Morning Coffee: So much for Barclays' assurances on job losses. Disaster as Deutsche's tech team got 2% of the code wrong
The acronym “GTC” stands for “Good ‘Til Cancelled”, and in equities trading it refers to an order to buy or sell at a particular price which stays in the book rather than expiring at the market close. In the slang of equities traders, though, GTC also refers to a senior manager whose word of honour can be relied upon, until it can’t.
Employees at Barclays might be forgiven for using the acronym this week, as it appears that the job cuts being made there are more extensive than they first appeared. Mainly affecting senior ranks and credit trading, there have been departures in both London and New York. When asked whether this was consistent with the statement made barely a month ago that there were “no plans for job cuts”, the company responded that the comment from April was “both true and accurate”.
It might not be completely fair to blame Barclays. We noted at the time the statement was made that it was in response to a heavily leading question, and that the spokesperson who made it (Simon Hailes) refused to give either a time frame or to say which parts of the bank he was referring to. It’s doubtful whether anyone really ever put much store in such an obviously hedged and ambiguous response.
It’s also not wholly clear that “job cuts” is necessarily the right description for what’s going on. When firings are concentrated on MD ranks, it’s not always the case that teams are being downsized and that the rank and file will be next for the chop. Sometimes, it’s the beginning of a juniorisation effort or an attempt to trim an operation that has got top-heavy. Sometimes it’s seen as a way to attribute responsibility for a division that’s underperforming in revenue terms. And sometimes, there are just a bunch of MDs whose faces just don’t fit any more, or who have come out on the wrong side of some office politics.
But on the other hand … a big global investment bank surely needs to be a bit clever with its communications. People in the industry read the news, and make judgements based on the statements presented to them. Barclays has fired the head of investment banking this year, seen surprise departures of several key executives and has not in any sense got finally rid of a powerful activist investor who wants to shut down the investment bank altogether.
Sometimes, the appearance of inconsistency is almost as bad as the fact. Barclays' employees deserve a bit more explanation than a blanket “the comment was true and accurate”. In a people business, it's doesn't help to be perceived that your word is good until cancelled.
Elsewhere, Deutsche Bank’s IT staff might be reflecting that the difference between “almost right” and “right” can be as big as the difference between lightning and a lightning-bug. They were responsible for installing an anti-money laundering application meant to search for suspicious transactions. It had 121 parameters that needed to be set. They set 119 of them correctly.
The remaining two parameters, on the other hand, appear to have effectively hobbled the system, causing it to miss transactions for almost ten years, before the glitch was picked up in a review by the compliance staff. It’s not clear whether any harm was done – Deutsche has other systems which might have picked up the missed alerts – but it’s yet another piece of embarrassing news in a week when Deutsche’s AML controls have been the subject of heated argument including some Presidential tweets.
It’s possible to be a little cynical about the timing of this revelation – the original error was made back in the 00s, it was found and corrected in September last year, but it’s reached the press on the day before an AGM when the supervisory board is widely rumoured to be talking about Chief Regulatory Officer Sylvie Matherat’s departure as a matter of “when, rather than if”. As with many other issues, it’s hard to see quite why something that happened so long before she arrived should be laid at Ms Matherat’s door, but banking is rarely a wholly fair business.
Meanwhile …
Who was it who paid $91m for Jeff Koons’ bunny, the highest sum ever for a work by a living artist at auction? Was it ever going to be anyone else but Steve Cohen? (Bloomberg)
UBS, meanwhile, is turning the lobby of its New York office into a public gallery because although it can’t compete with Steve Cohen, its corporate art collection includes some important pieces. (Barrons)
Akram Zaman, Bank of America’s global head of equity syndicate, is going to Millennium to advise on IPOs from the perspective of the buy side rather than the sell side. On the same team, Craig Coben is apparently being internally investigated after allegations that he leaked details of the Metro Bank rights issue on social media (Financial News)
Geneva has a reputation among bankers for being a little bit … staid. But increasingly, the option of living across the border in France has become forbidden by Swiss banks who don’t want their employees to potentially be a target of French authorities twice a day. (Bloomberg)
Commerzbank is still open to the right M&A offer, and may “refine its strategy”; no word yet about what this means for the investment bank. (Reuters)
Thirty six percent of wealthy British women feel that they are being patronised by their private bankers, according to a survey. It’s hard not to feel that this means sixty-four per cent haven’t realised it yet (Finews)
And the latest thing to buy for the man who has everything – designer generic Viagra at six times the normal cost, but with packaging that looks a bit more sexy and less medical. (Bloomberg)
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