Morning Coffee: Credit Suisse's new job cuts reflect harsh reality. Most dangerous job in banking
You survive the first round of job cuts. But can you survive the second? And the third? And the fourth? No? That's unfortunate, because this is what you'll need to do if you want to come through 2016 with your finance career intact.
Credit Suisse's job cuts are a good example of this phenomenon. Last October, the Swiss bank disclosed plans to cut or off-shore 2,000 jobs at its London office. Since then, Credit Suisse has made at least two rounds of job cuts. Firstly, it made around 100 fixed income traders in the run-up to Christmas. Then it told an unspecified number of staff their jobs were at risk in mid-January. Now, the Times reports that it's getting ready to dispense with another 200 people in London next Monday.
The latest victims will reportedly be a mixture of front office bankers (ie. fixed income traders) and infrastructure staff. It doesn't help that Credit Suisses's fixed income traders had an abnormally bad 2015 and that its equities traders didn't do much better. However, the worst placed people at the Swiss bank may well be credit traders - credit trading revenues are expected to fall further in 2016 and J.P. Morgan's analysts point out that Credit Suisse's fixed income business is over-dependent on its credit desks. Nonetheless, traders at Credit Suisse might prefer to know their fates soon rather than succumb to death by a thousand small cuts.
Separately, who would be an equities analyst? While the sector offers the potential for excitement through outlandish investment calls such as that of Citi's Todd Bault, it also brings the potential to crash and burn whilst attracting large personal regulatory fines.
The latest regulatory analyst to fall foul of the latter is Charles Grom, a former Deutsche Bank equity research analyst. The Financial Times reports that Grom expressed private reservations to hedge fund clients about a company ('Big Lots') whilst maintaining a "buy" recommendation in a report issued the following day. Grom came to the conclusion that Big Lots wasn't such a great investment after meeting the company's management during a Big Lots investor roadshow organized by Deutsche, but didn't feel able to downgrade the company directly after Deutsche hosted their event. For this wrongdoing, Grom has been fined $100k and banned from working in the industry for a full year.
The UK M&A pipeline could be affected as the Brexit vote gets nearer: 'Citigroup's global co-head of M&A Peter Tague, who is based in New York, warned that an exit could dampen CEO confidence and reduce the number of transatlantic takeover deals.' (Financial News)
HSBC pay chaos strikes again: wealth managers at the bank were suddenly told they won't get a pay rise after all. Only under-paid top performers, juniors and some mid-level employees will get a hike. (Financial Times)
Weird National Trust conspiracy theory explains why HSBC decided to stay in the UK. (Evening Standard)
If only Point72 Asset Management could hire more talent...(Business Insider)
On the joys of Frankfurt: “I’ve known bankers who have been miserable about moving here for work for a four-year placement but when they are called back home they don’t want to go because life is so good here for them and for their families — it is so civilised.” (Evening Standard)
Two ex HBOS traders made millions betting the UK housing market wouldn't experience mass defaults. (Bloomberg)
"How I went from being an Irish cattle farmer to an expert on the European banking system." (Bloomberg)
Female college athletes make great employees; and male college football and basketball players pay a physical price later in life. (WSJ)
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