Morning Coffee: Is JPMorgan letting go of the wrong people? How Goldman Sachs’ head of recruitment keeps his ‘edge’
JPMorgan is cutting costs and making redundancies. The trading business is at the forefront of all the cutting and chopping. In the first half of 2014, fixed income sales and trading revenues at the bank fell 18% year-on-year. Equities revenues fell 7%. Savings must be made and Daniel Pinto, head of JPMorgan's corporate and investment bank, is making them.
Pinto is not, however, making his savings by chopping expensive traders and salespeople. No. Bloomberg reports that he is instead chopping, 'hundreds of technology support employees.' Some of them have reportedly accepted demotions already to help save costs. Others are reading through letters explaining their severance packages.
Is chopping technologists really the way to go though? Technology support staff typically earn a fraction of the salespeople and traders who are sitting around waiting for volumes to come back. Why not cut costly traders instead?
JPMorgan has been slow to pare back its trading teams. The bank cut equities traders back in 2013 and there were intimations of fixed income layoffs in June. But while Goldman Sachs has reduced its fixed income currencies and commodities trading headcount by 10%, JPMorgan has seemingly preferred to maintain staff numbers and squeeze pay. The decision to dump support staff rather than hack away at front office personnel suggests this policy is continuing. It also implies that JPM still thinks trading volumes might bounce back soon. - Only three months ago, Jamie Dimon suggested the rout is cyclical rather than secular. For the moment, JPMorgan's trading jobs may be safe.
Separately, how do you keep your 'edge' if you're the global head of recruitment at Goldman Sachs? Try transcendental meditation. Michael Desmarais, global head of recruitment at Goldman Sachs, told the Financial Times that he was initially concerned that chanting mantras might deprive him of his edge but that this hasn't been the case after all. “There is an advantage to having an edge,” Desmarais reflected. “I don’t think meditating threatens the edge. It enhances focus and is additive.”
JPMorgan's job cuts are happening in New York, Tampa, Florida and Dubai. (Reuters)
The trend for replacing human traders with electronic trading systems may be waning. In markets where volumes are thin, a human touch is suddenly important again. (WSJ)
Deutsche Bank is benefitting from better credit conditions – especially in European distressed debt and real estate. If and when volatility returns to the fixed income markets next year, Deutsche could come out looking pretty smart. Having cut back on its fixed income trading business in 2012, UBS could look pretty foolish. (Breaking Views)
Now Deutsche Bank and UBS are having their dark pools probed too. Dark pool professionals everywhere have reason to be fearful as the investigation spreads outwards from Barclays. (WSJ)
The Bank of England wants to be able to clawback bonuses after a seven year period even if they've already been spent. If this happens, bonuses will become a defacto form of savings for cautious bankers, while incautious bankers may be inspired to invest for high returns that will leave them with something even if the money is reclaimed. (Financial Times)
How's the 'protected weekend' thing going for junior bankers? Ok, but some are complaining that the protected weekends of colleagues mean they're having to fill in for them and work harder. (Slate)
You can't keep a good hedge fund manager down. - So far this year, Steve Cohen's new 'Point72 Asset Management Fund' has returned 9%. Ex-SAC Capital employees who are now at struggling funds may wish they were still working with the fleece-wearing maverick. (Bloomberg)
Ex-Credit Suisse and BNP Paribas banker forced to give up his home to his fashionista ex-wife is complaining of ruin. (Evening Standard)
5 worse things to have your intern do. (Inc)
How to perform in an interview for Cambridge University (Telegraph)
Morgan Stanley juniors have been feeling underpaid, overworked and frustrated. Rush to staff-up in ECM
How to quit banking at 32 and still buy a £2m home. When Anshu Jain meets Deutsche clients himself