Morning Coffee: How children destroy your banking career in your 30s, what to do about it. The hottest product area to be in right now

Nearly everyone in banking who has a family would agree that one of the biggest drawbacks to the industry is the extreme difficulty of combining the stress and long hours of the financial world with anything resembling a normal family life. An article in the FT at the weekend (which we missed at the time) describes a typical case history involving a Banker Mum and a Banker Dad with late night conference calls interrupted by crying babies, the extreme expense of childcare and the inevitable career damage done by the lack of understanding common among top management of any concept of work-life balance.

So far, so predictable. Equally predictable in the FT's account is the more damaging effect of parenthood on the career of Banker Mum than Banker Dad. What's notable, is why. - While Banker Dad keeps working full-time and gamely tries closing a deal with a screaming baby on his shoulder, banker mum goes part time and works four days a week. Like many women in this situation, she leaves work every day at five but logs on again to deal with the U.S. when her children are asleep. 'She may have been paid for four days' work, but there was no doubt in her mind that she was working five,' observes the FT journalist. It wasn't long before the night work also leached into her day off.

While Banker Dad remained on track for banking promotions, the payback for Banker Mum's flexible working arrangement was, 'any hope of a pay rise or a promotion.' The bank appeared to have no interest in her progress and Banker Mum avoided saying anything for a long time for fear of being branded a moaner. Having two small children under five not only involved her giving up 20% of her pay when she went part-time; it also meant derailing her career indefinitely.

What can be done? The FT is short on solutions, but the story is reminiscent of research published three years ago in the Harvard Business Review, which suggested the best way to work shorter hours is simply to do less - not to put yourself on a part time track. Men commonly do the first; women more commonly do the second.

When you overtly ask for a reduction in hours, you put yourself inexorably on a “part time track.”  You are so grateful to your employer for allowing a little bit of flexibility that you make sure to go over and above the requirements to demonstrate commitment to making the arrangement work.  And finally, you effectively give up on the labour market, assuming that no competitor would ever offer the same working conditions.  So you end up in a situation where you’re doing five days work or more a week, getting paid for four with a bonus potential that looks more like three.

This is not ideal, which is more like working four days, get paid for five and still expect a bonus of six.  The key is to remember the old proverb “he that hath once got the fame of an early riser, may sleep till noon”.  A few ostentatious displays of dedication, crazy all-nighters or long haul trips at the strategic moment can buy you a lot of space for being not-quite-available at later points.  Since a parent with a newborn is likely to be awake at odd hours of the morning for the first few years, take the opportunity to have a couple of email conversations with people in the Asian office to underline the fact that you never switch off...

Separately, one sector that seems to have leapt off the naughty-step and gained a gold star in 2018 is structured equity products.  This area is one of the top revenue sources for the banking industry this year, and there has been a spate of senior hires at banks that want to staff up.  Sophie Franklin has gone from Deutsche to BNP Paribas and Graham McClelland from Goldman Sachs to Morgan Stanley, both at the MD level.

The products that are making the money are classic “whole bank” exercises; they’re bespoke transactions with a significant advisory element, which include loans to corporate and HNW customers, with equity kickers that improve the return in some states of the world while reducing the borrower’s risk (and increasing the lender’s loss) in others.  It’s a beast that’s capable of biting its keeper; a lot of the losses associated with the Steinhoff accounting scandal in Q1 were associated with equity-linked loans, for example.

The skill set is quite rare; successful equity structurers tend to have a good grounding in financial engineering, but also to be able to deal with legal issues and to negotiate a watertight contract.  They need to be team players to work with the advisory and markets divisions, but also to be risk takers.  If you can do all that, the market’s looking good for you right now.

Meanwhile …

Andrea Enria of the EBA has given some rare good news for UK-regulated banks going into Brexit.  The European authorities have consistently said that they are not keen on the idea of “back to back” transactions, where a trade is booked into a European subsidiary but immediately offset so that it can be risk-managed out of head office.  Mr Enria has now clarified, though, that there is no prospect of an outright ban of these transactions (which are sometimes necessary for emerging markets trades), as long as they don’t go so far as to turn the EU entity into a meaningless brass plate (FT)

Jamie Dimon appears to be benefiting from what Crispin Odey didn’t quite grasp but Tidjane Thiam intuitively understood – it’s much more flattering to have other people say you should go into politics than to suggest it yourself.  Gary Cohn, the former Goldman banker who joined the Trump administration, thinks Dimon would be “phenomenal” as a candidate. (Bloomberg)

One man boutiques strike again – Simon Robertson Associates (the “Associates” means former JPM Cazenove chairman Tim Wise) have the advisory mandate for Jardine Lloyd Thompson, which is being bid for by Marsh & McLennan.  It’s a $5.6bn deal, which puts it in the top ten year to date. (Financial News

It’s not necessarily wholly surprising, as staff are cut and outsourced in finance, but it’s still something of a milestone for WeWork that they are now the biggest renter of office space in Manhattan, knocking JP Morgan off the top spot (WSJ)

Analysis of data from the New York State Comptroller shows that in New York, average total comp at broker-dealers was $423,000, up 13% on last year but still below the 2007-8 peak. (FT Lex)

Finally a “Ten Years Since Lehman” story with some good news in it. The world of finance’s loss was the world of gourmet ketchup’s gain, as a trader made redundant from the firm’s Japanese business used the opportunity to set up “Sir Kensington’s” (Forbes)

Olaf Scholz, the German finance minister, gave a speech in which he called for consolidation among Europe’s banks to create a Euroland champion that could accompany global European corporates and develop the capital market (Reuters)

Longread of the day is Michelle Celarier’s profile of veteran short-seller Jim Chanos (Institutional Investor)

Kay Swinburne, one of the MEPs responsible for MiFID II, has said at a conference that the industry should not expect a “MiFID III” for quite some time (The Trade News)

At start-up firms, the pay gap might be less important than the “equity gap”; female employees get only 47% as much stock as comparable men. (WSJ)

And Deutsche Bank’s Employee Giving Day this year is inviting staff to contribute a day’s pay to support a research lab’s work on blood cancer (Fundraising)

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