Morning Coffee: Deutsche Bank’s covert search for egomaniacs. College school dropout saved Goldman Sachs
What makes a great M&A banker? Is it a way with clients, unalloyed enthusiasm for spreadsheets at 1am, or an extreme partiality to one’s own person? In the case of Deutsche Bank’s junior M&A bankers, the Financial Times suggests it might be the latter.
FT journalist Laura Noonan took Deutsche’s new 20 minute long “behavioural test,” soon to be rolled out for its U.S. analyst hires in M&A. The bank informed Noonan there were no right or wrong answers – the test would assess her employability based upon the extent to which her behavioural profile matched the results from the bank’s top performing junior staff. “If those people happen to be difficult loners who never back down, so be it,” Noonan observed.
Accordingly, Noonan says she gave a series of answers which revealed her “inner egomaniac” (unfortunately she doesn’t say exactly what they were). A day later, she got the results: Deutsche ranked her in the “low green area” for suitability - she fit the profile the bank was looking for and would be likely to get an interview.
Separately, there’s a good reason Goldman Sachs doesn’t just want to hire impeccable students who were in charge of the university finance society. The firm owes a key source of its competitive advantage and very survival to someone who's academic record - while still excellent - was not unblemished.
The Wall Street Journal expounds upon the history of SecDB, the database which enables Goldman Sachs to price-up and calculate the risk associated with millions of correlated securities on a daily basis. The system, which Goldman COO Gary Cohn reportedly valued at $5bn in the past, helped Goldman survive the financial crisis. Its scalability also enabled the firm to expand into new areas while rivals struggled with a hodgepodge of different inherited networks.
Goldman owes SecDB to Michael Dubno, a former college dropout. Dubno was a professional programmer aged 15, wrote parts of the operating system that preceded DOS and Windows, and created a top 10 videogame aged 20. He was hired at Goldman by renowned economist Fischer-Black, who could clearly recognize talent - even if it didn't fit Goldman's typical profile.
Now, the WSJ says Goldman CIO Marty Chavez wants to let Goldman clients access the $5bn golden egg directly as part of his Marquee system. “We’re putting it [SecDB] in the hands of clients,” Chavez tells the Journal. Clients aren’t too sure about this: “I’m not sure their core competency is being a tech company,” says one.
Conservative think tank does study, says the City has nothing to fear from Brexit. (Centre for Policy Studies)
Senior British bankers hit upon new negotiating strategy: threaten EU companies with funding problems if they lose access to London’s capital markets. (Bloomberg)
Morgan Stanley was the only U.S. bank invited to the British government’s Brexit meeting. There will be another one in a few weeks’ time. (Financial News)
J.P. Morgan appointed Mark Leung and Jason Sippel as global co-heads of equities (Wall Street Journal)
It’s a busy time for investment grade DCM bankers. (Bloomberg)
It now costs about $218k a year to buy default insurance on $10m of Deutsche Bank's debt. At JPMorgan the comparable cost is $56k. Lehman Brothers' CDS cost around $300k in the months before its collapse in September 2008. (The Street)
All that you have wanted to know about China’s sovereign wealth fund. (Institutional Investor)
No one wants to right swipe a banker. (RT)
24 year-old Chipotle chef emailed some strategic observations to senior hedge fund managers. (Business Insider)
In London you can earn big money as a MIFiD market structure guru. You'll just need to know all about the new rules, advise upon how to implement them, and analyse the quality of trade execution. (Financial News)