Morning Coffee: People at Deutsche Bank are packing their boxes already. A grave warning for traders in London
It starts this week. Although Reuters is reporting that Deutsche Bank's board won't meet until 7 July to discuss Christian Sewing's new plan to cut up to 20,000 jobs, and even though the plan itself won't be detailed until Deutsche reports its second quarter results at the end of the month, Bloomberg is reporting that in equities sales and trading at least, the bank will begin informing people of their impending redundancies today, tomorrow and the few days after that.
Deutsche's equities salespeople and traders are ready. The Wall Street Journal, which broke the story, said some have already cleared their desks and that sales people are curtailing client calls and meetings. We spoke to one New York equities salesman who said he, "packed all his stuff up on Friday." In Jacksonville Florida, the New York Times says DB staff have been bringing boxes to the office in preparation for moving out. On Friday, Peter Selman, Deutsche's allegedly departing head of equities, was seen in NY (maybe to collect his stuff); insiders say the floor was silent.
While the evisceration of the equities division seems a done deal, the other 15,000 to 20,000 cuts are what need to be decided. Even if they're given the go-ahead, they may not happen - the WSJ notes that former CEO John Cryan promised 15,000 cuts in 2015 but they 'never fully materialized.'
In the event that Sewing actually executes on his plan, it seems likely that the investment bank, which had 38,000 full-time employees at the end of March (of whom 17,000 were in the front office), will suffer disproportionately. One insider told us DB has around 8,000 equities employees globally, including all support staff. Another said the expectation is that investment bank employees in London and New York will be hit disproportionately: "You won't get hardly anyone cut in Germany, so of that 20,000 around 15,000 will be in London and New York, which will represent 50% of headcount here." To reach those numbers, DB will clearly have to go beyond equities. Insiders say the plan seems, "aggressive."
There are signs, too, that Sewing plans a total change of management. Selman is pretty much gone. Head of the investment bank Garth Ritchie is thought to be going. Bloomberg says Sewing is also thinking of getting rid of CFO James von Moltke and compliance head Sylvie Matherat. It's an extraordinary cull for the 49-year-old CEO who joined Deutsche Bank as an intern and who seems to have wild plans to make Deutsche into more of a wealth management player in the style of Credit Suisse or UBS.
If the big investment bank cuts come, the Times says they will likely be spread over a year. This will give Deutsche Bankers plenty of opportunity to look for new jobs - although with London likely to be paralyzed by Brexit, opportunties to move may not be that forthcoming.
Separately, events in Switzerland suggest an increasingly grim future for London as a financial centre after Brexit. The Financial Times reports that after the breakdown of negotiations between the EU and Switzerland, Swiss traders can only trade Swiss stocks in Switzerland and European investors can't trade Swiss stocks (including big names like Nestlé or pharmaceutical group Novartis) in the EU. As from today, anyone found doing so risks up to three years in prison.
The harsh state of affairs comes as Brussels is pushing Switzerland to accept a new treaty that will mean some EU laws become Swiss law automatically. Switzerland is pushing back, with the result that Brussels has been turning the screw on equivalence in financial services and only granting short six month equivalence permits since 2017.
This matters, because the City of London will likely operate on equivalence permits post-Brexit. Switzerland's predicament reflects how much control is ceded to the EU under an equivalence regime.
Deutsche Bank wants to hire 300 new wealth management relationship managers and investment managers across Europe, the U.S. and emerging markets. (Euronews)
Time to move to Geneva? First Goldman Sachs and now Facebook are hiring there. (Bloomberg)
Goldman Sachs is thinking of creating a digital coin a bit like JPMorgan's. (Bloomberg)
Failing UK fund manager Neil Woodford is good friends with Paul Hodges at Cenkos. Half of Cenkos’s top-20 equity fundraisings by value since the start of 2014 were in stocks where Woodford Investment Management disclosed an interest. (Financial Times)
Francesco Cuccovillo, the European head of structuring and head of structured financing, resigned from Nomura, even though Nomura was supposed to be focusing on his business. (Business Insider)
"I was an investment banker for 15 years. I loved the global lifestyle, the ludicrous compensation and the highly competitive environment, if not the endless office politics. But as my forties approached, the need to make a difference and create something more tangible became overwhelming." (The Times)
Princeton University graduate jailed for killing his hedge fund father, after the father threatened to reduce his allowances and not pay his rent. "This defendant didn't want to grow up and be an adult. When his father tried to push him along in that direction and cut his allowance, he threw the ultimate tantrum." (ABC News)
It's very hot on the London Underground in summer because the deepest lines run through clay soil that absorbs heat. That soil has absorbed as much heat as it can, and now radiates it out again. (Financial Times)
Banker wins $13k damages after being temporarily disfigured by a hairdryer. (The Times)
Have a confidential story, tip, or comment you’d like to share? Contact: firstname.lastname@example.org in the first instance. Whatsapp/Signal/Telegram also available.
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)