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Morning Coffee: Deutsche Bank’s secret Brexit escape plan. A most depressing Goldman chart

Caution sign cordon tape

Deutsche Bank’s advice to investment banks wondering whether or not they’ll gain access to the single market after the Brexit vote is this – move quickly, move first.

Frankfurt, Dublin, Paris or wherever banks choose to relocate roles currently based in London, the reality is that the local markets currently do not have the talent to support an influx of jobs. Getting in early will give you a “first mover advantage", Deutsche said in a leaked client document reported by Business Insider.

This doesn’t mean all banks should migrate to the same place, it suggests, but instead switch to the easiest option – namely, the location where they already have a full banking licence. This, rather obviously, means Frankfurt for Deutsche Bank and Paris for BNP Paribas. Meanwhile, Dublin should be the location of choice for Barclays, Bank of America Merrill Lynch and Citi. Goldman could go to either Paris or Frankfurt, while J.P. Morgan is better off in…Luxembourg.

Except, our research suggests that more U.S. banks already have full banking licences in Germany. If moving was simply a case of having a brass plaque already on the door, why are more banks not leaving already?

Well, J.P. Morgan also has its own Brexit plan, conceived in 2011, and by all accounts it will be both expensive and complex to move staff. Jamie Dimon’s threats to move 4,000 jobs out of the UK before the Brexit vote have been replaced by more political tone. He said that he hopes UK government will take “sensible decisions” during the bank's Q2 results conference call.

Yes, this could be an obvious attempt to reassure employees, but it’s also a costly exercise to switch. Dimon has, however, already said that J.P. Morgan would take the hit if it enabled them to serve clients appropriately.

Separately, Goldman Sachs did OK during the second quarter. Yes, 2,600 people have left this year, but fixed income revenues surged to $1.9bn and its debt underwriting team increased revenues by 20%. But it’s still cutting costs. And this is the reality of pay at Goldman Sachs.

Screen Shot 2016-07-19 at 23.00.00


After the initial Brexit shock markets “feel pretty normalized”, says Goldman’s chief financial officer, Harvey Schwartz (WSJ)

Goldman’s cost-cutting programme will save it $700m a year, but it’s spent $350m on severance costs in the first half of 2016 (Reuters)

Pimco may be reducing headcount, but it’s also made some big hires (Bloomberg)

Citigroup has hired equity specialist, Leonie Ryan, from Deutsche Bank as it rebuilds its equity business (Financial News)

Deutsche Bank has shaken up its investment banking team in Germany, Austria and Switzerland. Patrick Frowein and Berthold Fuerst head up corporate finance in the region. (Bloomberg)

Deutsche Bank’s credit rating has been cut to negative (Financial Times)

More hedge funds in London shut last month than opened, and others are shrinking (Bloomberg)

How Brexit contagion will spread, according to Deutsche Bank (Barry Ritholtz)

Ireland is the place to be for fund managers now (Financial News)

Clearing jobs may migrate from London after Brexit, but it could take years (Financial News)

“He worked very hard from an early age. He made a huge amount of cash from hedge funds and some more from the London property market.” Meet Pippa Middleton’s husband to be. (The Times)

“During a convention where he is supposed to throw red meat to the base, he instead calls for Glass-Steagall which is meant to outflank Clinton on the left.” (Dealbreaker)

The hedge fund Hampton party was “just good clean fun” and all about charity, says fired hedge fund manager, Brett Barna (CNBC)

25-hours a week is the optimum working time for those over 40 (BBC)

The horror of zero hours contracts (Guardian)

AUTHORPaul Clarke

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