Morning Coffee: MDs escape Deutsche Bank's U.S. business amidst strategic chaos. The case for the 5-hour work day
Headcount reductions within Deutsche Bank’s U.S. operations have already begun and the carnage may be worse than most anyone had originally thought. But what is becoming increasingly clear is that the strategy surrounding Deutsche Bank’s U.S. investment bank was never universal. In fact, Deutsche executives have been playing tug-of-war over the direction of the division – with both regulators and one another – for nearly two years.
Deutsche Bank is considering slashing up to 20% of its workforce in the U.S., with a particular focus on equities, rates and prime brokerage, according to Bloomberg. The German lender will close its Houston office that concentrates on the oil and gas sector and leave its iconic Wall Street office location in Manhattan for a humbler alternative in midtown. The bank denied part of Bloomberg’s report, noting that plans haven’t been finalized and that the layoffs will likely result the cutting of around 1,000 jobs, or 10% of its U.S. workforce.
Either way, the bank is wasting no time in getting to work. The FT has reported that 400 positions have already been eliminated. Barry Bausano, CEO of Deutsche Bank Securities and the man credited with overseeing the firm’s relationship with hedge funds, is stepping down. As is Jonathan Richman, head of trade and financial supply chain for the Americas. A host of big name defections have occurred in Europe over the last few weeks.
The decision by new chief executive Christian Sewing to rein in the U.S. investment bank follows an 18-month, behind-the-scenes scuffle over the direction and stability of the unit. Regulators have reportedly been in discussions with Deutsche executives over whether the unit was bloated and primed for failure, particularly considering the bank’s litigation record in the U.S., according to the FT.
These conversations were occurring at the same time that Marcus Schenck, the co-head of Deutsche's corporate and investment bank, began expanding the firm’s presence in the U.S. It seems that Deutsche was asked to slow down but instead sped up. He was said to have backing over former CEO John Cryan. Sewing, it seems, was pulling on the other end of the rope. Unsurprisingly, Schenck is no longer part of Deutsche Bank’s plans.
Elsewhere, a small financial services firm in Australia switched to five-hour workdays without its bottom-line being affected at all. Collins SBA says that scrapping lengthy meetings and other bureaucracies has allowed the company to trim the last three hours of everyone’s day. Sick days are down, recruiting has improved and some advisors and breaking records for new business. Good luck convincing your boss to do the same.
Facebook has announced a massive reorganization that will create three new divisions within the company and put a new set of leaders in place. A team focused on Blockchain technology has also been created. These are all internal moves; no one is actually leaving the company. (Recode)
Evercore is having a terrific quarter. With its latest deal, the advisory firm has jumped into the top five in the league tables, joining behemoths Morgan Stanley, J.P. Morgan and Goldman Sachs. (Bloomberg)
The CEO of Bank of America Merrill Lynch's new EU headquarters has appointed eight new executives to leadership roles. Bruce Thompson, formerly based in New York, has joined the bank’s Dublin office along with several others as the firm rolls out its Brexit planning. (Financial News)
Two analysts at New York’s Deerfield Management have been convicted for insider trading. Theodore Huber and Robert Olan’s reported role in the scheme already led to the fund paying out $4.8 million in fines. (HFM)
Bloomberg is joining rivals MarketAxess, Tradeweb and Nex Group in moving its EU trading operations from London to Amsterdam. (FT)
Former J.P. Morgan analyst Michael Weinstein has taken a VP of strategy role at medical device company Medtronic. He knows the firm well, having covered Medtronic over 20 years, raising his price on the stock from $42 to $90. (Bloomberg)
BNP former global head of credit, Benjamin Jacquard, has been hired by credit manager Chenavari to oversee the London firm’s strategic development. (HFM)
Basements in homes located in London’s most affluent areas aren’t covered in dust and broken-down refrigerators. They include 1,000 gyms, 376 pools, 456 cinemas, 381 wine stores and cellars and 115 staff rooms. (The Guardian)