2B client. Now that I’m running my own venture, I used to have no patience. I kept doubting myself and questioning why everything was taking so long. Then I realized that I was in reality. Here, everything takes longer, and costs more. If I want the dolls, I will need to work for months to earn them. Like in my childhood, there are no shortcuts.

When you accomplish something in a virtual world, your achievements are contained within that environment. Now that I’m outside banking – in the real world – my confidence is growing. Now, I know that if I have to start from scratch all over again, I can repeat this lengthy process and come out fine. People are doing business with me because of me: not because of a franchise or corporate machine that I represent. In life gamification, I have advanced to a new level: it’s called reality.

Mai Le was an investment banking associate at Goldman Sachs before she left to found her own venture Vietnam Inbound. Besides writing on her own blog, she also runs a cover-letter sharing community called Cover Letter Library.

““

For a bank, it’s hard to imagine a more damning indictment of internal culture than having the compliance professionals who are supposed to police conduct themselves accused of acting inappropriately. This is what’s transpired at Standard Chartered.

Bloomberg reports that some of Standard Chartered’s most senior male compliance staff have been accused of behaving badly and of sexually harassing colleagues. Bloomberg says their actions reflect a “toxic work culture” that ex-J.P. Morgan CEO Bill Winters is trying – and so far failing – to fix.

The compliance accusations relate to Neil Barry, Standard Chartered’s global head of compliance, and to Matt Chapman, its global head of anti-bribery and corruption. Barry allegedly made inappropriate comments to colleagues, including approaching a woman sitting with a male colleague in a canteen and saying she belonged to him before questioning her companion’s sexuality. Chapman was investigated for altering the performance review of a woman he was having an affair with, and left the bank last year.

Bloomberg says the compliance infringements are part of a broader cultural problem at Standard Charted which includes excessive expense spending on things like karaoke nights, and bullying, racism and verbal abuse in the private bank.

Winters is doing his best to clean things up. Since April 2016, Bloomberg reports that he’s been sending a relentless battery of memos invoking staff to create a safe environment for colleagues with the hashtag #knowtherules. The bank’s general counsel has also set up a team comprised of former spies, FBI detectives, regulators and compliance officers to identify colleagues who are behaving poorly. However, this team itself has proven controversial following accusations that it exaggerated evidence, mislead witnesses and improperly documented interviews. Some employees investigated by the team have been dismissed and deprived of deferred bonuses, only to overturn the rulings following further investigations.

Separately, the Financial Times has been looking at how banks have fared since the financial crisis. The good news is that profitability has recovered. – The FT found that profits at nine of the 10 top banks were $78.4bn in 2017 compared to $75.4bn in 2007. The bad news is that banks are making these profits with 60,000 fewer staff than previously. – Since the crisis they have learned to do with far fewer human beings.

In a piece on the same topic, the FT tracks the diminution of Deutsche Bank. While the German bank was ranked second by Coalition for all its investment banking activities in 2007, it came sixth last year. Barclays too has failed to retain the advantages incurred by acquiring Lehman (it went from 10th in 2007, to 3rd in 2008 to 7th in 2017). The big winners of the post-crisis decade have been J.P. Morgan and Citi, who went from fifth and fourth to first and second respectively.

Meanwhile:

Barclays is thought to have hired Matthew Cousens, co-head of sales for Europe, the Middle East and Africa for Credit Suisse’s algorithmic trading arm. (Financial News)

Commerzbank deal: “Going forward, we view this deal one of the only ways to save Deutsche Bank.” (Bloomberg)

Executive coaching company used by Deutsche Bank is being floated for £140m ($188m). (Sunday Times)

How to have a full time job and become an internet millionaire at the same time, by an ex-employee at Tesla. (Bloomberg)

I was gaslighted in the office. (Medium)

People are urging Lloyd Blankfein to become mayor of New York. He is flattered, but uninterested. (WSJ)

““

The banking industry usually has at least one of a particular type of character – the guy whose name is always in the frame for every top job going. It used to be the role occupied by Jamie Dimon, when he was at Bank One. Before that it was John Mack. Right now, it looks like Unicredit’s Jean-Pierre Mustier is the man of the moment. According to credible reports, he was offered the Deutsche Bank job but turned it down. He would surely have been the chief executive of a merged Unicredit/Commerzbank. And much of the credibility of the persistent rumours of a SocGen/Unicredit deal comes from the fact that with an unclear succession plan for Frederic Oudea after the departure of Didier Valet, SG’s former investment banking chief, it is easy to see as a “king across the water”, waiting in Milan until the time comes for him to reclaim his rightful throne.

For the foreseeable future, J-PM (he even has a good set of initials!) is going to be right up there on the executive search firms’ shortlists. So it’s worth having a look at the key episodes from his career to see what we can find out about his management style.

He learned about compliance and controls the hard way

The reason that Mustier lives in Milan rather than Paris today is that he was the executive at SocGen who carried the can for the Jerome Kerviel affair. The Delta One operation where Kerviel built up the positions was meant to report to Mustier, but it had systems which allowed the rogue trader to put fake hedge trades in to conceal his positions, and to report on a net rather than gross basis. Mustier had to step down as head of investment banking, and later left SocGen entirely when he was prosecuted by the AMF for selling SG shares while in possession of non-public information.

That’s a hard way to learn that what you don’t know can hurt you. Given that experience, it’s not surprising that Mustier would have said no to the opportunity to become responsible for Deutsche Bank, given the known problems with its reporting systems. It also might mean that we shouldn’t expect him to be interested in any roles which come up in Australia, until the Big Four Aussie banks have dealt with the compliance culture issues that are being exposed by the Royal Commission.

He wants to go big or he’ll go home

His current reign as CEO is actually the second time that J-PM has held a senior role at Unicredit. After leaving SG, he got a job as Unicredit’s head of corporate and investment banking, with a mandate to streamline the operations, cut costs and build a credible capital markets capability. He largely did this (although the divisional earnings were of course swamped by corporate loan losses). But after three years, it seems that he got tired of operating in a second tier and non-growth environment and quit, to join the private debt fund Tikehau.

What does this tell us? He’s a graduate of École Polytechnique, from a class which contained lots of highly successful bankers, and he’s ambitious. He’s prepared to fight fires and solve problems, but not indefinitely. We should expect to see him heading for roles in which there’s a clear vision for growth in the long term.

He’s not scared of unpleasant medicine

It’s no fun doing an equity capital raise at a 40% discount. Nor is it any fun to sell off twenty billion dollars worth of assets at a price below their likely fair value. That’s why most bank CEOs try to avoid doing either of these things, and to put them off as long as they can. Not J-PM. He launched the Unicredit capital issue within a few months of taking the job, and the NPL sales a year later. Comparing Unicredit’s strategy to that of other big Italian players, it’s really noticeable that Mustier has always chosen to take the pain and move on, rather than to try to hold on and hope things will get better. If he shows up at a bank which has sacred cows to slaughter, or a big problem division that’s historically been too politically sensitive to tackle, you can expect he won’t be slow to get off the mark.

There’s no particular reason to believe that J-PM has any plans to leave Unicredit, other than that people seem to keep offering him jobs. The consolidation rumours are more tangible, although it seems unlikely that any merger will happen until Italian political risk dies down. But somehow, it doesn’t feel like this is a chief executive whose plan is to see out the rest of his career in a mid tier European national champion bank. He’s worth keeping an eye on. He might be your next boss.

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Ever since John Cryan’s Strategy 2020 mooted a total shakeup of Deutsche Bank’s IT division in 2015, technology at the German bank has been in a state of flux. The exit of COO Kim Hammonds in April after her declaration that DB was the most dysfunctional place she ever worked, didn’t help matters. However, both Hammond and other ex-Deutsche tech executives seem happy in their DB afterlife.

Take Jorge Vacarini Junior, who served as Deutsche’s CIO (chief information officer) up until this May. He’s becoming the director of technology and operations at a new firm, the name of which he will reveal this week, as per his LinkedIn profile. His new role is likely to be related to the healthcare sector, according to sources. A technology veteran with more than two decades of experience, Vacarini Junior joined Deutsche in 2012 and remained there for more than six years. He headed IT production management before becoming Deutsche Bank’s CIO in the second half of 2012.

Meanwhile, Hammonds herself appears to be starting her own firm: Mangrove Digital Group. Before joining Deutsche, Hammonds served as the CIO of Boeing and as the director of Americas manufacturing operations at Dell. She also spent 16 years working for Ford as director of Manufacturing Systems for North America.

While at Deutsche, Hammonds attempted to streamline Deutsche’s sprawling IT infrastructure by reducing its multifarious computer systems down to four from over 40.

Mangrove Digital may well be an attempt by Hammond to cash on the digital transformation is all the rage. Most major banks, including Deutsche, are in the middle of the transformation process. “Right now, banks are all about hiring digital transformation specialists,” says Paul Bennie, managing director of recruitment firm Bennie MacLean. “It’s really taken off and there’s a very limited talent pool of people with the necessary combination of business expertise and technical knowledge.”

““

I am that person: a sell-side guy who now works on the buy-side. I came from a big U.S. bank to a small investment firm. – A small investment firm. Not one of the big players, or the prestigious houses. Small; relatively unknown.

My firm would like to be a client of Goldman Sachs. But Goldman Sachs is not exactly busting to work with us. This is because Goldman Sachs is choosy: and we are not desirable.

Being a client of Goldman Sachs is like being a customer at a Hermès store and trying to buy a Birkin bag. 99% of the time, you will be told they are out of stock. They are not. I know, from talking to people who work there, that Hermès stores have regular deliveries of Birkin bags, but that they pick and choose who they sell them to.

For example, you’re not going to be sold a Birkin bag if you seem the sort of person who’s just going to flip it in for a profit. Nor are you going to be sold one if you’ve never made a purchase at Hermès before. The Birkin bag is something you work up to.

Goldman Sachs has historically been the same. While other banks employed armies of sales and marketing professionals, Goldman kept its sales team slim: it didn’t need to sell itself as firms wanted to be its client.

Times are changing, but this attitude at Goldman lingers. While other banks are hungry to do business with us and try to respond to our requests as soon as possible, Goldman staff take their time. Email responses can take a while. Arranging a meeting is hard. Funds still accept this. If you’re a hedge fund and you have GS as your prime broker, it means something: it’s an endorsement and that helps when you’re looking for funding.

There are downsides though. It’s frustrating to send emails that don’t elicit a response for weeks (if at all). It’s equally frustrating when meetings must be booked months in advance- surely no one is that busy?

Goldman’s attitude may need to change. Although there’s a trend for prime brokers to become more picky, there are plenty of firms out there who want our business. In Goldman’s case, being picky has worked for years but the sustainability of that approach is now being put to the test. Under David Solomon, the firm wants to focus more on highly competitive agency business, which is similar across all banks. To stand out, you need good people, good technology, and a good strategy for ensuring best execution. Goldman’s spent a long time selling Hermès bags, but as it moves downmarket, it will need a very different approach. People who have the money to buy a Hermès bag don’t relish being made to feel inadequate because they’re wearing the wrong shoes.

Clive Stafford is the pseudonym of a former salesman in an investment bank

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Among people who want to see ‘bankers’ paying painful penance for their role in the financial crisis, it’s a popular refrain to complain that the perpetrators haven’t been jailed. In the case of ex-RBS CEO Fred Goodwin with his vintage cars and £340k a year pension, this is true. But there is also someone paying dearly – and only now realizing the price.

David Drumm was CEO at Anglo Irish Bank from 2005 to 2008. After borrowing €100k in bail money from his wife’s parents, he was convicted last Friday of fraud at the Dublin criminal court. Drumm now faces what the Irish Independent describes as a, “potentially unlimited amount of jail time,” for his part in a €7.2bn fraud that resulted in the nationalization of Anglo Irish Bank in a deal that cost Irish citizens £22.4bn (€29bn).

A well known figure in Ireland, Drumm has been largely ignored by everyone else. He looks doleful in all the photos and his hands reportedly trembled when he learned the verdict last week. An accountant by training, he helped hike Anglo’s profits 70% during his first two years as CEO. Then came the financial crisis, hundreds of millions in directors’ loans and a ruse by which Anglo sent €1.2bn of its own money in a circle through Irish Life, so that €7.2bn appeared to be “customer” cash at its year end.

Drumm isn’t the only AIB banker who’s been punished: three others were jailed in 2016, but their terms of between two and three and a half years seem short compared to the 10 years or so that Drumm can likely expect.

Drumm, who has been living in Boston, Massachusetts, with his wife and two daughters, tried to declare himself bankrupt in 2010 after declaring debts of $14.3m and assets of $13.9m, but his attempt was refused. At the trial, he had no supporters on the public benches and no one but his lawyers came to speak to him after he had been sentenced. None of his family were in court for the sentencing: his wife went back to Boston for his daughter’s graduation. While life goes on for everyone else, Drumm is going down alone. His haunted expression should be a palliative for everyone who wants to see pain in the crisis perpetrators, and a warning to bankers anywhere who might feel tempted to nefarious actions.

Separately, Jamie Forese, the president of Citi’s institutional clients group (its investment bank) has a warning for anyone working in technology and operations. Forese told the Financial Times that Citi will likely half its 20,000 technology and operations staff in the next five years as machines take over. At the same time, Forese said Citi would likely hire in other areas such as sales and research: “What people are doing, the type of work being done by the human rather than the machine will change.”

Meanwhile:

Barclays is reversing its strategy of pulling out of Europe and is trying to Brexit-proof its strategy by hiring on the Continent again. (Financial News)

Perella Weinberg hired Cyrille Perard, the co-head of Goldman Sachs in France, Luxembourg and Belgium. (Les Echos)

HSBC wants to increase the return on equity at its U.S. unit from 0.9% last year to 6% by 2020. (Financial Times)

HSBC plans to invest up to $17 billion in China and new technologies. (WSJ)

Bank of America hired Larry Slaughter, the former head of M&A at J.P. Morgan as executive vice chairman as it seeks to improve its standing in European league tables. Slaughter is the third senior banker BAML hired in Europe in the past few weeks. (Financial News)

Lauren Bonner is still working for Point72 whilst suing the fund for sexism. It’s, “awkward but also not that bad.” (CNBC)

Ponzi hedge fund manager squandered millions on a Ferrari, horse racing and gambling in Las Vegas. (Daily Mail)

The hottest jobs at Microsoft involve developing an AI chip in the Azure public cloud division. (CNBC)

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Almost a decade after the global financial crisis, structured credit professionals are back in vogue at Goldman Sachs.

Goldman recently hired Omar Waly, a former director at Credit Suisse who worked in credit structuring at the Swiss bank for nine years. Waly joined the Goldman’s London office earlier this month as an executive director.

With over a decade of experience, Waly is a specialist in correlation trades, CDOs (collateralized debt obligations), and balance sheet securitisations, all of which were associated with the financial crisis in 2008.

Some of the associated products are making a comeback. Synthetic CDOs which were partly held responsible for fueling the global financial crisis are resurgent. A research report by Citigroup published in October last year predicted that the sales of such products would reach as much as $100 billion by the end of 2017 from about $20 billion in 2015.

Waly began his career in credit structuring at BNP Paribas a year before the financial crisis, after completing his post graduation in finance from Imperial College London. In the second half of 2009, he joined Credit Suisse as a director of credit structuring and headed investment solutions like repackaging and credit-linked products for nine years, before leaving the Swiss bank for Goldman. He graduated from Cass Business School in banking and international finance.

Goldman Sachs has been hiring-in executive directors and VPs to boost its business, Last month, David Solomon, the CEO in waiting at Goldman Sachs, said the bank plans to focus on flow rather than structured products as it seeks to rebuild revenues in fixed income currencies and commodities trading.

2018 is looking good for Goldman Sachs’ fixed income traders

Separately, banking analysts at KBW spoke to Ashok Varadhan, co-head of the securities division at Goldman Sachs. Varadhan told them the GS FICC division benefited from increased volatility (related to Italy, Venezuela and elsewhere) in Q2 and that it stands to benefit further as the year progresses and quantitative easing is unwound. Goldman has gained significant market share in FICC, said Varadhan, adding that this might be because of retrenchment by European banks.

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