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Morning Coffee: How this 29-year-old trader pursued a $25m golden hello. Deutsche Bank is cutting 1,000 jobs

Traders doing what it takes to live the life of luxury.

Three City traders stand accused of making “bogus trades” by recording the currency of their deals in dollars rather than Argentine pesos to milk $100m from a Russian bank.

The three men altered the electronic records that record the currency in which the buy and sell deals were made, purportedly traded in dollars when they were actually traded in pesos, to convince Otkritie Securities to significantly overpay for derivatives trades. They were then able to “launder the proceeds of the fraud” through offshore bank accounts.

What did they do with all these bonuses? The traders' ringleader, George Urumov, and his wife used the money to buy a $25m house on Millionaire’s Row in London. All three traders reportedly had a habit of eating at Michelin-starred restaurants and drinking in five-star hotels.

Urumov, who attended both Cass Business School and the London School of Economics, previously worked as a trader at HSBC and Lehman before running a five-person fixed-income trading team at Knight Capital. He earned $1.04m (£800k) per year, with a guaranteed two-year package of at least $2.6m (£2m).

Separately, Deutsche Bank's woes have continued. After Friday's letter to employees from Deutsche Bank CEO John Cryan sent there was a brief uplift in the bank's share price. He blamed the share price’s fluctuations on “hefty speculation” and “new rumours” of the German government possibly having to step in and pony up some Euros.

The Department of Justice's demand for a $14bn settlement for allegedly misselling mortgage securities has European bankers scared that the DoJ can do whatever it wants, while other our more concerned about the bank's illiquid and "unobservable" assets. The fact that the credit curve inverted is not a good sign. More promisingly, though, it appears that Cryan will be able to negotiate the DoJ settlement down to $6bn or less, and some are skeptical that Deutsche Bank will ever need to be bailed out. In addition, rivals such as Goldman Sachs and Credit Suisse have said publicly that they don’t believe the Deutsche Bank situation is as bad as it seems.

But Deutsche Bank is no longer relying on a hiring frost to reduce headcount. It has plans to cut another 1,000 jobs, but again the investment bank front office staff will be spared. Deutsche plans instead on chopping people based in Germany working in information technology services. The question remains why Deutsche Bank continues to resist cutting back in its investment bank.

It's easy to paint the latest cuts as a reaction to the current turmoil engulfing the bank, but it was cutting technology staff anyway. Deutsche said 8,000 technology staff were going when it announced its strategic overhaul in October last year. This was 27% of the total, but Deutsche has also been chipping away at the some 30,000 contractors it has working at the bank.

Job cuts at its German contemporary Commerzbank have so-far focused on the back office. But this makes sense - Commerzbank has long retreated from its investment bank and it's the back office that is still relatively bloated. For Deutsche Bank, the 9,000 planned job cuts are still only 9% of its global workforce and cuts so far have focused predominantly on cheaper back office workers. This makes sense - Deutsche's back office headcount in its markets division is huge has been increasing - it currently stands at 23,611 compared to 4,671 people working in front office roles. Whether it can avoid cutting expensive traders or investment bankers remains to be seen.


Deutsche Bank opened a digital banking product development center in Frankfurt, where it hired 400 software developers and IT and financial specialists and plans to double staffing to 800 by 2018. (Reuters)

Theresa May has promised to formally begin the Brexit process no later than March 2017. (BBC)

ING is set to announce thousands of job cuts at its investor day today. (Bloomberg)

A former Morgan Stanley stockbroker convicted of coordinating a $5.6m insider trading ring that involved passing stock tips written on napkins and Post-it notes in New York’s Grand Central Terminal was sentenced to three years in prison and forced to give back $1.24m. (Reuters)

If the number of rich financial services professionals willing and able to pay high-end London property prices falls and the amount of cash flooding the British capital starts to fall, the enormous disparity in wealth would be reduced. (Independent)

To comply with ring-fencing legislation, Royal Bank of Scotland is renaming its investment banking division “NatWest Markets.” (FT)

The U.S. Department of Justice is negotiating a deal to fine Barclays, Credit Suisse and Deutsche Bank billions of dollars before the end of the year. (FT)

A J.P. Morgan banker and her trader sister were found dead reportedly after a day-long bender while on vacation in Seychelles, an island off the eastern coast of Africa. (Daily Star)

ITG’s new CEO Frank Troise has tapped the former head of Americas electronic equity trading at J.P. Morgan to a newly created high-profile strategic role. (Financial News)

The ex-CEO of ITG, who was ousted in 2015 following a US regulatory probe into the agency broker, is considering taking a New York-based consultative role at Barclays. (Financial News)

It takes money to make money, but how much money does it take to save money? Comerzbank is aiming to achieve cost savings of €1.1bn to cover its restructuring costs of…€1.1bn. (Twitter)

Deep-learning algorithms aren’t cheap. (Twitter)

The straight dope on the Libya scandal from one former Goldman Sachs derivatives salesman to another. (Bloomberg)

This hedge fund all-star has decided to come out of the closet and reveal a transgender identity. (Wall Street Oasis)

Many people think that the response to the 2008 crisis was too lenient to the banking industry, and wish they could have a do-over – what if a hefty fine for actions that fueled the last crisis gives them a chance at that do-over? (Bloomberg)

It's been a paltry year for initial public offerings, but a crop of private-equity-backed listings has done well so far this year and PE pros see the potential for more lasting gains. (Bloomberg)

JPMorgan Asset Management CEO offered career advice: “You have to be a subject matter expert in something.” (CNBC)

R.I.P. Ralph Whitworth, an activist investor who co-founded Relational Investors and forced leadership changes at various noteworthy U.S. corporations. (Bloomberg)

A Goldman Sachs exec said that we’re currently in the second wave of fintech and the third wave – when big banks partner with (or acquire) startups – is well on its way. (Bloomberg)

Is European banking fundamentally broken? (Telegraph)

Governments are running the risk of having to choose between a taxpayer-funded bank bailout and the potentially letting a systemically important financial institution go under, a.k.a. Lehman Brothers redux. (Bloomberg)

Heartthrob actor Zac Efron will produce – and is in talks to star in – the movie adaptation of Straight to Hell, a Wall Street-themed book by John LeFevre of @GSElevator fame. (GQ)

A Wall Street guru offers a spiritual guide to amassing the amount of money you need to quit the business, for example: “Stop leaving and you will arrive.” (Bloomberg)

The art of dropping a truth-bomb on your failing boss during your exit interview. (New York Times)

Photo credit: blazic27/GettyImages

AUTHORDan Butcher US Editor

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