Morning Coffee: Lose the Bonus, Keep the Job?
With seemingly no more jobs to cut, large banks are expected to use another tool in their arsenal to reduce costs: slashing bonuses.
Morgan Stanley analyst Betsy Graseck told Bloomberg TV on Wednesday that banks will look to reduce year-end bonuses to help balance their ledger, leaving base salaries untouched. The move, says Graseck, is an effort to avoid cutting additional jobs.
How successful banks will be in preventing further headcount reductions is certainly debatable. Bank of America recently announced plans to cut roughly 16,000 jobs by the end of the year. Royal Bank of Scotland has upped its expected workforce reductions in its investment banking division to 3,800 from 3,500. Meanwhile, Goldman Sachs and Deutsche Bank are quietly realigning their management staff, resulting in several high-profile and rather costly execs taking buyout packages.
Graseck’s prediction is a cheery note in an otherwise dreary job landscape, and one can only hope she has done her homework. Recent experience, however, suggests that once the banks get a taste for blood, they want more.
Nonetheless, banks should be leery of the manner in which they trim bonuses. In a recent FINS informal online survey, roughly half of the 781 respondents said they'd turn down their dream job if their bonus was paid entirely in restricted stock and subject to clawback provisions.
The British Bankers' Association, a private trade group charged with overseeing the London interbank offered rate, reportedly voted earlier this month to rid itself of the responsibility, a possibly moot move considering the U.K.'s Financial Services Authority is mulling whether the BBA should keep managing Libor.
An operations error that caused a $10 million loss for Bank of America has given additional ammunition to critics of dividend trading, which some say takes advantage of smaller, less knowledgeable investors.
Citigroup’s European distressed-debt sourcing unit added five employees over the last month to help banking clients riddled with troubled assets cut leverage.
Another managing director has left Deutsche Bank, taking with him three colleagues to build his own hedge fund. Hal Lehr, a managing director for global cross-commodity trading at the German bank, plans to launch the fund before the end of the year.
Portman Square Capital, the new hedge fund spearheaded by Sutesh Sharma, Citigroup's former global head of proprietary trading, will be run by one-time colleague Andrew Mack, the former head of Europe at Morgan Stanley Investment Management, who’s signed on as Portman’s chief executive and chief risk officer.
Credit Suisse is considering integrating its poor-performing asset-management unit with its private and investment banking divisions. Not clear whether jobs will go, but a source told Reuters the move is “all about costs.”
Just because you lost your job at a bank doesn’t mean you’re stuck with a lousy exit package. Let the negotiations begin.
Searching for a job is tough business for all Americans, but even more so for recent college grads who are often forced to accept menial positions that don’t take advantage of their education. Nearly 32% of college-educated 25-to-29-year-olds are working outside the college labor market.
|Buzz Around the Office|
A 29-year-old inebriated Florida man was arrested this week after leading police on a 30-minute low-speed chase on horseback.
List of the Day: Recruiters
Whether you like it or not, working with recruiters is one of the best ways to get in front of hiring managers. Here are a few ways to get them on your side.
- Treat them with the respect you would give a hiring manager.
- Be enthusiastic. Personality counts with recruiters too.
- Keep them in the loop as you move forward in the hiring process.