Morning Coffee: This big bank will cut staff by a quarter over two years. Ex-Goldman banker's bad hiring choices
Irrespective of the British General Election results and prospect of a hung parliament, a big Swiss bank is planning to slash its City headcount by an eye-popping 23% over the course of approximately 18 months. No, it’s not UBS. Yes, it is related to Brexit (which is now looking more confused than ever), but that’s not the only reason for the planned layoffs.
Credit Suisse will cut around 1,500 jobs in London by the end of next year, part of the Swiss bank's efforts to cut costs, according to Reuters.
Brexit has been encouraging UBS, Credit Suisse and big U.S. investment banks, all of which set up their European headquarters in London to get access to the European Union market, to explore alternatives.
Credit Suisse’s job cuts will take its London headcount down to around 5k, but the paring down of its London operations actually began in 2015 when CEO Tidjane Thiam initiated a restructuring. Other than Brexit, what was to blame? High bonuses and the pricey cost of doing business in London made it difficult for Credit Suisse to turn a profit on its City operation.
Prior to the 2015 cuts, Credit Suisse employed more than 9k people in the City. Credit Suisse already has an office in Poland and opened a branch in Dublin last year.
Both UBS and Credit Suisse have shifted their focus towards Asia, which has the fastest-growing number of millionaires.
Separately, the Treasury Department, led by a former Goldman Sachs banker, is having trouble filling top positions, sapping its ability to influence the policy debate and slowing down some of the Trump administration’s top agenda items.
Secretary of the Treasury Steven Mnuchin has a lot on his plate. Trump tasked him with rewriting the tax code, leading a repeal of financial regulation and convincing Congress to raise the debt ceiling. Making his job all the more challenging is the fact that his department is severely understaffed.
Goldman Sachs wealth manager Jim Donovan, recently bowed out, leaving Mnuchin with no deputy secretary, no undersecretaries and one assistant secretary. Nominees for two crucial undersecretary positions are backlogged in the Senate, according to Bloomberg. Further, he hasn’t even named a domestic finance undersecretary yet – in fact, of the 27 key remaining positions that require Senate confirmation, only eight have nominees.
In the meantime, Mnuchin has been forced to rely on a handful of counselors who don’t need confirmation, including former BlackRock executive Craig Phillips, ironically a big-time Hillary Clinton donor. They’re handling everything from debt management and tax policy to budget issues.
Financial industry executives who have had meetings at Treasury say the hallways are unusually quiet and many offices have blank nameplates; others still bear the names of Obama appointees.
The White House’s personnel process has been disorganized, and a rigorous vetting of potential nominees’ social media accounts looking for anti-Trump commentary has slowed things down further. If you’ve been on Twitter lately, then you know that could disqualify many people.
David Malpass, a former Bear Stearns economist nominated to be undersecretary for international affairs, and two other nominees have a hearing on June 7. But even if they get confirmed quickly, the Treasury would still be a long way from being fully staffed, per Bloomberg.
Wall Street is already starting to lose patience over the lack of staff at the Treasury Department, complaining that Mnuchin still hasn’t hired a business affairs liaison, leaving the financial services industry without a primary point of contact at the department.
Morgan Stanley and Goldman Sachs have been checking out offices in Frankfurt. (Independent)
Matthew Zames, the COO of J.P. Morgan Chase who was once seen as a possible successor to CEO Jamie Dimon, is leaving the bank. (WSJ)
The U.S. House of Representatives voted to pass a bill that would gut major elements of the Dodd-Frank Act, which Republicans say is strangling the financial industry and killing jobs but Democrats contend is an invaluable safety net designed to prevent another financial meltdown. (New York Times)
But banks have jettisoned their big earning trader anyway (Bloomberg)
Jefferies poached three investment bankers from Deutsche Bank as part of its plan to open an Amsterdam office. (Financial News)
The U.K. will extradite Stuart Scott, the former head of HSBC’s currency trading in Europe, to the U.S. to face charges that he and the bank’s global head of foreign-exchange cash trading schemed to rig foreign-exchange markets. (Bloomberg)
City executives donated large sums of money to Theresa May and her Conservative Party. (Financial News)
Goldman is hiring for its new corporate bond ETF. (WSJ)
Quantopian is hiring for its new hedge fund, 1337 Street. (HFM Week)
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