Morning Coffee: The big risky trade to make with your banking career in 2018. Elite middle-aged white men choose similar leader
To the extent that 2018's banking job market bears any resemblance to 2017's, there will be one big and potentially risky trade to be made with a banking career in the months to come: leave a U.S. investment bank and join a European one on a very generous guaranteed package.
It's a lucrative trade that was made by many in the past (think Alasdair Warren's move from Goldman Sachs to Deutsche Bank in 2015), and it's a lucrative trade that many continued to make in 2017 (remember those guarantees at Barclays?). The Financial Times points out that Europe's four largest banks (Barclays, Credit Suisse, Deutsche Bank and UBS) began increasing headcount in the second half of last year as they sought to capitalize on improving market conditions. Together, Credit Suisse, Deutsche and UBS added around 3,000 people, while Barclays alone added 2,500 in the year as a whole. What begins in the second half of one year often continues in the first half of the next.
Of course, not all those new jobs were exciting ones in the front office. One recruiter told the FT that the hot hiring areas for 2017 were mostly governance, IT and audit. Nor is there any certainty that recruitment will continue: Credit Suisse is now waiting for results from all last year's equities hiring and Deutsche Bank is urgently trimming costs. Barclays, though, is expected to continue recruiting for its UK investment bank and international private bank, and UBS is promising to continue focusing on equity research and execution.
Migrating to a European investment bank isn't without risks, but for bankers of a certain age and career stage it can be a lucrative move: look at all the ex-Goldman bankers who've gone to Barclays and Deutsche in recent years. 2018 may offer an opportunity to get in on the tail-end of this trade. Who knows, you could even lock in a bonus for what could be a difficult few years as the interest cycle turns?
Separately, people supposed for a moment that the embattled white men of McKinsey & Co. might choose someone a bit different for their leader. They were wrong. It was hoped that the 560 McKinsey senior partners who voted for a leader would pick Bob Sternfels, an entrepreneurial partner based in San Francisco, or even Kate Smaje, the head of technology, to be their senior partner. Instead, they chose 51 year-old Scotsman Kevin Sneader as their figurehead. With McKinsey consultants facing threats from technology, Sneader was seen as the "safe candidate."
“It’s another white, middle-aged dude,” complains one ex-partner. Sneader is, "a fireball, a little fireball," insists his departing predecessor, "Kevin is a very energetic, fun person."
Credit Suisse plans to move 250 bankers out of London in its first wave of Brexit preparations. They won't be going to Paris any more, thanks to, 'discussions with local regulators and government officials.'. (Bloomberg)
Quant funds fell out of fashion in February. Man AHL’s $1.1bn Diversified fund lost almost 10 per cent in the month to February 16, while the London investment firm’s AHL Evolution and Alpha funds were down about 4-5 per cent over the same period. (Financial Times)
At Sweden's Handelsbanken pay is almost all fixed, isn't tied to sales targets, and the company's incentive plan only pays out when an employee turns 60. (Bloomberg)
It's a good time to be a financial sponsor banker. Private equity groups are buying public companies at the fastest rate since before the financial crisis, with deals totalling $180bn last year, nearly twice the level of 2016. (Financial Times)
A reminder that Barclays still doesn't have a permanent head of compliance (Financial News)
Work in fund management, receive a bonus that's 569% of your salary. (Financial News)
How Softbank decides where to invest its Vision Fund ('Mr. Son can go “on and on” explaining his conclusions if directors challenge him.') (WSJ)
Expats earn the most in...Mumbai. (BBC)
Buy Steve Jobs' 1973 job application for $50k. (BBC)
Goldman Sachs might sell its new London office and then rent it back again. (CityAm)
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