Citi's credit MDs keep quitting for this brokerage firm that pays CASH

If you work in credit sales and trading, Citi is the place to be. While banks like Goldman Sachs rush to strengthen their trading relationships with corporate clients in the credit market, Citi already has plenty of corporate counterparties tied into its "network."  Citi is what Goldman Sachs wants to be. This isn't stopping senior people from leaving.

Two of Citi's credit sales managing directors (MDs) have left in the past 18 months; both have now ended up in the same place. John Ream and and Dan Gissendanner both exited Citi after 12 and 17 years respectively. Both men now work for Stifel Nicolaus Europe. a U.S. brokerage firm which is growing in London. Ream joined last November; Gissendanner joined earlier this month.

Stifel isn't new to London. It's been present in the City for at least 16 years and acquired Oriel Securities in 2014 as a means of gaining scale. Spencer Harman, head of head of European fixed income at the firm, says Stifel Nicolaus Europe already has 45 people working in credit, making it, "bigger than most banks in the credit space.

"We’ve been doing this since 2009, so are an established platform, not a start-up," Harman adds.

Even so, Stifel is expanding fast. Its current recruiting intentions don't stop with the likes of Ream and Gissendanner.  This month, it also hired Emanuel Brefin, the former head of trading in supranational, sub-sovereign and agency debt at Barclays, and Paul Man, ex-senior SSA trader at Societe Generale. Harman plans to hire another three people this year plus more next.

"It’s not difficult to hire," he tells us. "Banks are letting go of some very well qualified people whom they just can’t afford because of their high cost structure. This is where the opportunity is from our perspective: as banks practise juniorization and fill their slots with inexperienced people, we can pick up the experienced people they let go."

Why do investment banks' credit MDs want to join Stifel? Harman suggests it's partly to do with pay and partly to do with politics. Because Stifel is small, it falls outside the Financial Conduct's Authority's edicts on pay. It's therefore free to pay entirely in cash on a monthly basis and to offer packages that are all bonus (no salary) and are solely based upon a percentage of P&L.

"We are an agency business. People here don’t receive salaries, but are paid on a commission only basis," he says. "Their compensation is entirely variable and is paid monthly, based upon their production. Because people are paid monthly based entirely upon their production, there’s no incentive to ingratiate yourself to senior management. You are simply paid for producing: it’s a meritocracy. People who’ve joined us from big banks have found this a refreshing change."

If this sounds appealing (particularly after Citi allegedly underpaid last year), the three additional hires Stifel plans to make this year include two in sales and one in sourcing non-performing loans. "We anticipate further selling of NPLs especially in Italy,” Harman says.

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