Morning Coffee: Bad news for the most ambitious people at Goldman Sachs. Deutsche Banker's morning trick
Senior executives at Goldman Sachs likely let out a collective groan over the weekend when they learned their odds of being crowned with the industry’s most sought-after title have been narrowed. Set to be announced this week, Goldman’s latest class of partners will be the smallest since before the company went public in 1999.
The onus to keep the upcoming partner class light comes directly from new CEO David Solomon, who told managers to be particularly selectively this year as he aims to make the top rung more exclusive, according to the Wall Street Journal. Fewer than 65 people will get the call this time around, down from 84 two years ago. The number of Goldman partners has ballooned from 221 when the firm went public to 435 today. Sources also told the Journal that the diminutive class will help offset the unusually high number of lateral partner hires that were made this year. More than a dozen outsiders were hired as partners in 2018.
The 20 or so employees who may have made the cut in previous years will be missing out on a minimum salary of $1 million along with bonuses that often dwarf base salaries. So who will be the unlucky losers? Likely it will be high-ranking employees who work in legal, compliance and control departments, according to the report. A host of executives who work in these non-revenue generating roles were named partner following the financial crisis, though that trend appears to be slowing.
As a former investment banker himself, Solomon has elevated several of his brethren to high-level positions since being named the successor to former CEO Lloyd Blankfein. If that trend continues, a host of investment bankers are set up for a fortuitous week. Solomon has also been vocal about bridging the gender divide at the top levels of management. It wouldn’t be at all surprising to see the percentage of women who are named partner increase this year.
Elsewhere, a Deutsche Bank exec who travels globally around 10 times a month has found the secret to offsetting jetlag and keeping his energy up. Unfortunately, it involves waking up at 5 a.m. and sweating. New York-based managing director Piers Constable has participated in numerous triathlons and marathons across his 20 years of travel. At the least, he goes for an early morning run every day. “For me it's a magic combination — it invigorates my body after a long flight; it energizes me for the day ahead, clearing my mind and removing stress and keeps my mindset positive, so I appreciate the opportunities travel gives me and I don't begrudge the time away from family and friends,” Constable told Business Insider.
Well that didn’t last long. After most banks sat out an investment conference in Saudi Arabia following the murder of journalist and government critic Jamal Khashoggi, big names in the industry like Blackrock’s Larry Fink said they are planning to continue their dealings with the Middle Eastern country. Consulting firms including McKinsey, Booz Allen Hamilton and Boston Consulting Group are doing the same. (Bloomberg)
The average Merrill Lynch broker will receive what amounts to a 3% pay cut in 2019 under a new compensation plan. However, Merrill is also adding incentives for cross-selling products from parent-firm Bank of America. (WSJ)
There is an implied contract between tech companies and recruits when it comes to culture. When that culture appears to change, tech workers have shown they aren’t willing to sit on their hands and do nothing, like what happened with the Google walkouts last week. “If the company breaks the trust and doesn’t match the values, then it becomes personal.” (FT)
The huge bribery scandal that unfolded last week that resulted in the arrests of two former Goldman Sachs bankers is far from over. An unnamed “high-ranking executive” from the bank reportedly attended a 2013 meeting with the co-conspirators. That mystery exec is likely gnawing at their fingernails at the moment as authorities and the bank continue to investigate the matter. (Bloomberg)
Luigi Rizzo, Bank of America’s head of investment banking in EMEA, will move from London to Paris as part of the firm’s post-Brexit plans. The banks will announce additional senior management appointments in the EU shortly. (Financial News)
A number of London-based staff at Société Générale will lose their jobs if they are unwilling to move to Paris as part of the bank’s no-deal Brexit contingency plan. (Financial News)
Fintech and other startup companies that rent out office space at WeWork in Manhattan received some sobering news last week. The company will no longer offer bottomless kegs of beer to its tenants. The new limit will be four pints of beer per person per day. (WSJ)
Looking for an edge, some hedge funds are paying companies for access to “alternative data,” like the location of cell phone signals. One company collected smartphone location data from Tesla’s factory to show the car maker had significantly increased its overnight shift, giving hedge fund's reason to believe Tesla would hit its production goals, which it did. (WSJ)
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