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Morning Coffee: Credit Suisse and the quiet layoffs. This is what happens to a bank when its top traders leave

Lest we forget: most banks are still in cost-cutting mode. The bloodletting at Deutsche Bank has been the big news of 2018, but public pain at the house of Sewing isn't the only instance of forced staff evacuations this year. Headhunters say most banks are letting people go, in blocks of four or five. - Quietly, while no one notices.

Credit Suisse is a practitioner of this method of headcount reduction. Under CEO Tidjane Thiam, the Swiss bank aims to cut another CHF200m from operating costs in its markets business this year.  Three per cent of CS managing directors and directors were allegedly eliminated before bonuses were announced in February. Cuts were made to emerging markets and prime broking teams in New York in March. And now that it's July cuts are being made again to U.S. prime broking again.

Bloomberg reports that CS is letting go of seven people this time around. They're all in prime broking and include senior people like Tony Bertoldo (18 years at the Swiss bank) and Justin Carey (eight years at the Swiss bank). The exits follow the announcement last month that Ryan Nelson from UBS is joining Credit Suisse as head of global prime financing, and suggest that Nelson might be indulging in cutting ahead of upgrading. Either way, the ongoing trimming is a reminder of the new reality: just because you survive one round, don't presume you've survived.

Separately, SocGen's equity derivatives business is being held as a warning of what can happen when top talent leaves en-masse. So says an article in the Financial Times today, questioning what went wrong at a place that was once known as "the Goldman Sachs of French banking."

By some measures things aren't that bad at SocGen. The French bank still ranked second globally for equity derivatives in 2017 according to Coalition. It's been making a push into fixed income as a foil to its dependence on equity derivatives and is a "cross-asset house." But detractors point to the fact that equity derivatives revenues didn't keep pace with rivals in the first quarter. A comparatively high proportion of people at SocGen aren't happy with their pay, and costs in the fixed income unit are thought to be disproportionately high.  Some insiders say things began to go wrong for the French when a generation of its top traders left 10 years ago.

"They lost some real leaders in the field who were instrumental in getting SocGen where they got to,” one equities professional who used to work at SocGen and who now works for a rival bank told the FT. “It’s a real real shame for the amazing franchise that they had.” SocGen's lost talent is said to include Jean-Pierre Mustier, the current chief executive of Italian lender UniCredit, who has been touted as a potential CEO of Deutsche Bank or of a merged Commerzbank and Unicredit, or even Unicredit and SocGen. To the extent that SocGen has suffered from the exit of Mustier et al, maybe it could be reversed by a merger that brings the big man back?


U.S. hedge fund Varde Partners is expanding in EMEA. (Hedge Fund Intelligence) 

J.P. Morgan is losing share in high yield bond underwriting. Barclays is gaining. (Seeking Alpha) 

Barclays is thinking of going back into South Africa. (Financial Times)

Between 1997 and 2010 the UK finance sector’s productivity soared almost 6% on average every year, between 2010 and 2015 it was barely above zero. Blame all the extra control staff. (Bloomberg)

Advice to interns: "Treat your immediate bosses like the one and only God. " (LeQuynMai)

Want a job in big tech? Forget big universities and try apprenticeships or two year courses at community colleges partnering with the likes of Amazon, IBM (and Credit Suisse). (Wall Street Journal) 

Rise of the bullsh*t job: "A lot of workers in middle management, PR, human resources, a lot of brand managers, creative vice presidents, financial consultants, compliance workers, feel their jobs are pointless." (Economist) 

The joys of cognitive appraisal: try to experience pain and fatigue in a dispassionate way and you'll feel much better for it. (British Psychological Society) 

Naked, foraging, hermit prised from island utopia. (Gizmodo) 

Ex-Goldman Sachs EMEA CIO now volunteering at fintech start ups. (WSJ) 

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AUTHORSarah Butcher Global Editor

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