What must you study if you want to maximize your earnings during your career working for an investment bank? No, it's not a degree in economics from the London School of Economics or Imperial College. Nor is it a degree in computer sciences or business.
New research, published by Financial News, suggests the route to riches in financial services is...a degree in mathematics and statistics.
At director level, maths and statistics graduates earn an average of £400k ($610k). This compares to £280k for directors with a business and accounting degree, to £300k for directors with an engineering degree, and to around £315k and £325k respectively for directors with an economics or engineering degree.
It typically takes anything from five to seven years to reach director level, suggesting the recipients of these pay packages are aged anything from 27 to 32 years old. Financial News suggests highly paid maths graduates can attribute their pay to technical skills and their ability to work on complex products. Surprisingly, therefore, the second highest paid directors (earning around £335k) graduated in the more nebulous discipline of 'management and strategy', an area in which banks have traditionally lacked talent.
Secondly, Goldman Sachs likes to hire strivers. Lloyd Blankfein has specifically said that the firm doesn't like "entitled" kids and that rising up out of adversity is a "common story" at Goldman Sachs. This doesn't mean that everyone at Goldman Sachs grew up on a Bronx housing estate, however.
Take Mark Sorrell, the co-head of UK investment banking at Goldman, and one of the bankers working on the $109bn SAB Miller InBev deal. Business Insider points out that Sorrell is the son of Martin Sorrell, chief executive of advertising giant WPP. Banking is in the family: his two brothers also worked at Goldman for a while. Jonathan Sorrell is now chief financial officer at Man Group; Robert Sorrell joined Moelis & Co in London last year.
Credit Suisse will almost certainly cut its US corporate debt group.
Late To The Party (WSJ)
Jes Staley could have been CEO of Barclays in 2012, but the bank didn't want to buy him out of his deferred compensation.
“Barclays have some excellent capabilities on the investment side, with some talented people, where they are best in class, such as research in the oil market in the US and their hedging capabilities in foreign exchange.”
Barclays’ return on equity is expected to fall short of its cost of capital until 2018, at least.
Half Way Through Cost-cutting (Reuters)
Barclays is just over half way through a three-year plan that involves cutting 7,000 jobs from its investment bank.
How senior bankers speak at J.P. Morgan: “I think our team has a good balance between juniors to seniors. The focus is to give senior originators leverage and make sure that analysts and associates get full exposure to all aspects of a deal, training and mentoring for the future.”
Bring Your Own (WSJ)
Work for J.P. Morgan, pay for your own phone.
Tom Hayes: Irresistible (Bloomberg)
Tom Hayes had a psychotic God syndrome, allegedly. (Bloomberg)
Caffeine Diet (WSJ)
As long as a person has a diet that is high in fruits and vegetables and healthy fats, “there is no reason to think that someone who solely drank coffee would have any issues.”
Bitter Taste, Bitter Person (Quartz)
A study has found that a taste for bitter foods, such as coffee, is associated with narcissism, Machiavellianism, psychopathy and, in particular, sadism.
Quote of the Day:
“Appointing an American investment banker is actually the right thing for the job, given the U.S. is where the investment bank makes all its money and has been under-performing,” why Americans rule in investment banking, even at British banks.