How desperate must you be to accept a job in a bank’s ‘non-core’ unit?
These days, a bank is not often a bank unless it has a non-core unit of assets it wants to wind down. What started as a localized phenomenon at banks like RBS and Citi has spread to UBS, Deutsche and most recently Barclays. If you want to work for a bank, you may not be able to work for the good bit. You may have to settle for the dark side, AKA the 'bad bank' or 'non-core unit.'
Leading banks' non-core units are home to some big names. Barclays' new bad bank is being overseen by Eric Bommensath, the longtime head of fixed income for the British bank, who was most recently co-CEO of the whole investment banking unit. RBS's long-established bad bank (also known as the 'capital resolution group') is the domain of Rory Cullinan, who reports directly to the executive committee. Former top fixed income traders and loan specialists are also to be found populating the bad benches. At UBS, for example, Adam Masood, one-time head of FICC algorithmic strategy trading is now an exotics trader in the non-core division. Jeffrey Lavine, a former managing director in UBS's real estate group, is now a managing director in the 'StabFund' formed of illiquid assets which UBS bought back from the Swiss National Bank after it was bailed out in 2008.
And yet, one headhunter, speaking on condition of anonymity, said bad banks are a career dead end. "I've spoken to a lot of people in these non-core units and they're all desperate to get out of there," he said. "It's basically a contract role - you're working on something that's being wound down. Your job won't exist in three years' time."
This may be overstating the case. UBS's non-core unit, formed in late 2012, still employs around 150 people and is whittling that number down as assets are disposed of. At the last count, however, UBS still had around $65bn of legacy assets to go, down from $114bn in 2012. Disposals at the Swiss bank are taking longer than anticipated, suggesting that Barclays' $676bn of bad assets may create work for Bommensath's team for many years to come.
Will a bad bank job equip you for a good bank job in future?
When you emerge from your bad banking job, having wound down all the bad assets and done yourself out of employment, what will you do next?
Banks argue that their bad units equip employees to do all sorts of things when they leave. One tells us ex-bad bankers can go to other banks (who are setting up bad banks) or hedge funds who want to own the assets being disposed of. Chris Wheeler, banking analyst and director at Mediobanca, said bad banks offer very high profile roles, particularly when it comes to disposing of illiquid structured credit assets which require negotiation with the counter-parties involved - which can give you good contacts for a future move onto the buyside.
However, headhunters beg to disagree. Barry Seath, managing director of Mirage Recruitment, says that although he gets CVs from non-core units he's never placed their owners into a hedge fund role. Hedge funds are choosy, says Seath: they only want to hire from the trading and M&A teams of 'good banks.' The anonymous headhunter agrees: "What are you doing in a bad bank? Selling assets. It's completely different to a job in a hedge fund or fund management company where you're holding assets to make money. It prepares you for nothing at all."
This may be why some banks seem to be struggling to fill their bad banking roles. At both UBS and Deutsche, non-core units seem to be partly staffed with people promoted into trading jobs from the middle office. This seems to suggest that established traders think they might be better off elsewhere.
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