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Morning Coffee: Deutsche Bank’s cunning way of paying its bankers. Don't let banking ruin your love life in your 20s

Deutsche Bank is cracking down on bonuses during times of strife. It’s forcing, or is likely to force, its bankers to accept more their variable pay in shares from its non-core unit or – even worse – in shares of Deutsche Bank itself.

Right now, Deutsche Bank employees receive around half of their bonuses in immediately available cash, and 49% in deferred cash or stock. In an effort to appease investors and boost capital buffers, CEO John Cryan is considering his options. Right now, this could be (presumably newly-issued) shares in Deutsche’s shrinking non-core unit, or requiring employees to simply accept more company shares.

Right now, of course, Deutsche’s share price has been tanking, but whether this continues if, or when, the bank reaches an agreement with the U.S. Department of Justice over its $14bn fine is debatable. Meanwhile, its non-core unit is shrinking - it had €27.8bn in risk weighted assets (RWAs) in June, 80% less than when it was created in 2012. It seems like a hospital pass.

But Credit Suisse bankers no doubt complained about its decision to award $5.5bn in ‘toxic bonuses’ in 2008 – a popular decision with investors at the time. By 2012, these had risen by 75% while the bank’s share price had dropped by 23%.

Similarly, as one retired derivatives trader told us recently, Merrill Lynch issued performance option plans (POPs) to its traders during the 1998 Asian crisis, which only vested once they covered their cost of capital. They were issued in plentiful supply because of their lower fair value, but when things turned around, 1999 and 2000 turned out to be very good years indeed.

“Deutsche’s top bankers know it’s been done in the past and they’ll be pressuring Cryan to do it again. Watch for some kind of pay announcement dressed up shareholder kindness,” he said. You heard it here first.

Separately, it’s known that analysts going into IBD invariably leave all their friends and partners behind because the job eats up so much of their life. If you think you can pack it all in at 30 and focus on your personal life, bad luck.

Your 20s are for learning the basics of how relationships work, says Quartz. Sacrifice this for your career and by the time you reach your 30th birthday you will be starting from scratch when your brain is less adaptable. It’s too late!


Fund managers should scrap bonuses for fixed pay and allow employees to invest equity in their firm, says a top industry think tank leader (Financial News)

James Gorman says Morgan Stanley will be forced to move people to Europe, and nothing good has come because of Brexit (Bloomberg)

It’s OK, you can fire people in Spain too: “You have an abundance of talent here in Madrid that is very well qualified and that can be hired at relatively low cost compared to other business centres. And labour laws in Spain are far more flexible than in Frankfurt or Paris.” (Financial Times)

Goldman Sachs fired 20 more U.S. staff straight after an awesome third quarter (NY Post)

Oliver Wyman, which thinks 35,000 jobs will be lost in finance because of Brexit, is struggling because of Brexit (Financial Times)

Theresa May told Goldman Sachs’ London employees that she wanted to lead the UK in Europe and feared Brexit would force companies to leave (Guardian)

Boutique bank Greenhill increased revenues by 51% in Q3 (Financial News)

Citi’s head of investment banking sends out congratulatory woops. Get excited: “We know it takes long hours, late nights and weekends to get these deals to the finish line. On days like today, we hope that you can take a step back and appreciate the quality and depth of our Client Coverage and M&A Business and the contribution that each and every one of you makes.” (Business Insider)

Why women are still failing in finance: “All of our senior leaders are older white males. They are the ones who set the culture that we experience every day, despite any programmatic efforts by the bank.” (HBR)

Rishi Bhuchar and Klaus Elmendorff have been promoted to lead Deutsche Bank’s real estate corporate finance arm (Property Week)

Tony Walker, co-head of Bank of America Merrill Lynch's electronic equity trading business, has left the bank and is taking a break from financial services (Financial News)

Jurors in Rurik Jutting’s trial have sat through a horrifying 20-minute video clip of him torturing and killing a young Indonesian woman (Reuters)

Egyptian investment bank EFG Hermes has started a New York operation (Bloomberg)

Korean finance professionals are taking time off. This is a big taboo (Bloomberg)

Big tech firms cut too: Twitter is laying off 300 staff, largely in sales (Techcrunch)

One man's daring 3.30pm escape from the office (The Onion)

Photo: Borut Trdina/Getty Images

AUTHORPaul Clarke

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