Morning Coffee: Banker bragging rights (and potential bonus uplifts) distributed. Bleak banker Brexit outlook
If you’re working at Bank of America, did you wake up with an extra bounce in your walk today, from the knowledge that according to Euromoney, your employer is officially the World’s Best Bank? And Citi employees, how does it feel to be the World’s Best Investment Bankers? The year-long reign of HSBC and Morgan Stanley has come to an end, and the bragging rights have been redistributed. Jean-Pierre Mustier is no longer the Banker of the Year – that title is now held by Tidjane Thiam of Credit Suisse. It’s all a bit of fun – or is it?
Well, it is all a bit of fun, but it’s not just a bit of fun. Banks put in a surprising amount of lobbying to win these titles and Euromoney’s editorial team put in the hours reviewing them. There were 1,500 submissions in total for the awards programme in total (20 global awards, 50 regional awards, and “Best Bank in ….” awards for nearly 100 countries). The judging process took four months and required over a thousand interviews. People are taking this a little bit more seriously than your average industry awards ceremony with a prosecco and chicken supper and 30 minutes of banter from a comedian in a dinner jacket.
The reason is that these “World’s Best” awards look absolutely fantastic in a pitchbook. The “credentials” slide is always one of the most important in any deck when you’re trying to get new business, because it’s the one that tells the clients what they really want to know. And since everyone is exaggerating their achievements, it’s valuable beyond belief to have a big gold star on that slide demonstrating that an informed outside judge with no particular conflict of interest thinks that your bank is the best at what they do.
That’s why the real value that was distributed at the ceremony last night is in the global category awards. Things like “World’s Best Bank” and “Banker of the Year” are not really specific enough to motivate a transaction. Potential clients might see them (probably correctly) as awards for having a currently fashionable business model, a rising share price and managing to avoid any really damaging scandals that year. But “Best Bank For Transaction Services” (HSBC) or “Best Bank For Sustainable Financing” (BNP Paribas) – to a client interested in doing some business in that space, this is a title very much worth having.
And related to this, winning the category awards is great news for bonus expectations. It’s unlikely that many people at BoA are really expecting a better compensation round for winning the overall gold star. But the heads of divisions who won “Best Bank For Financial Institutions” (Morgan Stanley) or “Best Digital Bank” (DBS) will not only be expecting a good year’s compensation round themselves, but will be able to make a pretty good case to the C-Suite that their world-beating franchise is delivering results and needs to be paid up in order to keep the team together. Congratulations to everyone who won.
Commiserations to anyone who was hoping for a good result from the UK government’s Brexit White Paper, which was about as disappointing for London’s bankers as Wednesday’s football score. It was finally confirmed that there is basically no hope for UK finance that the “passport” which allows them to do business all over the EU will remain, and the “mutual recognition” approach which was proposed as an alternative to it has been recognised as unacceptable to Europe. Instead, British banks will do business on the basis of “regulatory equivalence”, the same regime as US firms, to the very great dissatisfaction of industry associations. The Brits still hope that they can agree an “expanded” version of regulatory equivalence, but at present this doesn’t look likely. The European Securities Markets Authority has warned UK firms currently doing business in Europe under the passport that they only have until the end of July to get in their applications for a securities business authorisation in one of the EU27 states, and that they shouldn’t be relying on a transition period.
Philippe Moryoussef, formerly of Barclays, was found guilty in the Euribor-rigging trial, while Achim Kraemer was found not guilty and remains employed by Deutsche Bank. The jury failed to reach a verdict on the other three defendants, who were all former Barclays employees. (Financial Times)
Jacques Ripoll of Santander will be replacing Jean-Yves Hocher at Crédit Agricole CIB when he retires this year. (Financial News)
The New York Department of Financial Services wants fintech lenders to be regulated to the same standards as conventional ones. At present, many online operations partner with national banks who are recorded as the “true lender” and thus avoid state-level usury laws. (Finextra)
Morgan Stanley has an AI platform, called “next best action”, which draws on a database of hundreds of conversations with its advisors to make recommendations. (American Banker)
A former department head at Citibank now offers guided trips to follow the path of Guru Rinpoche in Nepal. (Entrepreneur)
Deutsche, Rabobank, Unicredit and other European banks have launched we.trade, the first live trade finance platform to run on blockchain technology. They have had ten customers use it in the first five days. (Forbes)
Arabesque, the quant fund, has run data on various metrics to score global companies on environmental, social and governance issues. Lots of European banks did badly, but Deutsche Bank (partly as a result of governance issues and layoffs) was among the worst, ranking number 6,539 out of 6,700. (Financial News)
Christopher Lawrence, the rainmaker at Rothschild responsible for deals like Intel/Mobileye and American/US Airways, will be joining Lazard as head of global financial advisory. (Reuters)
No banks (unless you count Fannie Mae) in the top ten workplaces. (Indeed)
An unnamed J.P. Morgan employee has got a record $30m whistle blower award from the CFTC for speaking up about conflicts of interest with asset management clients. (Bloomberg)
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