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FX traders needed; they’re just not wanted

Normally when a company fires someone for cause, it looks to immediately backfill the position. That’s unless you’re talking about the foreign exchange market, where traditional logic seemingly has no place.

As we’ve mentioned on several occasions, roughly two dozen mid-level and high-profile FX traders have been fired or suspended amid the ongoing investigation into the alleged manipulation of currency markets. While 24 employees don’t sound like a lot, in the foreign exchange market – one dominated by technology with precious few stakeholders – it’s a huge number. Just a handful of real market-movers exist at each bank.

Logic, then, would dictate that the traders need to be replaced, and soon. That’s not happening, according to Reuters. Banks are simply too nervous to hire traders from outside the firm in the chance their new employee may too have been caught up in the scandal. With the investigation likely to drag on into 2015, and with more bankers having been suspended than fired, firms are being forced to sit on their hands.

The end result is a patch-job of sorts. Banks will likely be forced to promote untainted junior staffers – perhaps temporarily – or bring in internal traders from other disciplines to fill the gap, according to Reuters. Clearly not an enviable position for the banks to be in, but hey, it offers some room for growth for those not embroiled in the scandal, goes the half-glass-full argument.

Weekly Hiring News (eFinancialCareers)

In this week’s roundup of hiring news, SocGen furthers its Asian and U.S. push, London firms heat up growth plans and a once-shrinking private equity firm starts growing.

Asking for an Allowance (Financial Times)

HSBC missed expectations on Monday, but that’s not the most interesting story. The bank announced that it will institute a program aimed at circumventing EU bonus cap. Roughly 660 employees will receive “fixed pay allowances” in addition to salary and tempered bonuses. Chief Executive Stuart Gulliver’s allowance will exceed $2 million for the year.

Hefty Payday (WSJ)

It seems rather trivial to complain about the pay of CEOs like Lloyd Blankfein and Jamie Dimon after private equity firms unveil their results. KKR co-founders Henry Kravis and George Roberts will combine to take home nearly $327 million for 2013.

More Informed than You’d Think (eFinancialCareers)

We spoke to ex-investment bankers, new analysts and former interns due to enter the industry and a number of common themes emerged – most are under no illusions about the work required, money isn’t the main motivator and the majority have an exit strategy from the get-go.

UBS Clearing Way for Investigators (Bloomberg)

UBS is once again planning to play nice with investigators in the hope of leniency. The Swiss bank is reportedly prepared to disclose its role in the alleged manipulation of currency markets in exchange for a cheaper bill. You’d have to assume this is bad news for the UBS traders who are under the microscope.

Deutsche Bank Pulling Back from U.S., But Not Really (Reuters)

Deutsche Bank plans to cut its U.S. balance sheet by roughly $100 billion to comply with local cap rules. The German bank will “reassign” some operations to Asia and Europe, although it said the move shouldn’t affect its fixed income or wealth and asset management units in the U.S. Rather, the repo unit seems primed for consolidation.

Charged (NY Times)

Former Evercore managing director Frank Perkins has been charged with insider trading. It’s far from your normal tale. Perk, as he is often known, made insider bets through his ex-girlfriend’s account as a way of paying for child support. He’s married.

Buzz Around the Office

I’m Sold (Bloomberg)

Copenhagen-based Saxo Bank is coming off a tough year. How does the firm plan to turn things around? Offering potential customers bobsled lessons and test drives in a $1.5 million Swedish supercar. Gotta spend money to make money.

Quote of the Day: “We don’t want to do this at all. Sadly, because of the EU directive we’ve had to change,” –HSBC Chief Executive Stuart Gulliver on fixed pay allowances


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AUTHORBeecher Tuttle US Editor

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