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Morning Coffee: How bankers talk when they want a $40m bonus. What is Andrea Orcel up to?

If you're looking for gems of insight into what goes on at the very top levels of a slightly dysfunctional investment bank when the pressure is on, the Barclays trial is a trove of treasures.  One of the clearest takeaways is that the very richest of the rich bankers get that way because, as well as going the extra mile to get key transactions done, they never lose sight of the need to make sure they get paid themselves.  In the immediate aftermath of the shareholder vote approving the controversial Qatar investment, BarCap’s Roger Jenkins sent a stream of consciousness internal email making his case and divulging the inner workings of his brain. It’s possible to piece together the whole text from various news reports:

“So vote goes thru. This capital did the trick why can’t varley diamond go to renco and say we need to make a special payment for this endeavour now. It was not his job no one else in the organization or at any other bank except credit suisse did this.  Did it four times this year to save our arses and jobs guys you know the sell! If not what is the plan”

There’s a lot to decipher here; Mr Jenkins was clearly from the school of thought that saw email as an informal means of communication.  But the context makes it clear and pretty easy to translate.

The message is topped and tailed with the request for action “Why can’t [John] Varley [and Bob] Diamond go to Renco [typo for RemCo, the remuneration committee]” leads to “Guys, you know the sell! If not, what is the plan?” This will be familiar to a lot of us – Jenkins is writing to his immediate boss, Rich Ricci, and asking him to enlist the two even bigger bosses in making a case (the “sell”) for him to the committee that makes the decisions about his pay.  Since Bob Diamond was the overall head of Barclays Capital and John Varley the group CEO, this is interesting in itself as it suggests that the committee was not a rubber stamp and needed to be persuaded; at this level, the bonus cheques are so big that even the chief executive can’t sign them off on his own.

In between the two, we have some standard-issue banker boasting which will also be recognised, in style if not in size, by many.  Big up your successes - “save[d] our arses and jobs”. Make comparisons to the competition, both external – “any other bank except Credit Suisse” and internal – “no one else in the organisation”.  The only slightly false note is “It was not his [that is, Robert Jenkins’] job”.  If you’re a middle ranking VP then it’s OK to point out when you’re going outside your role and title, but at this level of seniority one might have expected that people might see the big picture and volunteer to work on survival capital issues to save the whole bank without demanding extra credit for doing so.

In any case, it appears that RemCo accepted the “sell” and a “special payment for this endeavour” was made, of £25m (around $40m at the prevailing rate).  It’s quite unusual for an individual banker to be given a special commission on a single deal, outside the normal bonus cycle.  But then, nothing about the Barclays/Qatar transaction seems to have been normal.

The situation between Andrea Orcel and Santander is also a long way from normal.  The latest development seems to be that he is considering suing the bank for his lost UBS compensation.  At the time when the job move first fell through, many of us were surprised that Orcel seemed to have made the elementary mistake of resigning without having established all the remuneration details in writing, but it appears that he was in possession of a contractual letter and therefore believes himself to have a strong case.

Even so, this is an unusual move and a rather paradoxical one.  The main reason to sue would be that Mr Orcel expects to take another job in banking; otherwise, consistent with the non-compete details of the UBS deferred compensation scheme, he could sit at home and collect the money, without paying lawyers’ fees. Then again, if he wants to get another banking job, employers are likely to be put off someone who brings litigators into an HR dispute, particularly when the party that they’re suing is that single biggest client relationship on which their investment banking career was based.  Perhaps he intends to use the lawsuit proceeds to start up Orcel & Co?

Meanwhile ...

Where do you go to from the top levels of investment banking?  Sometimes, into the top levels of executive recruitment.  Miles Millard, one of the senior Deutsche bankers shaken out by the last Cryan reorganisation, will be leading business development at JD Haspel (Financial News)

A variation on the “Marathon, not a sprint” cliche; David Solomon gives an interview comparing Goldman Sachs to an NBA basketball team, and saying the difference is that Goldman judges its performance over a Soviet-style five year plan rather than after every game (Business Insider)

Shifting squares on the organogram at JP Morgan’s European investment bank, as David Lomer is moved from EMEA M&A to co-head of the UK franchise and Dwayne Lysaght goes from UK M&A to the EMEA head, among other moves (Financial News)

A real nightmare story as the housekeeper of Warren Stephens (founder of the eponymous Arkansas-based Stephens Inc) was stuck in the elevator of Mr Stephens’ New York townhouse for 72 hours. (BBC)

The latest HackerRank survey of trends in software development skills and recruitment is out (Venturebeat)

Just in case you were worrying; LVMH have stockpiled champagne and cognac in UK warehouses, so there need be no Brexit-related interruptions to supply (Bloomberg)

Or if your lifestyle is less exciting, a New York startup is promising to improve “al desko” office lunches (Bloomberg)

And researchers at Columbia University have managed to process brain waves into intelligible speech.  It’s not necessarily “a step closer to reading your mind” as the headline says, but it gives some hope for patients who had lost their own voices through injury or illness. (FT)

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AUTHORDaniel Davies Insider Comment

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