Morning Coffee: The Tidjane Thiam guide to keeping your job in banking. Traders brace for a sleepless Tuesday
As 2018 draws to a close, it's starting to look like banks might have to make some job cuts soon. Take, for example, Citi, which warned last week that it might not reach its cost/revenue target due to unexpectedly weak revenues in debt capital markets and fixed income trading. If you're worried about your future as the festivities loom, you may have things to learn from an arch survivor: Tidjane Thiam, CEO of Credit Suisse.
In a long article about Thiam ahead of Credit Suisse's annual investor day this Wednesday, Bloomberg notes that the Credit Suisse boss is still in his seat, despite a 50% decline in the bank's stock price during his tenure and even though Credit Suisse stock was the second-to-worst performing of 39 bank stocks tracked by Bloomberg this quarter. Thiam has endured longer as CEO than either John Cryan at Deutsche Bank or Antony Jenkins at Barclays, observes Bloomberg. He's done so despite the falling share price, despite a 40% decline in profits from the trading division between 2015 and 2017 (which Thiam might argue was intentional) and despite bad feeling among some employees (Bloomberg spoke to eight current and former employees who said Thiam's tenure had negatively effected morale). So what's his secret?
The short answer seems to be friends in high places. Thiam has survived because he carefully ensured people would look out for him. Key among them is chairman Urs Rohner. Knowing that he would make enemies as he restructured Credit Suisse, Thiam is said to have met Rohner 19 times before he took the job at the Swiss bank. Rohner assured Thiam that he would allow the new CEO to fix Credit Suisse's weak capital cushion - even though doing so has upset shareholders, who've seen their CS holdings 'massively diluted'. Rohner also has stood behind Thiam while he aggrieved traders, who've seen their jobs cut and their pay fall relative to that in the wealth management division, which Thiam prefers.
It's not just Rohner though. Bloomberg notes that Thiam has further bolstered his position by adding his own supporters to the Credit Suisse board. When he arrived, Thiam nominated six people to the bank's board, including Pierre-Olivier Bouee, the Credit Suisse COO who previously worked with him at Prudential and who has been the main protagonist when it comes to picking-off trading businesses.
Not everyone can befriend the chairman and nominate a cadre of friendly bosses, but Thiam's technique bears scrutinizing. If you want to survive the coming round of cuts, you need to build support with those in the tier above you. If you're moving into a challenging job, you need to make very sure that the person appointing you will stick with you through the worst. And you should try to work alongside a confidant, with whom you've worked at previous firms and whom you can absolutely trust. In this way, Thiam has become a survivor and earned $9.7m last year. Now all he needs to do is to return Credit Suisse to growth.
Separately, traders who didn't get much sleep over the weekend may come to regret it by Tuesday night. Banks in London are reportedly preparing for chaos surrounding the parliamentary vote on Theresa May's Brexit deal. J.P. Morgan and Barclays are expecting traders to stay late and to come in early, while some trading houses are providing staff with sleeping bags so that they can stay in the office.
Meanwhile:
The German finance ministry has reportedly been discussing scenarios for merging Deutsche Bank and Commerzbank. In one, the German state would become Deutsche Bank’s largest shareholder for about five years before merging the two banks. In another, Deutsche Bank could raise money from German industrial companies to buy Commerzbank. In another, a holding company would hold stakes in both banks. (Bloomberg)
UK financial services exports to the EU could be 59% lower after Brexit. (Bloomberg)
Appetite for UK deal-making by private equity funds has fallen 50% since the Brexit referendum. (Financial Times)
Hedge fund founder Chris Hohn made £215m last year. (The Times)
Deloitte UK has fired 20 partners for inappropriate behaviour in four years. (Financial Times)
Ex-senior Goldman salesman's guide to life on the trading floor after AI takes over: "OUT are the swaggering jocks that rely on gut feeling to take risk. OUT are the slick salespeople with seemingly unending charisma and expense accounts." (Business Insider)
Millennials don't want to work for start-ups any more. It's all about chasing 'steady corporate jobs' instead. (The Atlantic)
Google is descending into paranoia as employees try to work out who's leaking things to the press. 'During a question and answer session at a company-wide meeting, a senior engineer took the microphone to shout “F*** you leakers” at his fellow colleagues.' (The Times)
A 22 year-old Google employee was found dead as his work terminal at the firm's office in New York. (NY Post)
Artificial Intelligence discovers that you don't have to be a data scientist to become a data scientist. A Barclays analyst was identified by the software because he had a master’s degree in statistics and knew computer programming languages like C++ and Matlab, even though he had no apparent background in data science. (NY Times)
Why very rich people like money, and why money will never be enough. (The Atlantic)
Silicon Valley types and hedge fund owners are prepping New Zealand bunkers for the apocalypse. (Bloomberg)
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