Morning Coffee: The big bad dark cloud hanging over Barclays. Terrible fate of London bankers who survive Brexit
As we noted in yesterday's big roundup of banks' hiring and firing intentions for 2018, Barclays looks like the place to get a new job now. The British bank has added 30 managing directors to its markets division since the start of 2017 and is focused on reallocating capital to its investment bank in an effort to increase returns. Between the second quarter of 2017 and the second quarter of 2018, equity allocated to Barclays International rose 17%. Assets in the trading portfolio of Barclays International rose 40% over the same period (although risk weighted assets were up a mere 3%). In equities, if not fixed income trading, the bank had an excellent second quarter.
But what if this all proves transitory? Waiting in Barclays' wings is, needless to say, Edward Bramson, the activist investor who owns a 5.4% interest in the bank and is one of its biggest shareholders. Bramson has been lurking since March 2018, but seems determined to make his presence more felt. The latest manifestation of this is Bramson's reported determination to have a say in who replaces Barclays' chairman John MacFarlane. MacFarlane dismissed talk that he was leaving in May 2018, saying that he would remain in his post for at least another year. Bramson seems to want him to go sooner.
This matters. MacFarlane presided over Staley's appointment as CEO and has repeatedly praised him for doing a good job as Staley rebuilds Barclays' investment bank. Bramson's choice of chairman would unquestionably be less easy for Staley to live with: there have been claims that Bramson wants to break up and sell Barclays' markets arm, and the Financial Times says he wants to return much of the £26bn of capital in the investment bank to shareholders and to shrink the unit. If Bramson gets his chairman, then, the recent revival of Barclays' investment bank will be in jeopardy. It's probably something to bear in mind if you're joining as a managing director with a guaranteed one year pay deal.
Separately, if you're a London banker and you maintain your job in the City following Brexit, you may suffer the sort of fate that makes dinner parties vibrate with disquiet: house prices could fall considerably. Bloomberg reports that London prices are already suffering the side effects of EU nationals leaving the City. Things are only likely to get worse after Brexit happens for real.
Nomura has written to its clients asking them to prepare for a chaotic no deal Brexit. (CityAm)
Salespeople are leaving for bitcoin. Amy Yu, who previously worked in sales for synthetic products at JPMorgan, joined BitMEX to head up institutional sales. Lauren Abendschein, formerly a director at Credit Suisse, has joined Coinbase as a manager of institutional sales. (Business Insider)
Amir Khandani, a systematic trader at Morgan Stanley, left for Millennium Management. (Financial News)
Jeffrey Schackner, former head of consumer investment banking at Citi, joined Ardea partners - a boutique set up by Goldman alumni. (Financial News)
ABN AMRO is cutting 250 jobs and paring back its business in trade and commodity finance and other business in which earnings are volatile. (Bloomberg)
'Overfitting is the curse of anyone who tries to use the past to predict the future. Forecasting is a delicate balance between two extremes: at one end we risk creating a model which is too simplistic to be of practical use, whilst at the other the model is too complex and closely fitted to the past.' (RiskyFinance)
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