Morning Coffee: Goldman Sachs' stealth takeover of Deutsche Bank could soon be complete. 'Banker neck' a recognized thing
Deutsche Bank isn't the first bank to draft in Goldman Sachs veterans to turn it around and it won't be the last. - Bank of America did a good job of channeling ex-Goldman staff in its hour of need and still has many in positions of power (most notably Tom Montag as COO). But while Bank of America hired in plenty of ex-Goldman staff to its markets business under Montag, it's never actually been run by someone from Goldman Sachs (John Thain was ejected three weeks after the Merrill Lynch merger). Deutsche may yet have this pleasure by the end of 2018.
So suggests German newspaper Handelsblatt. Following Friday's admission that Deutsche is expected to make a small loss for 2017 and that sales and trading revenues at the German bank fell 22% in the fourth quarter of 2017, compared to a year earlier, Handlelsblatt says pressure on Deutsche CEO John Cryan is increasing. It doesn't help that Cerberus Capital, the distressed private equity fund with a 3% stake in Deutsche, is said to be pressing for results. Cryan desperately needs performance at Deutsche Bank to pick up in the first quarter.
And if it doesn't? Handelsblatt points out that ex-Goldmanite Marcus Schenck is waiting in the wings. As we observed last year, Schenck has already amassed a cluster of ex-Goldman Sachs bankers to reinvigorate DB's trading business - including, most recently, Peter Selman, Goldman's ex-head of global equities. With Schenck in charge of the entire bank, Deutsche's transmutation into a sort of Germanic version of Goldman Sachs would be complete.
Of course, it might not happen. Cryan could stay. And if Cryan goes, Schenck may not replace him - Handelsblatt notes that Christian Sewing, head of Deutsche's private bank, is also in the running to become CEO. Sewing is a Deutsche Bank lifer with a background in operational risk and audit. If Sewing takes over, Deutsche will be less like Goldman Sachs under Lloyd Blankfein and more like Barclays under ex-retail banking boss Antony Jenkins. 2018 will be crucial to its future.
Separately, if you have neck pain you are not alone. In an article about the medical facilities at Goldman Sachs and elsewhere, the Wall Street Journal quotes a doctor dispensing to Goldman bankers who's observed a condition he calls, “investment-banker neck.” This is, "an arthritis that can afflict people in their late 40s, particularly ones peering at lots of monitors," and sounds pretty painful. If you work for Goldman, you will at least get assistance with your neck cramp, alongside various other ailments. - The bank boasts a dermatologist, a gynecologist, an orthopedist and other physicians on-site in New York City. Goldman bankers won't have to queue to see a doctor if they get Australian flu.
Deutsche Bank shares fell to a two month low as markets digested its loss. (The Street)
Shares in Barclays, led by the more obviously banker-friendly Jes Staley, have performed even worse than shares in Deutsche Bank over the past year. (Financial Times)
Cerberus won't be pushing for Deutsche Bank to merge with Commerzbank. (Reuters)
UBS is ahead of its plan to double Chinese headcount over five years and could have 1,200 staff in China by the end of this year. (Straits Times)
The rabbit in Barclays' hat? A possible merger of its international corporate and investment bank with Standard Chartered, which will be under discussion around the turn of the year. (Financial News)
Deutsche has reserved several hundred places at international schools in Frankfurt. (Financial News)
RBS trader fined £250k ($339k) for manipulating LIBOR. (Reuters)
Brexit advice to banks from Nigel Farage, (Reuters)
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