Morning Coffee: The exclusive WhatsApp groups at the top of the banking industry. The Deutsche staff who still had IT access after being fired

One of the reasons why one might have thought that people would been keen to settle the Andrea Orcel / Santander dispute early and out of court is that the longer it goes on, the more mud is going to fly and the more embarrassing details are going to crop up. For example, according to reporting in El Confidencial, there’s a secret WhatsApp called “Promontorio” (named after the Botín family mansion) in which the most senior members of the Santander management swap chitchat, baby pictures and jokes.

Part of Orcel’s case appears to be that Ana Botín, Santander’s chairman and executive director, added him to this group, and that this is pretty powerful evidence that Santander had made a legally binding offer to make him CEO. For its part, Santander is arguing that Promontorio is literally a social network on which no business is discussed, and that Orcel’s addition signifies nothing other than the fact that (at that particular moment) the bank liked him.

The immediate thoughts that come to mind on learning of this are first, that every other bank presumably has a similar WhatsApp group for its top management and a lot of them probably have much funnier names than “Promontorio”. And second, that this is actually going to be a minor management problem for Santander, as the nature of management hierarchies is such that if there are 40 senior executives in a WhatsApp group, there will now be 80 senior executives who think they ought to have been part of that group and are put out that they weren’t invited. The modern equivalent of getting the keys to the executive washroom is apparently the invite to the executive WhatsApp, and consequently, the true inner circle may potentially end up creating their own, super-secret group as a back channel for the official top management group.

Santander is doing its best to throw some accusations back, but so far the worst that it appears to have been able to come up with is to be shocked and disappointed that Orcel started recording phone calls. An investment banker speaking on a recorded phone line, whatever next? There are also some questions being raised about who made what kinds of assumptions about what UBS might be convinced to pay, what letters were sent and what threats of losing future advisory business were (or should have been) made, but it appears that in the end, the case is likely to turn on points of Spanish employment law as to what constitutes a binding contract of employment.

The outcome is almost impossible to predict, but based on experience of reporting on dozens of banking industry employment lawsuits, it’s very rare for anyone to leave the courtroom feeling like a winner. They’re invariably an embarrassing distraction for the bank and a stressful (often health-destroying) pain for the employee. First best is always not to need to bring one; if you can’t manage that, then the second-best solution is to settle it early and amicably. Santander and Orcel have missed these chances and look set to provide us with a lot more entertainment at their significant mutual expense.

Elsewhere, it seems that Deutsche Bank’s “rare humanity” in dealing with the employees made redundant earlier this month might have come back to bite the bank. Several fired equities personnel have noted that the company wasn’t particularly aggressive in demanding the return of security passes and lanyards, and it seems that there was also a bit of a slip in cancelling remote IT access for people who had it set up on their own devices, reports the Financial Times. About fifty traders and salespeople were still able to log into the system for as much as a week after the big announcement.

Although there was no access to the actual trading systems, any sort of unauthorised use of an investment bank’s IT systems has the potential for all sorts of mischief. So it has to be counted as
fortunate that as far as anyone can tell so far, the only thing they used it for was to send goodbye emails. Deutsche is carrying out a big enquiry into whether any client information was compromised (which could mean anything, including relatively harmless and normal behaviour like sending yourself a copy of a call list), but it looks like the fired employees maintained professional standards even in the face of temptation.

Meanwhile

When is a quant fund not a quant fund? Arguably, when the “quant” computers not only spend their time analysing sell side analyst reports for “alpha capture”, but are advised on how to do so by experienced portfolio managers and salespeople. At some point, don’t the computers end up getting made redundant by the human beings? (FT)

Big moves in the world of financial data as Refinitiv is to be acquired by the London Stock Exchange; there is little overlap between the two companies and so unlikely to be redundancies. (Financial News)

Everyone, including investment bankers at SEB, is expected to take all their holiday in Sweden and the more senior you are, the more you’re expected to set an example. Bloomberg had a hard time getting quotes for their article though, as all the executives were on holiday. (Bloomberg)

Credit Suisse takes Richard Gibb from Deutsche’s APAC corporate finance business to replace John Knox, its head of Australia. (Finews)

Frédéric Oudéa writes on European banking, urging Brussels to do its bit to help achieve pan-European consolidation – perhaps most interesting because it implies that he still sees SocGen as a consolidator rather than a target. (FT)

The UBS tweet which criticised an FT journalist has now been deleted, and the FT story updated to say that the investment bank beat expectations. Has honour been satisfied? (Financial News)

“Our incredibly bad performance over the past four and a half years is a result of several factors … [including] … bad stock picking … we wish to express our deep regret for having launched this fund”. The most self-lacerating investor letter ever. (WSJ)

 

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