Morning Coffee: Long term, you'll make more in banking if you didn't go to a target school. The vulnerability of Credit Suisse
Should you study at Oxford, Cambridge, the London School of Economics, Bocconi, Paris Dauphine, or WHU in Germany? Or should you just study at the best school you can and trust that your innate passion for working in financial services will hoist you to the top?
If you don't study at a bank's target school, you will certainly find it harder to get your first job at the bottom. However the chart below, taken from the latest Wall Street Oasis Compensation Report (via website Poets and Quants), suggests that when people from non-target schools do get into banking, they make more when they get to the top - a lot more.
Average total compensation in investment banking, by school brand
How is this? Maybe it has something do with the fact that banks pay for educational brand in the early years, but that in the long term graduates from top universities prove complacent and are trumped by harder working graduates from non-targets who have something to prove.
Separately, Euromoney points out that Credit Suisse's fixed income currencies and commodities (FICC) business was particularly exposed to the emerging markets disruption at the start of this year. Credit Suisse derives around 20% of its fixed-income revenue from emerging markets, says Euromoney. This is roughly double the proportion at Goldman Sachs and around four times the weighting at big European banking peers or Morgan Stanley. Credit Suisse is trying to perform a 'high wire balancing act,' says Euromoney: it's trying to focus on its areas of strength, like high yield and emerging markets whilst remaining a credible player in sectors such as rates that are suffering from falling margins, but remain the main source of revenue.
Last time we looked, Credit Suisse was shrinking its rates business. However, headhunters say that it also cut tens of senior emerging markets professionals at the turn of the year. If fixed income revenues continue falling and emerging markets jitters worsen, the Swiss bank will have some hard decisions to make.
Why you'd be an idiot to hire automatons with perfect CVs. (New York Times)
In the fourth quarter of 2010, there were 24,300 people working in FICC. Now? 19,300. (Quartz)
Sudden rush of financial services whistleblowers. (Wall Street Journal)
Actually, returns from corporate credit have beaten equities so far this year. (Financial Times)
Everything you've ever wanted to know about the ascent of Andrew Balls at Pimco. (Bloomberg)
BNP Paribas Bank of America, Goldman Sachs. HSBC, Morgan Stanley, Barclays, Citigroup, Credit Suisse, Deutsche, JPMorgan, Royal Bank of Scotland Plc and UBS are all being pursued by investors in a lawsuit accusing them of rigging FX markets. (Bloomberg)
A mysterious and unnamed individual at the Prudential earned £7.5m last year. (Financial Times)
Cliff Asness defends self: HFTs don't need that super speed to get ahead of the little guy or even institutional traders, but to get ahead of other HFTs. (Wall Street Journal)
What it’s like to star in a Michael Lewis book. (NY Mag)