Morning Coffee: Steve Cohen’s audacious bid to lure top traders. Banks are already leaving London
Point72 Asset Management, the family office managing hedge fund guru Steve Cohen's money would like you to know that it’s not a hedge fund. It would also like you to know that, should you come to work for it, Point72 will pay you more than most hedge funds.
Cohen’s firm is making a bid to hire lure as top traders across at a time when large hedge funds are cutting jobs and others are cutting fees, says Financial News. Point72 is bolstering bonuses its for traders – the catch is that they beat the benchmarks.
You’d be right to cite the fact that this is the entire selling point of a hedge fund – beating the index, generating alpha, justifying those huge fees they charge to investors. But this is a change for Point72 – previously traders earned a fixed 20% bonus on investment returns irrespective of how they measured up against broader benchmarks.
Now, they’ll get 25%, but this will only be paid if their performance beats the index. This is a specific tactic to demonstrate that Point72 is the most lucrative place for traders to work, according to president Douglas Haynes – but there are also repercussions if you fall behind.
If this seems harsh, bear in mind that certain hedge funds – notably Bluecrest Capital Management and Millennium Management – have a reputation for staff churn, or getting rid of you when your performance slips.
Separately, London’s fall as a financial centre will go with a whimper not an(other) big bang. Prime minister Theresa May might be dismissing more threats from senior bankers to move jobs out of London as mere grandstanding, but moves are already underway, says the Telegraph.
What Brexit has highlighted more than anything is that the efficiencies of London’s hub and spoke model – 87% of EU staff of U.S. investment banks work in London – are offset by the political risks of having all your staff in one place.
Banks will simply fire a few hundred in one location, and move them somewhere else. These jobs could go to Europe, or they might go to New York, or the bank could simply decide close up functions because they’re too expensive to relocate.
The City will slowly shrivel. It’ll still be a major financial centre, but up to 30% of those jobs could go elsewhere. No dramatic announcements or political confrontations, just a gradual movement.
But there’s hope. Banks are formulating “no regrets” policies – coming up with a plan to move people and functions out of the UK, which could be reversed if ‘hard’ Brexit never happens.
The City job market is holding up, and there are a mere 1.8 people chasing every role, says Morgan McKinley (Business Insider)
John Stumpf, Wells Fargo's CEO, has stepped aside (Financial Times)
Large U.S. banks are having to create new entities to bail themselves out in times of crisis (WSJ)
ING is moving 60 trading jobs from Amsterdam and Brussels to London (Bloomberg)
Lloyds Banking Group is cutting another 1,340 staff (Financial Times)
The third quarter is crunch time for banking bonuses and it’s looking…pretty good (WSJ)
Navinder Singh Sarao, the flash crash trader accused of spoofing markets, has “one foot already on the plane to the U.S” as he faces extradition (Bloomberg)
Deutsche Bank has been slapped with a $9.5m fine for failings in its equity research department (Financial Times)
41.2% of those taking an EMBA have no backing from their current employer (Financial Times)
“The exchanges clearly have set their trading models up to sell latency, to provide certain advantages to people who want to pay for them. That caters to a certain class of the market. We’re trying to do the opposite, where we create a universal speed bump. There’s one way in and one way out.” (Bloomberg)
To change its sales culture, Wells Fargo will have to train 100,000 employees in 6,000 locations and dismantle and incentive structure that stretches back two decades (Reuters)
Male lawyers are better at taking credit than their female colleagues, and earn 44% more (New York Times)
The rise of the robo-interviewer: “I'm not a YouTube star, obviously. It's such a weird experience talking to a camera. It honestly was pretty horrible.” (Bloomberg)
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