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After graduating from the George Washington University with a bachelor’s in business administration, Joshua Pulman got a job at Goldman Sachs in New York. Not just any job at Goldman Sachs: a job in Goldman Sachs’ executive office, working alongside Goldman’s most senior staff. The executive office at Goldman deals with everything from corporate strategy, to Goldman culture, and Goldman brand. Pulman was in the thick of it.

Even so, he didn’t stick around. During the year-plus that he was at Goldman, Pullman didn’t frequent the cafeteria, eating egg white omelets alongside his colleagues. Most every lunch break he sprinted down to World Trade Center so that he could pitch his side project. ‘Silver Arts Projects,‘ a program that wants to bring some sparkle to the world of Wall Street.

“Our mission is to introduce color to the grey-suited people of the financial district,” says Pulman, who quit Goldman in September 2018. These days, he’s a product strategy associate at Arthena, a quantitative investment firm for art assets. He’s also busy with Silver Arts and its mission: transforming unused commercial real estate space into temporary pop-up studios for the next generation of artists – who will be able to use the space for free.

Pulman is now working with artists around the world instead of executives at Goldman Sachs. Even so, he says his time among the grey-suits has proven instructive.

“The art world doesn’t have a lot of appetite for professionalism,” said Pulman. “Most of my job is translating between executives and CEOs and 19-year-old artists who want studio space.” However: “My experience [at Goldman] was a great way to prepare for those conversations.”

Pulman has managed to use his Goldman-inspired conversational abilities to secure five floors at the recently completed 3 World Trade Center, courtesy of building owner Silverstein Properties. There, he’s pairing-up promising artists in need of studio and exhibition space with a new building swimming in square footage (at least until new businesses can move in).

Artists from around the world can apply for free studio space where they can work and eventually show off their art before collectors at shows curated by Silver Arts. Instead of toiling away at some empty warehouse in Brooklyn that collectors may avoid, the artists will be working at the epicenter of finance. Pullman says that one of the 80k sq. ft floors is dedicated solely to exhibitions that will be more “polished” than typical art studios. The presumption is that finance people will prefer this.

Pulman said that other commercial property developers have shown interest in giving Silver Arts temporary space, though they are currently working exclusively with Silverstein Properties and 3 World Trade Center. When it launches next year, the project will employ temporary walls and can shuffle artists out as quickly as they move them in.

The idea might catch on. – Just as long as the 19-year-old artists can play nice with the rest of the financial district. The free rent should help grease the wheels.

Follow @BeecherTuttle

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If you’re reading this article in December 2018, you’ve probably sat the CFA Institute’s Level 1 December exam. Good luck. The CFA exams are notoriously hard and for Levels One and Two at least, most people fail. Recent years’ miserable pass rates are show in the table below.

Level One has the lowest rate of success. Of the huge 68,000 people who sat the first rung of the CFA exams in December last year, around 39,000 failed. That’s a lot of disappointment. Given that the CFA Institute advises 300 hours of study per exam, that’s also 12m hours of study time wasted (assuming the candidates who failed actually put the hours in, which isn’t always the case).

To maximize your chances of passing CFA Level One, you need to do some mock tests. It’s a bit late now, but successful candidates say you need to be doing a lot of mock tests under timed conditions. But when you score yourself afterwards, how will you know whether you’ve done well enough to pass the real thing?

This is the problem: you won’t.

The CFA Institute, which masterminds the entire process, is notoriously coy when it comes to explaining what constitutes a pass and what doesn’t.

To pass, candidates need to meet a minimum ‘net passing score.’ What is that minimum net passing score ? No one knows. It’s never given and it varies year-on-year according to how hard the paper was and how well everyone does in the exams.

When it’s working out the minimum passing score, the CFA Institute uses something known as the ‘Angoff Standard Setting Method’ to determine the pass rate. This has something to do with a set of CFA Charterholders sitting down and working out how difficult the questions really are and how easy it ought to be to pass.

To confuse matters further, because the marks allocated to different topics vary (and this allocation changes), strong performance in one topic won’t necessarily compensate for weak performance in another.

If you fail the coming exams, you might therefore, have no idea why.

So, what’s the minimum score you need to pass?

Based on results posted in various online forums, we’ve identified the candidates who’ve passed recent Level 1 exams with the weakest scores. This is, seemingly, the minimum you’ll need to get through:

1. You can pass with less than 50% in four subjects (Derivatives, Economics, Portfolio Management, and Quantitative Methods), with 51% to 70% in Alternative Investments, and with more than 70% in Corporate Finance, Equity Instruments, Ethical and Professional Standards, Financial Reporting and Analysis, and Fixed Income.

2. You can pass with Financial Reporting and Analysis under 50%, Economics and Portfolio Management over 70%, and everything else (seven other subjects) between 51% and 70%.

3. You can pass level 1 even if you only get 49% in ethics and 50% in financial reporting and analysis. You can also pass with 40% in financial reporting and analysis (FRA) and over 90% in ethics.

4. You can pass with less than 50% in Derivatives and more than 70% in Corporate Finance and Equity Investments, and between 51% and 70% in the other seven subjects.

5. You can pass with less than 50% in Quantitative Methods, Derivatives, Financial Reporting and Analysis, as long as you have more than 70% in Economics, Quantitative Methods, and Equity Instruments, and 51% to 70% in Corporate Finance, Ethical and Professional Standards, Fixed Income, and Portfolio Management.

6. You can pass with less than 50% in Alternative Investments, Derivatives and Quantitative Methods, so long as you have 50% to 70% in Economics, Equity Instruments, Financial Reporting and Analysis and Portfolio Management, AND more than 70% in Ethical and Professional Standards, Fixed Income and Corporate Finance.

So this, roughly, is the minimum passing score…

In other words, you don’t have to get more than 70% in everything to pass. Some say you can get as low as 65%, or even 63%. You don’t even need to get more than 51% in everything to pass. It looks a lot like you can get less than 50% in three (or maybe four) topics, but you will probably need to counterbalance this with more than 70% in at least three subjects and with 51% to 70% in the rest. However, if you get 70% on average across the subjects, you’re pretty sure of celebrating when you get the results.

The ethics adjustment

Lastly, if you’re going to try super-hard for any of the subject areas, you might want to try very hard in ethics. For the past 11 years, the CFA Institute has implemented a so-called “ethics adjustment” when scoring exams, described on its website as follows:

‘What is the “ethics adjustment”?

The Board of Governors instituted a policy to place particular emphasis on ethics. Starting with the 1996 exams, the performance on the ethics section became a factor in the pass/fail decision for candidates whose total scores bordered the minimum passing score. The ethics adjustment can have a positive or negative impact on these candidates’ final results.

CFA Institute has a policy of not releasing either the minimum passing score or individual candidate scores. Consequently, CFA Institute does not release specific information about the ethics adjustment or the candidates who were affected. The adjustment has had a net positive effect on candidate scores (and thus pass rates) in most exam sessions. The published pass rates always take into account the ethics adjustment for borderline candidates.’

Good luck!

Follow @MadameButcher

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Christmas is coming and you might be inclined to talk to your family about your career. However, unless they also work in finance, there may not be not much point. Such is the suggestion of David Abrams, a Boston-based hedge fund manager who manages nearly $9bn at his fund, Abrams Capital.

Abrams addressed attendees at a New York conference last week and reflected that most parents have little to offer when it comes to advising on finance. “It’s not about if your parents or mother-in-law have heard of the place you’ll be working,” he said. Instead of choosing somewhere to work based upon prestige and the slight chance that your mother might know it, Abrams advised choosing an employer based upon how well you get on with the, “half dozen people you’ll be working with every day.”

There’s a pattern emerging here. Last month, Colm Kelleher, the global president of Morgan Stanley, described how his father, a country doctor in Ireland, found the size of his early bonuses “horrific” compared to the kind of pay a country doctor in Ireland was used to. There’s no point even trying to massage or cap banking bonuses to the level someone like his father would find acceptable, concluded Kelleher; within reason, banks should just do their own thing.

While parents and siblings might have something meaningful to say about office politics and awkward managers, work conversations are nonetheless best avoided at approaching family occasions. Last year, Marty Chavez, co-head of the securities division at Goldman Sachs recalled how a guest at a Thanksgiving dinner asked, “Marty, how can you work for that company? How do you look at yourself in the mirror?” Chavez concluded that humans like to have someone to, “name and shame and blame,” to make themselves feel better, and that bankers have been fulfilling this function of late. “This too shall pass,” he figured.

If family outside finance is too far removed from – and too opposed to – the industry to be of much help, who can you turn to for assistance? Insiders, obviously. And if those insiders also happen to be members of your family, so much the better. At a Women in STEM event organised by Caixa Bank in London last week, the representative of one major U.S. private equity fund said she went into banking and then PE because she grew up immersed in finance. “There was never any question that this was what I would do.” And if your family are country doctors or bank bashers?” she said. There are always the public utterances of people like Abrams. “I would not advise people doing what I did, which is entering the business knowing absolutely nothing,” he said – although that doesn’t seem to have hindered him much.

Separately, a former associate at Moelis & Co. in London has achieved a quite exceptional new job. Financial News reports that Sabina Virtosu, who previously spent 18 months at Moelis and two and a half years at HSBC, has just turned up at WeWork, the fast-growing New York provider of flexible office space which is receiving a $10bn investment from SoftBank. As, ‘growth strategy and operations lead for Europe, Australia and Africa,’ Virtosu will be responsible for driving ‘expansion’ across EMEA, says Financial News. In this way, she appears to have escaped an M&A boutique with a reputation for very long working hours and injected herself into a hip expansionary company where you can bring your pet to work. Who knew corporate development jobs could be so exciting?

Meanwhile:

Fund managers are protesting against global warming. Yan Swiderski, a fund manager blocked a busy London road near his Pimlico home the other week. “It was the first time I’ve ever done anything like that.” (Financial Times)

Raj Hindocha, the former COO for research at Deutsche Bank, is joining UBS as UBS ramps up its Evidence Lab technology-based research platform. (Financial News)

Seven KPMG partners have left because of inappropriate behaviour, including sexual harassment, in the past four years. (Financial News)

The UK Financial Conduct Authority is trying to hire fewer people from Oxford and Cambridge. “We have started taking off educational venue but not educational achievement. We don’t see that this person was from Oxbridge and that person was from Kent. We just look at what they have achieved and then we test around competence.” (Financial News)

Beware of Barclays in the event of a hard Brexit? “Its relatively greater exposure to volatile, capital-hungry investment banking remains problematic.” (Financial News)

SocGen is opening a Paris hub to clear derivatives in the EU. (Reuters)

J.P. Morgan wants to employ 200 technologists in Israel. (Bloomberg)

If you live five to six miles further away from the job you’re applying to than rival applicants, you will receive fewer callbacks. (HBR)

Brexit-supporting hedge funds are shorting the British economy. For example, Odey Asset Management has taken out £436m worth of declared short positions against British companies, of which nearly £150m are consumer-facing entities. (Guardian)

Hedge fund managers who are buying a house under-perform, particularly if the house is a big one. (Barrons)

Beware the brogrammer tech firms. ‘Heavy drinking, colleagues fire large foam darts at her while she is working and try to one-up each other.’ (Financial Times)

Have a confidential story, tip, or comment you’d like to share? Contact: sbutcher@efinancialcareers.com in the first instance. Whatsapp/Signal/Telegram also available.
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by 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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Given the extent of Deutsche Bank’s troubles (the bank’s share price is down again today, leaving Deutsche the 90th biggest bank in the world behind Axis Bank in India), a state of minor insurrection in its Birmingham (UK) office is unlikely to bat many eyelids globally. Even so, DB Birmingham insiders’ angst bears noting – not least because their jobs look particularly precarious in a world where Deutsche is trying to cut costs in the middle and back office, and the angst might spread.

Insiders in Birmingham complain of high levels of stress and overwork following a hiring freeze that was imposed in March this year. “It’s becoming an unbearable place to work,” says one. “I’m burned out, micro-managed, unfairly treated, and given no idea of my future with the bank. The compensation package here is not competitive with other employers. People are signing-off work with stress and I’ve decided to move on.”

Deutsche Bank didn’t respond to a request to comment on conditions in Birmingham. In fairness, not everyone at its outpost in the British Midlands seems to share this disgruntlement. A quick look at Glassdoor reveals DB people in Birmingham praising the bank for its ‘high pay,’ ‘high productivity’ and ‘great culture.’ Even if it does only score 3.5 stars overall, someone there must be doing something right.

The more vociferous grumbling at DB in Birmingham seems to be coming from a client services data team, which insiders say was set up in July last year to remediate client data problems. At one point, the team in question allegedly employed around 40 analysts. Insiders claim that it’s now down to 20 following various exits and a hiring freeze which has inhibited the ability to recruit replacements. “For a new project, it’s been a shambles,” says one analyst. “But the bank is happy that people are leaving because it means they are cutting costs.”

Birmingham isn’t the City of London, but it still has its fair share of alternative employers for DB people who leave. At least eight people have left the data team in the last five months alone.

Even so, it’s quite possible the complaints are simply the result of a disaffected few and that most people in Birmingham are happy with their lot. Even so, as Deutsche would do well to take note of the grumbling on the ground as it prepares to cut costs in 2019. “Working here has been the worst experience of my life,” says a plaintive Birmingham employee. “Management are not interested in keeping employees on their teams, there’s a lack of opportunities and the fear of redundancy.”

Deutsche Bank’s former CEO, John Cryan, famously said that robots could replace half the employees at Deutsche Bank and still get the work done. It may be that this is the kind of thing new CEO Christian Sewing has in mind as he takes costs from the middle and back office. In the meantime, DB Birmingham is staffed by human beings – and some of them, at least, do not appear to be very happy there.

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If you want to leave banking and work in the fintech sector – or simply to sidestep banking altogether and go straight to fintech – you may have heard of Revolut. Based in London, the app-based bank founded by a former Credit Suisse equity derivatives trader and an ex-Deutsche and UBS developer is already valued at around $1.7bn. It’s hiring heavily and expanding rapidly – into the U.S., Asia and Australasia. But don’t imagine you’ll get a job there easily – or that you’ll spend your time sipping kombucha and doing yoga if you do.

Revolut is no ordinary fintech.

What kinds of people work for Revolut?

Every week, Revolut receives around 1,000 CVs from people who want to work there, say Alan Chang and Christos Chelmis, a VP in operations and product owner at the company respectively. 99.5% of those applicants are rejected: the company is extremely fussy about who it hires. “We accept people who are super, super high calibre,” says Chelmis. “We want Revolut to be the other place that top students apply, alongside Google, Amazon and Facebook.”

“Super, super high calibre” means that as Revolut expands, it’s chasing the same kinds of students and young people who might otherwise work for investment banks or consultancy firms to join its operations team. Top academic qualifications from top universities are the norm. Chang graduated in physics from the UK’s Imperial College; Chelmis has a masters in econometrics from the London School of Economics.

The London office ops team also includes people from UCL and Cambridge. While Revolut clearly needs developers and engineers for its development jobs, its current focus is on hiring operations and business development people as it expands. Of over 120 jobs currently advertised globally, only around 25% are for technologists.

“An ops associate at Revolut is a generalist,” says Chang. “We want to hire the sort of person who becomes a banker or a consultant – with that standard analytical and presentational skillset. If you want to work for a fintech, this is an alternative to going in as a programmer. You don’t need a background in computer science to work for a fintech.”

What even is operations at Revolut?

Chang and Chelmis are keen to emphasize that operations at Revolut is an exciting place to be.

“Working in operations for Revolut is not like working in operations in a bank,” says Chang. “There, you’re the ‘back office’, here it’s almost the other way around. We push the business and drive it forward. We’re active rather than passive and we take direct responsibility for revenue growth and ownership of the margin.”

Practically, you’ll either be working in business development and helping Revolut expand overseas, or will be assisting with the development of existing products and markets.

What’s the application process for working at Revolut?

If you’re one of those 1,000 people a week who fancies working for Revolut, you’re going to need to send in your CV. If you’re one of the rarer birds that catches their eye, you’ll be asked for a screening interview. If you get through that, you’ll be given a “home task”.

What does this involve? Chang and Christos are cagey. Suffice to say, the home task to work in operations is a dataset which replicates a problem Revolut has faced in real life. You will solve the problem; the successful applicants simply solve it more elegantly than others.

What’s the culture like at Revolut?

You’re probably not going to work for Revolut if you’re super chill and not at all competitive.

“We have a culture that’s direct, hard-working, transparent and ambitious,” says Chang, who’s LinkedIn profile is preceded by epithets like, “We are underdogs. We innovate. Everyday is a new fight”. Chang says that Revolut is channeling Bridgewater, the hedge fund who’s culture is self-described as ‘being like a nudist camp at first:’ “We model some of our values on Ray Dalio’s approach at Bridgewater – although ours is a very basic version of what they have there.”

Some people take exception to this. “The culture is by far the worst I’ve ever experienced,” complains one Revolut review on Glassdoor. Chang is unphased: ““When people leave, it’s because they’ve misunderstood what it means to work for Revolut. There’s an expectations gap. They think that because they’re joining a start-up they’ll be hanging out, drinking beer, playing ping pong and going home at 6pm.”

In any case, Chang says the rate of staff turnover is falling: “The people who didn’t enjoy working here have left and those who are here now love it.”

What are the working hours like at Revolut?

You’re also not going to want to work for Revolut if you have a lot of hobbies and like to work eight hours a day or less. Revolut founder and ex-Credit Suisse trader Nikolay Storonsky is famously unapologetic about the company’s working hours. “We are not about long hours — we are about getting sh*t done,” he told Business Insider last year. As a corollary of this Storonksy said people at Revolut, “work long hours…at least 12, 13 hours a day. All the key people, all the core team. A lot of people also work on weekends.”

Chang and Chelmis are no exception to this rule. However, both stress that Revolut is very flexible. “There is no clock watching culture here,” says Chelmis (who previously worked for J.P. Morgan). “People know what their goals are, and how they choose to work towards those goals is up to them.” Accordingly, while both work 13 hour days in pursuit of their goals, one comes in at 8.30am and goes home at 9.30pm and another arrives at 10.30am and goes home closer to midnight. Another unnamed person at Revolut reportedly arrives at work at midday and goes home in the early hours of the morning.

As long as you get the work done, it’s up to you. People at Revolut seem to like this. “We work hard because we love it,” says Chang. It probably helps that the average age at the company is 28.

What’s the pay like at Revolut?

Salaries at Revolut are “market” say Chang and Chelmis, refusing to elaborate further. Needless to say, there are also stock options which could be worth a lot when Revolut eventually IPOs.

The company also offers perks like meals after 7pm and Ubers home after midnight.

So why would you want to work for Revolut?

Aside from the $1.7bn valuation, the prospect of making loads of money in an IPO and the free meals in the evenings, another reason to work for Revolut is that it’s hiring. The London office employs 150 staff and expects to double this in the next few years. New York and Singapore are recruiting, as is Australia. If you join now in London, the chances are you’ll be sent to drive the expansion overseas.

Chang and Chelmis are also big on the concept of ‘ownership’. “When you’re a product manager, you manage a whole scheme of projects, from beginning to end,” says Chelmis. It helps that Revolut has a policy of building everything in house rather than buying-in systems externally. “At a bank, you’re maintaining old systems. Here, you are building from scratch,” Chelmis adds.

“People here enjoy working hard,” he reiterates. “You get a lot of responsibility and you get to deliver something at the end of it. It’s not like you’re making a presentation that no one will ever see, or are working on a deal that will never get done…”

If you’re a top student in your 20s who’s happy to work 13 hour days, join the queue.

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Unless you’re out soliciting money from high-net worth clients, the dress code at most hedge funds is rather ambiguous. Most people don’t wear suits, though some do. Others dress business casual or will even wear jeans. A trader at a Connecticut hedge fund said one portfolio manager has showed up to work in shorts and flip flops during the summer, though he said the timing tends to coincide with a string of highly profitable days. In short, the dress code at hedge funds is highly variable and rather firm-dependent.

But what about interviews? Quant fund Two Sigma said it doesn’t expect anything different from candidates than employees. “We don’t have a dress code,” the fund notes on its career page. “Folks come to work in anything from a suit to jeans and a t-shirt – the same goes for you. We recommend wearing what you feel is appropriate and comfortable.”

Has this become an industry trend? Wearing jeans and a t-shirt to an interview? Hedge fund recruiters won’t go that far, but they do note that the advice underscores the general message that buttoning down during interviews has become commonplace. In fact, dressing overly formal for interviews could lead to your demise as a candidate. “If you show up in a suit and tie, you’re likely out. You won’t fit,” said Drew Froelich, founder of Strategic Growth, a New York headhunter that specializes in front-office asset management placements. “In the world of hedge funds, the worse you dress, the more successful you are,” said one buy-side analyst.

Froelich, who worked as a trader and PM before moving into recruiting, advises candidates to dress one notch up from what current employees wear to the office. “If they are in jeans, dress business casual,” he said. “If they are business casual, wear something like a jacket with no tie.” He said that none of his current hedge fund clients have a suit-only dress code. While jeans may be a bit over-the-top at some firms, so is overly formal dress. “You’re always safe wearing business casual,” added another New York headhunter, who said the only people who tend to wear jeans during first interviews are engineers with PhDs, typically at quant funds. Second-round interviews are usually even more casual, Froelich said.

The key, therefore, is to find out what employees wear at the office before your interview. The New York headhunter suggests using your network to message a current employee. If that doesn’t work, don’t be afraid to just ask HR or your point of contact, she said. “While [dressing appropriately] isn’t something you should overthink, you want to make sure that you’re fitting the culture of the fund,” she said. If what you’re wearing fits with a fleece vest, you’re likely golden…

Follow @BeecherTuttle

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A high ranking male banker, a junior female colleague, a New York hotel bar and an event that nobody will talk about in public, but which has profound career consequences. It’s a story familiar to anyone in the industry who has been around for a while and listened to the gossip. The difference is, 2018 seems to be the year in which the career consequences are affecting the men too. Bloomberg is reporting – cautiously, but with quite a bit of specific detail – that when Thibaut de Roux, HSBC’s former head of Global Markets, left his job in September, he was under investigation over an allegation considered serious enough to have been reported to the Financial Conduct Agency. Bloomberg cites “inappropriate conduct.” All the bank will say is that “an allegation was made against an individual” and that they “dealt with it directly, robustly and appropriately”.

Far worse events have happened in the recent past. Credit Suisse fired two employees from their London office this year over allegations of sexual assault going back to 2010 which came to light as a result of a #MeToo letter, while a senior employee at UBS is alleged to have raped a trainee in 2017. (We should make it clear that at present there’s no suggestion been made that the HSBC case involved criminal behaviour; the complaint was apparently made to HR this summer, but it’s not clear what period it relates to).

The human resources functions of the banking industry, more used to dealing with bonus contracts and high-level team moves, seem to be struggling to keep up with things. Uncertain about what they ought to do and how cases need to be investigated, managers are starting to kick things up to the regulator in order to cover their backs. It seems somehow counterintuitive for a financial supervisor to also become the de facto #MeToo authority for the financial sector, but the FCA appears to be willing to take on this role. In the case of the UBS allegations, for example, they are actually investigating the bank for failing to keep them informed, suggesting that this might have been a breach of UBS’ duty to be transparent to the regulator.

Whether or not the authorities are involved, though, there’s a clear expectation that the old strategy of covering things up, making excuses and protecting senior revenue generators is no longer going to be acceptable. After ten years of clearing up the toxic waste of the crisis, the industry is having to face up to the fact that some of its biggest risks are behavioural rather than financial.

Separately, we have some rare good news on hiring at Deutsche Bank and another example of the fact that it’s possible to do quite well in a troubled bank. Earlier in the year, CEO Christian Sewing announced that Deutsche would be cutting 25% of the equities sales and trading staff. More or less, this target has been delivered. But when you make big, high profile cuts like that, you tend to damage the franchise. And when a franchise is wounded to that extent, you have to either cut it completely, or …

…Or you have to build it back, by hiring people and paying a premium price to do so. Which is what Deutsche appears to be doing; it’s hired James Rubinstein from Bank of America to head up U.S. electronic equities and expects to do “quite a bit more” next year. According to the head of equities, “Christian is incredibly supportive of growing the investment bank … we cut balance sheet by reducing internal inefficiencies and are now able to redeploy this into better opportunities”. That sounds like at least a temporary about turn. The financial sponsors team in Deutsche’s IBD is also looking for people, planning to increase its headcount by 20% next year. Even in an environment of cost cuts, there are always big ticket vacancies.

Meanwhile…

Worse news for hiring in London; Morgan McKinley data suggests that the number of vacancies is down 40% on this time last year, while the number of candidates seeking new jobs is down 28%. (Financial News)

Mike Novogratz gives an interview on Bitcoin, cryptocurrencies and how to hang on to some of your money and most of your sanity in conditions like the ones crypto investors are currently experiencing. “We did well at not losing money on the first 60% down. But you forget that a market which is down 84% from the peak, like Bitcoin is now, is one that fell 60%, then fell 60%” (Bloomberg)

Bank of America did well in IPO league tables this year as the market played to its strengths with plenty of mid market deals and few technology mega-IPOs. That might not be the case next year – with Morgan Stanley selected for the Uber IPO and JP Morgan leading Lyft, the 2019 IPO league table could be written quite early in the year. (Bloomberg)

Rumours are beginning to grow that Credit Suisse’s planned share buyback program is going to be disappointingly small (Financial Times)

Vanguard and Fidelity are both implementing the Women in Finance Charter which, among other requirements, means that top executive bonuses will partly be based on success in meeting diversity goals. (Financial News)

If you were arrested on charges of breaking sanctions (and if you think it couldn’t happen, ask your compliance officer) who would stand your bail? Meng Wanzhou of Huawei managed to find a group of 30 friends and neighbours in Vancouver who were willing to pledge part of the value of their houses for her. (FT)

And Andy Ozment, head of cybersecurity at Goldman Sachs, is close to despair at the patchwork of inconsistent regulations and reporting requirements which govern cyber risk in the various jurisdictions in which GS stores data (CNBC)

Some economic research on the perennial question of “are elite colleges worth the struggle to get into?” The answer appears to be that if you’re a rich white guy then the “Harvard Effect” is close to zero; all the effect comes from providing positive signals for women and minorities to allow them to close the gap with rich white guys. (Atlantic)

Most people quite like working at Tidjane Thiam’s Credit Suisse. During today’s (ongoing) 2018 Credit Suisse investor day presentations, Thiam presented the results to a recent survey which said 88% of Credit Suisse employees would recommend working for the bank to their family and friends (compared to an industry average of 77%). A similar proportion said they feel motivated to, “go above and beyond at work” (compared to an industry average of 72%). Take that, haters.

Thiam didn’t say so, but it seems possible that the 5,500 people who don’t think Credit Suisse is great are disproportionately to be found among the 11,250 people in the bank’s global markets division, and in fixed income trading in particular. While the rest of the bank is having a ball, Credit Suisse’s fixed income professionals are being left in the corridor.

The extent of the freezing-out is illustrated in the agenda for the investor day, which is disproportionately about wealth management. To the extent that the global markets or investment banking division are mentioned at all, it’s mostly in relation to the wealth management business or as difficult children to be ‘managed across the cycle.’ Thiam’s distrust of the fixed income side of the sales and trading business is implied by the inclusion (twice!) of a slide depicting declining credit and macro trading revenues across the market since 2012 in his own presentation.

Accordingly, the global markets business has seen the biggest cuts under Thiam’s tenure, with costs of CH1.2bn taken out in three years. By comparison, APAC wealth management, the CEO’s darling, has seen costs rise CHF300m over the same period.

The cuts have taken their toll. In 2015, the markets business contributed 39% of profits at Credit Suisse; this year it’s expected to contribute 10%. Revenues in global markets are down 35% in two years based on performance in the nine months of 2018. Thiam’s own (repeated) charts reflect the extent to which the decline at Credit Suisse is an anomaly – across the market as a whole, credit and macro trading revenues are only expected to be down 9% over the same period. The CS markets business has been hobbled.

It’s not the whole of CS markets that’s out in the cold. Thiam has high hopes for equities sales and trading. Following the addition of 50+ people in equity derivatives and 10 senior research analysts, the bank’s equities division is expected to increase revenues in the next three years (on the back of what looks like a peak across the market in 2018). However, CS credit and macro traders are less lucky and are barely mentioned today. The slimmed down global markets division is most enthusiastically referenced in relation to ITS (International Trading Solutions), a cross-divisional product manufacturing and distribution platform for wealth management and institutional clients.

Is this strategy the right one? As Bloomberg pointed out earlier this week, Credit Suisse stock has fallen 50% during Thiam’s tenure and is the second-to-worse performing European bank stock this quarter of 39 tracked by Bloomberg. Not everyone is convinced.

While Credit Suisse is determined that fixed income trading is a hiding to nothing based on the retrospective revenues earned since 2012 , J.P. Morgan and Goldman Sachs are both chasing growth. “The fixed income wallet will double and pretty much, everyone everywhere wants to enjoy some of that,” declared Marianne Lake, J.P. Morgan CFO in October 2018. “It’s a pretty good future outlook [for fixed income],” said Jamie Dimon – adding that “you run that business to capture your share of that doubling,” as margins come down and electronic trading rises. Goldman Sachs is going after an additional $1bn in fixed income trading revenues, of which it already claimed to have secured $300m last month.

Today’s investor day presentations are unapologetic for the decline in Credit Suisse markets revenues. Thiam may yet be vindicated if CS stock rises and Goldman Sachs decides to jettison its own fixed income aspirations in the New Year as part of its current business review. Even so, cost cutting need not equate to revenue shrinkage – Morgan Stanley’s fixed income business has thrived ever since CEO James Gorman heavily pruned it in 2015, and Gorman now says it has “great potential.” Credit Suisse’s business has shriveled over the same period and looks increasingly like the enfeebled appendage of wealth management. This may be what Thiam wants, and it may be making most Credit Suisse employees happy, by people in the global markets division can be forgiven for thinking that it didn’t need to be this way – whatever is said in today’s presentations.

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Artificial intelligence and machine learning have already made their imprint on investment banks and other financial firms. The main applications currently revolve around trading, but people like Alexander Fleiss believe the technologies will eventually be adopted at every rung, replacing the need for bank employees in ways that people have yet to imagine.

Fleiss is the CEO of Rebellion Research, a New York hedge fund and robo adviser that relies on AI and machine learning, as well as a guest lecturer at several universities, including Yale School of Management. We talked to him about the disruptive capabilities of AI and the potential ramifications for banks and big tech firms. He also made one bold prediction and provided some advice for people who want to make a career out of artificial intelligence.

Are AI and machine learning job killers at big banks?

Just look at the last jobs report. AI will create many jobs in time, but there is going to be a disconnect before enough people are educated to make up for any of the losses in the short-term. Finance headcount is going to drop like railroad stock in the 50s. But the banks themselves will do well. They’ll continue to cut costs as they incorporate more intelligent learning processes.

Are all hedge funds destined to be quant funds?

No. I believe traditional traders will always exist. There is room for both.

How will banks fare in the recruiting war over AI talent?

It’s the tech companies that are going to take over the world. We are in the midst of a total AI arms race. You look at Amazon, Google, Facebook and Apple – no one else is pouring more money into AI. These four companies are going to be so far ahead. Someday Amazon will buy a J.P. Morgan or a Wells Fargo. They’re going to buy one of the top three banks in the country within the next five to 10 years. I believe that’s part of why they are coming to New York. Amazon and Alibaba are spending more on machine learning than anyone on the planet.

What’s the best way to launch a career in AI and machine learning?

Start by taking introductory classes. Stanford has some of the best AI courses available under [Google Brain co-founder] Andrew Ng. MIT is great. AI programs are popping up left and right. Follow everything the Allen Institute is doing.

In terms of getting a job, a company like Amazon wants to see that you can work with machine learning tools; you don’t actually need to build them. The technology is important, but it’s all about how you apply it. Companies want people who can discover and implement new applications. When it comes to AI, we are at the dawn of the dawn. Cortez has burned his ships. This is actually the third AI cycle – there was one in the ‘60s and one in the ‘90s – but this is the first time we’ve really broken through the threshold to implementation. It’s an exciting time.

Follow @BeecherTuttle

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As Brexit goes from bad to mind-numbingly-abominable and possibly worse (before getting better?), London finance professionals could be forgiven for thinking they’ll be shunted to Frankfurt and Paris at first light in 2019. For some people in sales, this might be the case. But for most people in most front office finance jobs, there will be a few more years’ leeway before jobs must be moved en-masse.

The reprieve has been granted by individual governments in Europe, which continue to function amidst the chaos. The German finance ministry, for example, amended the country’s banking act to make provision for a no-deal Brexit in late November. France did the same a week or so earlier.

As law firm Clifford Chance points out in a client briefing note, the effect of the amendment to the German banking act will be to empower the German Federal Financial Supervisory Authority (“BaFin”) to allow UK-based banks and investments firms which are currently using passporting arrangements to operate in Europe to continue doing so after a hard Brexit. Even if Britain crashes out of the EU, London banks will be able to passport into Germany for up to 21 months.

In France, Clifford Chance says there are preparations to continue passporting arrangements for, “ongoing contracts.”

Germany’s provisions for a no-deal Brexit won’t cover everything. – “Transactions entered into after 29 March 2019 are only in scope if these transactions are closely connected to transactions that existed at the time of Brexit,” notes Clifford Chance of the German proposals. The law firm adds that the the German draft law does not define “close connection,” nor does it specifically address services provided on a continuing basis. “However, based on the reasoning of the draft law, hedging of pre-Brexit transactions or certain life-cycle events would be in scope,” it concludes.

The French arrangements are less complete still and may only apply with certainty to contracts to which banks were, “irremediably committed before Brexit.” ” – France are trying to grab things, but then they always have,” says lawyer Barnabas Reynolds at Shearman & Sterling.

The country-by-country provisions for a no deal Brexit aren’t perfect, but senior traders say that in the case of Germany at least, they’re sufficient to prevent a scramble to relocate trading businesses in Frankfurt at the earliest possible opportunity. In the case of France, jobs may be moved somewhat sooner (Bank of America traders take note).

Either way, the pressure on banks is less intense than might be presumed. Rachel Kent, head of financial services regulation at law firm Hogan Lovells, notes that if a withdrawal agreement is negotiated, then we will have a transition agreement in place that will last until 2021. And if we don’t get a withdrawal agreement, then individual countries’ provisions for a no deal Brexit will come into effect. “The main issue that banks have is the loss of passporting, and this delays the point at which this arises,” Kent says.

There are plenty of rumours about London banking jobs and Brexit, including some that traders are being asked to sign contracts asking them to move to Europe at short notice and that others are being given until early January to make up their minds. There are also victorious claims that Brexit hasn’t led to a wholesale shift in banking jobs out of the UK as initially anticipated. Both look wrong. Jobs will move, but irrespective of the Brexit chaos banks have good reason not to move them just yet.

Activist defense has quietly become a bigger source of revenue for investment banks over the last few years as corporations are looking for help dealing with public campaigns from the likes of Bill Ackman, Carl Icahn and Daniel Loeb. Boutiques such as Evercore and Moelis have been particularly active as the business fits well within pure advisory shops. It made sense, then, when rival boutique PJT Partners purchased activist defense and shareholder engagement firm CamberView back in August. With the deal now closed, PJT is looking to add more experienced bankers to the Camberview team.

The boutique has just 13 openings on its career page; six are for its PJT CamberView business unit. They are looking for analysts, associates and directors in both San Francisco and New York. That’s quite a bit of growth potential considering CamberView had only 40 employees when PJT bought the firm. Sources told Reuters at the time that the boutique planned on keeping CamberView’s staff fully intact, so it’s likely these are new positions and not backfills. PJT Partners agreed to pay $165 million for the six-year old firm. The deal closed in early October.

For associate and director roles, PJT CamberView is looking for candidates with previous experience dealing with corporate governance matters. Analysts need at least a year working in management consulting, M&A or other strategic advisory positions. The company didn’t immediately respond to requests for details on its hiring plans.

The demand is far from surprising considering the current landscape. Nearly 150 new activists campaigns were launched during the first half of 2018, up 75% from the previous year, according to Reuters. Moelis just hired two senior executives to its activist team last week. In August, Jefferies poached Chris Young, the head of Credit Suisse’s high-profile activist defense team. Lazard made a number of similar hires earlier in the year.

Meanwhile, the 40 or so CamberView employees can only hope that PJT shares the wealth with them as it does its M&A bankers. The boutique maintained a massive 73.6% compensation-to-revenue ratio through the first nine months of the year, more than 13 percentage points higher than at Evercore. Assuming a strong fourth quarter performance, the average PJT employee may take home just shy of $750k for the year.

Camberview is still led by its founder, Abe Friedman, who was made partner at PJT following the acquisition. The firm also recently hired Anne Sheehan, former director of corporate governance at CalSTRS, as a senior advisor.

Follow @BeecherTuttle

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You probably won’t remember this – unless you happen to be the sort of geek who recalls banking presentations, but last year’s Credit Suisse investor day included an interesting chart.

The chart, embedded below, was not replicated in today’s 2018 investor day presentations, but it helps explain one of today’s more curious revelations: Credit Suisse’s spending on technology is falling.

In 2015, Credit Suisse says it spent CHF3bn on technology spending. This year, it predicts that will fall to CHF2.8bn. All of the CHF200m cut has come from so-called “run the bank” spending, which is down from CHF1.6bn to CHF1.4bn. The more innovative “change the bank” spending is steady at CHF1.4bn.

Does is matter that Credit Suisse’s technology spending is falling? Well, maybe. Deutsche Bank is also cutting its technology spending and its historic under-spending on IT has been blamed for its current predicament. While European banks are scrimping and saving on tech, J.P. Morgan and Goldman Sachs hiked spending on communications and technology by 13% and 14% this year. Surely the Europeans need to spend to keep up?

Well yes, except that as Credit Suisse’s chart from last year shows, spending money on some tech staff is a waste of time. – There are (or were) far too low performing teams with low code quality, or diligent coders who don’t produce much code at Credit Suisse. Only the coders in the top right of the chart are really worthwhile.

Credit Suisse has figured this out. Hence today’s presentation on the bank’s 2018 technology investments talks of the automation of the, “development process end-to-end,” and says that the banks’ coders are spending an average of 5.5% more time coding each day as a result. Credit Suisse is spending less on technology and is making its existing coders more productive.

This matters because it’s not just Credit Suisse. J.P. Morgan is using ‘automated code scanning’ which is enabling it to save hundreds of thousands of developer hours.

In this sense, banks’ high IT spending is a double-edged sword. The more banks’ spend, the more they will look to save. – Just ask compliance staff, who were all the rage until recently (Credit Suisse said today that its compliance headcount is up 43% in three years), but who are now being pruned back as banks seek to replace them with machine learning programmes that can monitor staff on an ongoing basis at a fraction of the cost.

A small proportion of great Credit Suisse coders do most of the work (from Investor Day 2017)

coding effort

Source: Credit Suisse, 2017

After Goldman Sachs and Bank of America, Citigroup has become the latest to announce who’s made managing director (MD) for 2018. Business Insider has procured Citi’s list of 125 people, of whom 37 are in banking, capital markets and advisory, 54 are in trading, seven are in technology and operations and the remainder are doing other things (eg. private banking and “international franchise management”.) Few are women, most have decades of experience, several are Citi lifers.

As ever, though, the people banks choose to promote to their highest levels are reflective of their priorities, and in the case of Citi a few patterns emerge. Firstly, Citi is all about equity derivatives trading. This year, it promoted Henry Yeh, a director of corporate equity derivatives trading in New York, Nicholas Cons, an equity derivatives quantitative analyst (also in New York), Robert Stewart, head of exotics trading for APAC, Robert Smolen, head of EMEA equity exotics and hybrids trading (who was hired from J.P. Morgan in September 2017), and Vikas Sharma, a director of prime finance and delta one. The list also features Seok Jeong, the bank’s head of Americas flow volatility trading, who joined from J.P. Morgan in May 2018.

In technology, Citi’s promotions reflect the bank’s emphasis on data and trading technology. The lucky few include Nadir Azim, head of reference data in EMEA, Amit Rijhsinghani, global head of central risk book and market making technology in New York, and David Griffiths, global head of equity risk and equity derivative technology in London.

Elsewhere in trading, Citi’s elevated Michele Cancelli, its global head of product development in its quant investment strategies group (hired from Goldman two years ago), and John Loizides, an algo trader. Citi’s new female MDs include Maggie Wang, whom it hired from J.P. Morgan in 2014 to head CLOs and CDO strategy.

In investment banking, tech-focused bankers have been fortunate. Mark Litz, the EMEA head of fintech is on the list. So too is JX Toh, the head of TMT investment banking in Hong Kong, Jeff Ard, a global technology banker, and Matt Sutton, who focused on tech corporate banking in San Francisco.

So, who’s not on the Citi 2018 MD list? There seems to be a conspicuous lack of people from Citi’s cash equities business. Blame MiFID II. Somewhat lacking too are old-fashioned credit and rates traders, although Alexis Serero, head of investment grade credit trading in Europe is on there. Even so, the special people at Citi this year appear to come from a few privileged groups – equity derivatives traders in particular.

Separately, a banking IT consultant stands accused of a murder in the UK that has resonances of the Rurik Jutting case in Asia. Zahid Naseem, a consultant who appears to have had a long career in the City of London, stands accused of brutally murdering a 29 year-old hostess.

48 year-old Naseem, who reportedly earned up to £250k ($316k) a year, is in court this week. He denies the murder. After allegedly killing Christina Abbotts, he reportedly called his partner (who also appears to work in banking) and said, “It’s too late, I’m sorry, life isn’t going to work for me.” When police arrived, Naseem was reportedly lying on the couch in a state of semi-consciousness, although medics who examined him thought his condition was feigned. He told police: “I’m not some hyper high-functioning psychopath creating a story for you a-la Silence of the Lambs.” The case continues.

Meanwhile:

German Finance Minister Olaf Scholz and Deutsche Bank Chief Executive Officer Christian Sewing are looking for ways of merging Deutsche Bank and Commerzbank. (Bloomberg)

Deutsche Bank’s transgressions: “We are not talking about isolated cases but about a multitude of issues that habitually pop up in different business areas all across the bank. The problem is that there’s a clear pattern.” (Financial Times)

In 2012 Deutsche Bank wanted to hire Tim Leissner, the former Goldman Sachs senior partner in south-east Asia now embroiled in the 1MDB scandal. (Financial News)

Tidjane Thiam says things are not going well for Credit Suisse’s APAC trading business. “We see lower activity both in global markets and APAC markets. More in APAC markets — you have seen the correction in Shanghai and Shenzhen, which is actually quite brutal. That leads to lower activity.” (Bloomberg)

Credit Suisse’s Asia chief said client activity in private banking and trading was the worst in 10 years in the fourth quarter. (Financial Times)

Morgan Stanley raised $1.4bn for a new investment fund that will source deals using the bank’s investment bankers and wealth managers. (Bloomberg)

Barclays wants to double its workforce in Ireland to 300 by the end of next year. (RTE)

Crypto companies are laying off staff. Blockchain venture firm ConsenSys is cutting13% of its staff. Steemit, a firm that runs a blockchain-based social network has laid off 70%. (WSJ)

Professor Alice Gast, the head of London’s Imperial College, earned £433k ($539k) last and was given use of an official residence with a market rent of £120k. (Financial Times)

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If you’re a quant who wants to work for a hedge fund, you probably want to work for D.E. Shaw. Heralded as “the first great quant hedge fund,” D.E. Shaw launched in above a Marxist bookshop in New York City in the 1980s and came to the UK 13 years ago. D.E. Shaw & Co. (London) LLP just released its results for the year ending March 2018. They suggest you’ll be lucky to get a job at D.E. Shaw, but that you’ll make good money if you do.

There were only 21 slots for top quant portfolio managers at analysts at D.E. Shaw’s London office in the year ending March. This was up from 16 one year earlier, but is still hardly on a par with the biggest hedge funds like Millennium Management, which has nearly 150 registered staff in London according to the FCA Register. D.E. Shaw’s 21 traders are supported by 22 London administrators.

The original quant fund is pretty generous when it comes to paying its people. The average UK employee (admin staff included) earned £464k ($587k) last year. The highest earning of the fund’s three UK partners earned £4.3m, with a further £5.7m shared between the other two. To complicate matters, one of D.E. Shaw’s London partners is D.E. Shaw & Co. UK, another listed entity. The other two are Neil Cosgrove, who’s worked for the fund in the UK since 2005, and Julius Gaudio, a Harvard economist in his 40s who has his own philanthropic foundation.

D.E. Shaw & Co (London) made profits of £10m on turnover of £52m last year. On its website, the fund says it is, “extensively searching the globe for talented individuals,” and hires people who are, “able to think creatively, who are relentlessly rational, and who put ego aside in the interest of getting things right.”

The fund says it encourages employees to express the “eclectic parts of their personality.” One quant analyst describes it as, “a mixture of grad school and a tech company with a flavor of finance in it.”

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Yet another ex-Deutsche Bank MD has proven that there is life after the German bank. Ali Almakky, the bank’s former global head of corporate strategy has just turned up at J.P. Morgan, six months after his team at Deutsche was reportedly disbanded.

Almakky joined J.P. Morgan’s London corporate and investment bank strategy team, according to his LinkedIn profile. He spent just over three and a half years at Deutsche Bank after being hired into a strategy group set up under the tenure of former DB CEO John Cryan. Before that, Almakky spent over 11 years at BAML.

Christian Sewing dismantled Almakky’s strategy team in June 2018, after taking over from Cryan as CEO. At the time, the Wall Street Journal reported that the team had “more than a dozen employees,” and that Almakky was contemplating moving into another position at Deutsche Bank, or looking for a role elsewhere. He clearly opted for the latter.

Almakky isn’t the only ex-Deutsche Bank managing director to resurface in recent weeks. Jon Murray, a former director at DB joined Mizuho as co-head of equity capital market syndicate and equity-linked origination for EMEA, and the bank’s former head of financial institutions debt capital markets turned up at Deloitte.

Yesterday, Bloomberg reported that German Finance Minister Olaf Scholz and Deutsche Bank Chief Executive Officer Christian Sewing have been looking for ways of merging Deutsche Bank and Commerzbank. Deutsche Bank’s shares rose over 8% as a result.

Working in strategy for Deutsche Bank is no easy gig. As we noted when Sewing took over, Deutsche’s recent history has been one of endless strategic changes (as has Barclays’ too). J.P. Morgan should be a lot more steady.

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Will the ‘gilets jaunes’ (rioters in yellow high-vis jackets) dissuade banks from moving staff from London to Paris? A London trader writing here last week argued that they will. London finance professionals were “horrified” by the riots, he said: “Brexit has shaken the stability of London, but Paris has made itself seem worse by appearing to be a war zone.” They might also be horrified by President Macron’s capitulation to the rioters, which seems likely to result in higher taxes in the long term – although anecdotally higher wealth taxes are the biggest concern.

For the moment, however, French bankers say nothing is likely to change and that the situation in France is being exaggerated in London.

“A good number of banks have already made preparations in the wake of the Brexit referendum and it’s bit late for them to reverse their plans. These are not the kinds of events that will change our mind on decisions that will effect us for the next 15 years,” a spokesman for one large U.S. bank told French publication BFM Business.

One finance recruiter said the coverage of the gilets jaunes and the Parisian riots is symptomatic of “French bashing” by the Anglo Saxon press: “There are elements that want to dissuade finance professionals in London from coming to Paris, but that hasn’t happened yet.”

A French banking analyst points out that Germany is also afflicted by “a certain political instability” now and that some banks chose Paris over Frankfurt for that reason. “This was before the gilets jaunes crisis,” he notes, cautiously.

With Britain still in Brexit chaos, few banks are going to make any immediate changes to their plans for relocating to France. “The gilets jaunes haven’t had a significant impact on the strategic intentions of foreign banks in Paris,” says Oliver Coustaing at headhunter Alexander Hughes in Paris. All things being equal, places like Banks of America will still be moving London staff to Paris in the New Year.

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Barclays has poached a high-ranking technology lead from Credit Suisse just before the end of the year. Chris Wells, a former managing director of global markets technology at Credit Suisse, started at Barclays in December in New York as an MD heading up its macro technology team.

The move comes a year after Barclays brought over Michael Lublinsky from hedge fund Brevan Howard to lead the UK bank’s macro trading business in New York. Barclays has been extremely active this year, making 275 external hires to its markets business between January and September 2018. The bank’s big focus now is electronic trading and digitalization.

Wells had been at Credit Suisse since 2015, before which he spent almost a decade at Goldman Sachs in various trading technology roles. He made managing director as the global head of interest rates products technology in 2011, according to LinkedIn. He cut his teeth at Deutsche Bank before a short stint at Citadel. He has his master’s in economics and finance from the University of Bristol. Wells is the latest example of banks making big-name hires at the tail end of the year – something that was rare in years past as firms tended to wait out bonus schedules. There seems no time for that now, particularly in technology.

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Despite all the negative headlines surrounding Elon Musk, the next-generation of engineering talent is still lining up to work for the man. More than 13,000 students recently rated Tesla as the fourth most prestigious internship, behind only Google, Apple and Microsoft. That’s up two spots from a year ago – before the infamous tweet, the $20 million SEC fine and various reports of engineers putting in marathon weeks of work to meet seemingly impractical deadlines. So why are they so enamored?

A fascinating and exhaustive new article from Wired delves deeper into the reasoning and provides plenty of anecdotes that suggest working for Tesla means you’re in an “abusive relationship” with Elon, according to one former executive.

Perhaps the most startling story is of a young engineer who was “ecstatic” about working at Tesla’s battery manufacturing plant in Nevada, despite working 13-hour days, seven days a week. At 10pm on a Saturday, a frustrated Musk called over the engineer to help with a module that wasn’t performing properly. “Did you do this”? Musk reportedly asked. The flustered engineer responded that he didn’t know exactly what he was referring to. “You’re a f*****g idiot!” Musk shouted back. “Get the f**k out and don’t come back!” Less than a minute after meeting him, and without Musk even learning his name, the engineer was fired, according to the report.

One anonymous manager told Wired that he had a name for the outbursts: “rage firings.” The same manager would dissuade his reports from getting too close to Musk, lest they face a similar situation. Sources told Wired that he would openly deride, insult and even bully employees, sometimes demoting them on the spot. “Everyone came to work each day wondering if that was going to be their last day,” a former executive told the website. Another said he was told by others to hunch down in meetings because Musk appeared to prefer sitting higher than everyone else. There are probably a dozen other anecdotes that are worth reading, but they all paint a similar picture of an emotional and combustive CEO, far worse than any we’ve come across in finance, who kept employees on an extreme edge.

That all said, the most fascinating part of the piece seems to answer the question around why employees are so enamored with Tesla and with Musk in light of all that they know. The majority of people who were interviewed, including some who were fired, see Musk as a visionary and believe deeply in the greater good that he promises to deliver. They breathe, drink and eat the mission statement. “Tesla is the only company positioned to make this world a better place, to really improve the world right now,” one fired employee told Wired. “And Tesla is Elon. How can you be bitter about humanity’s best hope?” (A Tesla spokesperson told Wired that some of the stories were misleading and lack context).

Elsewhere, the 1MDB bribery scandal has left former higher-ups at Goldman Sachs shaking their head. Nearly a dozen former partners told Bloomberg that they are disturbed that the firm allegedly missed or ignored red flags surrounding the deal, calling the scandal the biggest threat to the firm’s reputation since the financial crisis. That takeaway is underscored by the fact that two former partners actually went on record with Bloomberg to criticize Goldman – something that rarely, if ever, happens.

The bank too was somewhat out of character with a sharp response, noting that former CEO Lloyd Blankfein received a standing ovation last week at a lunch with corporate executives. “That public affirmation from our long-standing clients is more meaningful than backbiting and second-guessing from former employees,” a Goldman spokesperson told Bloomberg.

Meanwhile:

A female BNP banker is suing the firm for discrimination over claims that her former male boss called her a “princess” behind her back. Regis Pecheux, the bank’s head of corporate sales for central and eastern EMEA, said in court on Thursday that he used the term “jokingly” and that he “did not consider it belittling at the time.” (Bloomberg)

Amazon is only set to hire around 700 employees in New York’s Long Island City next year, a fraction of the 25,000 it plans to add by 2028. It will take roughly two years before the company can even break ground on its new headquarters. The anticipated explosion of news jobs will be more of an extended trickle for the foreseeable future. (WSJ)

U.S. politicians have called on the Senate Banking Committee to launch a “thorough, detailed bipartisan committee investigation” into Deutsche Bank. The firm’s German offices were raided by police in November as part of an offshore tax-evasion and money-laundering case. (WSJ)

Hedge fund veteran Philippe Jabre is closing the three funds that he personally managed after “an especially challenging” year. Meanwhile, New York-based River Birch Capital, co-founded by former Lehman Brothers President Bart McDade, is also closing. More than 170 hedge funds were liquidated in the third quarter alone. (Bloomberg)

BlackRock is building a technology platform for Microsoft that will allow the software company’s employees access to financial planning tools and guaranteed retirement income through their workplace saving plans. BlackRock may be the world’s largest asset manager, but it is clearly now focusing on technology as a key revenue generator. Who would have ever thought it would be BlackRock that’s selling software to Microsoft? (WSJ)

Swiss investment company GAM plans to cut roughly 10% of its workforce next year following outflows that were prompted by a scandal over a star money manager. (Bloomberg)

Morgan Stanley is shuttering its equities and FX sales and trading desks in Moscow. Some of the 40 employees will move to London. Others will be let go. (Bloomberg)

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Barclays has just announced its list of new managing directors (MDs) for 2018. Congratulations to the 85 lucky people, who are predominantly men, predominantly based in the U.S. or London, and are all listed below.

The new list should keep an important cohort of people at Barclays happy. In the past two years, the bank has done some big hiring. In the 19 months to October 2018 it added 50 managing directors to its markets business and 33 to its banking business. The new additions have prompted complaints from Barclays lifers that the bank is being inundated with new staff on big pay packages, whose (allegedly high) compensation isn’t always justified – even though Barclays’ equities business in particular has out-performed this year.

Today’s MD list should go some way to placating the complainers. Some of those on the list are new joiners, but most are long-serving Barclays men (and the very occasional woman) who’ve worked their way up.

Most notably, the 2018 promotions have gone to a healthy proportion of people in Barclays’ New York office who joined when the bank acquired Lehman Brothers in 2008. We count around 19 people – 22% of the new MDs, who cut their teeth at the failed bank. Some, like Ainsley Withey in the U.S. investment banking division or Manav Patnaik in equity research, spent years at Lehman before joining Barclays and finally making the grade. Others, like Eric Waters and Claire Pearson, were summer associates at Lehman Brothers in New York before joining Barclays ten years ago.

This isn’t to say there are no recent hires on the list. Staffan Johansson has just been promoted to MD despite only joining Barclays in 2018 as head of M&A for the Nordic region. Jan Asboth has been promoted too, after joining from Macquarie as head of programming trading and high touch sales for continental Europe in July 2018. Barclays can still be a ticket to a quick promotion if you play it right.

Mostly, though, today’s list contains people like Siddharth Mehla, an options trader who’s worked for Barclays for 12 years, or Sita Noble, head of UK risk solutions, who’s been there for 13. This is about rewarding longevity. Last year’s Barclays MD list contained a high proportion of people who hadn’t worked their way up at Barclays. This year’s seems different.

The promotions come at a time when Barclays in particular stands to be battered by Brexit. As a UK-based bank, Barclays’ share price could suffer disproportionately from the UK’s messy extrication from the European Union. Nor will the bank be helped by a falling pound.

The elevation of large numbers of ex-Lehman people therefore looks doubly interesting. Contributing over 40% of revenues, Barclays’ U.S. investment banking business stands to be an important stabilizing force in the next year; staff in New York must be kept happy irrespective of a falling share price and events across the Atlantic. All the ex-Lehman promotions might just be serendipity – it’s 10 years since Barclays acquired Lehman and it usually takes 10 years to make MD – but they’re also likely to be helpful when it comes to retaining key people in the U.S. franchise in 2019, particularly as many ex-Lehman equities staff at Barclays have disappeared over the past 18 months. Onwards into the storm.

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ExodusPoint Capital Management is still at it. The $8bn hedge fund, which has been one of this year’s big hirers on both sides of the Atlantic, just added Stanislas de Caumont in London. De Caumont joined this month, according to his LinkedIn profile.

Like many of ExodusPoint’s recruits, de Caumont is no stranger to working for a hedge fund. Before ExodusPoint, he was a former global macro portfolio manager at Steve Cohen’s Point72. Before that, he was at Balyasny Asset Management in London. Before Balyasny he was at SAC Capital (also then run by Steve Cohen).

In the past five years de Caumont has worked for five hedge funds, ExodusPoint included.

Before immersing himself in the hedge fund waters, however, de Caumont was bobbing about in an investment bank. He spent nine years at Credit Suisse, latterly as head of government bonds, inflation and repo for Europe. Prior to that he was nearly four years at Lehman Brothers and five years at Salomon Brothers. Even at Lehman, de Caumont’s tenure was longer than at any of the hedge funds he’s worked for.

This may simply be chance. De Caumont left SAC Capital in 2013, after the fund closed its London office in the wake of an insider trading investigation (there is no indication at all that De Caumont was implicated). His decision to leave Balyasny in December 2015 looks well-timed in light of that fund’s recent mass layoffs and may have been motivated by a desire to work with Cohen again. His decision to leave Point72 and join ExodusPoint may just be because ExodusPoint is the place to be right now.

Whatever de Caumont’s motivation, however, it’s hard not to conclude that banking careers can be more steady than careers on the buy-side. In the hedge fund world, there’s a far greater tendency to jump from firm to firm every few years.

De Caumont isn’t the only one doing it; some of ExodusPoint’s other recent hires from rival funds have similar CVs. For example, Luiz Fernando Beltreschi, who joined ExodusPoint in New York in October, has worked for four funds (ExodusPoint again included) in six years. Raghav Subbarao, a quant trader who joined in London in November, previous spent less than three years at Citadel and less than three years at Millennium Capital. Some of ExodusPoint’s own recent hires appear to be moving on already – Larry Chen, an experienced macro trader who joined in April 2018, now claims to be self-employed.

This doesn’t mean that hedge funds like ExodusPoint don’t provide good careers for people leaving investment banks. It does mean that you might need to be prepared for a bumpier career if you join one. Not that this is likely to dissuade anyone. One of ExodusPoint’s most recent ex-banking hires is Rick Gelband, who joined in September from Goldman Sachs, where he was an associate in FX sales. He shares a surname with Michael Gelband, ExodusPoint’s founder and may therefore be looking for some stability with his immediate or extended family (although this may just be coincidence and they could be unrelated entirely).

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