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Morning Coffee: When 20-something bankers decide it’s not worth it. Rich Millennials kick off their own VC firm

Credit Suisse couldn’t have paid its investment bankers any more without going into the red. Costs ate up 99.2% of revenues within its global markets division in 2016. Seemingly, the bank came good on CEO Tidjane Thiam’s statement that it would be a “reasonable year” for compensation.

In fact, pay per head was down 9% to $236k last year and Credit Suisse is still cutting costs. It’s planning another 6,500 job cuts this year after the $2.4bn loss in 2016, and has started with more cuts in its Asian equities business. Some employees are deciding it’s just not worth it, however.

An unusually large number of analysts and associates at Credit Suisse left earlier this month after disappointment over bonuses, according to AFR. Around six juniors left the bank earlier this month (in Australia), which is a big proportion of its overall team. Even worse, they’ve just left – rather than found another job at a competitor. This follows junior exits at UBS and Citi this year.

It’d be easy to assume this was a local problem. But it’s indicative of an issue that banks face holding on to their juniors who are increasingly deciding to move out of the industry before their training is complete. Analysts and associates are well paid relative to their experience – with total compensation of £78k ($96k) in the first year and £200k ($247k) as an associate 2 – but don't earn the huge sums seen further up the tree. Maybe bonuses keep them happy.

Separately, why toil away for two years in an investment bank just to get on the lowest rung of the ladder in a private equity firm? You could, if you’re lucky enough to come from a rich family, just rely on the bank of mom and dad.

Bloomberg reports that RHL Ventures is a new VC firm set up by three millennials whose parents have either a lot of wealth or deep connections across Asia. They used this influence to attract capital and then turn it into one of the top investment groups in South-East Asia.

“We look at Southeast Asia and there is no brand that stands out -- there is no KKR, there is no Fidelity. Eventually we want to be a fund house with multiple products. Venture capital is going to be our first step,” said one of the co-founders Rachel Lau.


Bob Diamond is back with Panmure Gordon purchase (Guardian)

Actually, maybe not: "Do I expect Bob Diamond on the board? No, why would he be. This is not about Bob Diamond. This isn't his return to London, he's not going to run little Panmure Gordon.” (Telegraph)

The Panmure Gordon takeover needs a perfect Brexit to really work (Gadfly)

Diamond is likely to move it back to international markets (The Times)

Panmure Gordon’s research needs to remain independent (Financial Times)

“Are sellside analysts a thing of the past? I don’t think so. But I still think there will be [fewer of them]. Do you really need 70 research reports [about Apple]? How many of them actually call the downside?” (Financial Times)

Meet HSBC’s new MDs (Financial News)

Brexit is just a “bit of a bump” for London (WSJ)

Lloyd Blankfein's pay will be tied to how Goldman Sachs fares against its competitors (Financial Times)

1,057 hedge funds closed last year – more than any time since 2008 (Bloomberg)

The psychological background to the financial crisis: “They mistook leverage for genius.” (Harvard Law Today)

Donald Trump Jr gets $50k per speech (NY Times)


Photo: Getty Images

AUTHORPaul Clarke

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