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Morning Coffee: Deutsche Bank deals a new blow to remaining staff in London and NY; ominous plans at UBS

In a move not necessarily calculated to shore up morale at its global investment banking businesses, Deutsche Bank has announced that, with immediate effect, it will no longer be allowing employees to carry over holiday entitlement from one year to the next.  Not only that, but if you were coming up to forty years and had a spot cleared on your mantelpiece for a golden Deutsche Bank carriage clock, bad luck because long service awards have also been discontinued from October.

Adding a degree of insult to injury, these changes only affect the international staff; because German employment contracts are somewhat harder to change, the domestic staff will continue to receive long service awards and to be able to carry over as much as ten days’ worth of holiday.  The email to all staff recognised that these changes “may be disappointing” and employee reactions quoted by the Financial Times seem to confirm that they were.

To an extent, it makes sense that Deutsche would be cutting back benefits and tilting the work-life balance back in the direction of work.  The starting position was pretty generous in terms of holiday; Deutsche added five days last year to bring the annual entitlement up to 30 days, with the option to buy another five (in the UK) through the flexible benefits package.  If someone had done that, plus carried over five days from the previous year, then they’d be entitled to take a big chunk of the next working year off.  That could pose problems for a business that’s going to be trying to get its investment banking business units to do more with less.

There’s also perhaps an implicit recognition that employee expectations with respect to their carried forward leave might be about to change.  Lots of bankers fail to take their full entitlement every year (some of them have problems even taking the compliance-mandated two weeks).  They carry forward the maximum amount, treating it either as a point of pride or as a sort of psychic wealth.  But with the overhanging uncertainty over employment and compensation at Deutsche Bank, it would be quite easy to see how 2020 might be the year in which people decided to cash in their carried-forward balances and take their full entitlement.  Changing the system halfway through August, when it’s too late to change summer plans, is a way for the bank to mitigate this effect, albeit at the obvious cost of some significant employee badwill.  Expect the early season ski slopes to be a little bit more full of Deutsche bankers this year.

The loyalty awards, though, are difficult to understand.  It’s not completely clear what you get for 10, 25 and 40 years’ worth of service (the remark earlier about carriage clocks was a joke).  But whether it’s cash or sabbatical leave, it’s unlikely to be a huge drag on costs, simply because of the nature of the job.  Even ignoring company-specific issues with respect to Deutsche Bank, how many people stay in a sales and trading job for ten years?  And the symbolism bought for this trival expenditure is really powerful.  Even if few employees ever actually saw themselves winning a long service award, it’s hard to understand why any bank would sent out a message to all its employees announcing that loyalty is no longer going to be rewarded, at a time in its corporate life when loyalty is what it really needs.

Elsewhere in the industry, Piero Novelli and Rob Karofsky are working on the first major strategic plan for the post-Andrea Orcel era in UBS’s investment bank.  And it’s a mould-breaking, innovative … no, it’s another cost cutting plan, according to “people familiar with the matter” talking to Bloomberg.  The story talks about “hundreds” of redundancies, in the context of a headcount of 5,333 investment banking full time equivalents as of the Q2 results.  And given that UBS has a higher-level strategic aim of boosting the synergies between investment banking and wealth management, it’s likely that the brunt of the cuts will fall on sales & trading rather than on advisory and capital markets.  Mr Novelli is also, however, apparently considering a “reshuffle” of leadership on the banking side, and “sharpening a focus on industries of most interest” to ultra high net worth clients. 


An unusually frank survey from technology company Merrill Corporation, in which bankers were asked what they thought were the most important qualities to learn.  “Properly prioritising tasks” was the big winner, and “Personal organisation” (suggesting the respondents were relatively junior, as “building relationships and socialising” isn’t there at all).  The most common errors made in M&A are apparently “pushing send on an email before reading it”, followed by “failing to check numbers”, then the alarmingly ambiguous “missing something”. (Businesswire)

Time out of the market seems to have sharpened Greg Coffey’s edge rather than dulled it – after retiring in 2012 and coming back last year, he’s up strongly year to date (FT)

The seemingly neverending Barclays-Qatar fraud trial has raised the stakes slightly, as the Serious Fraud Office, seemingly undeterred by the acquittal of John Varley and the collapse of the case against Barclays itself, has added new charges to the case against Robert Jenkins and his two colleagues. (Bloomberg)

Although HSBC’s U.S, operations have dropped their profitability target, they still aim to build a strong franchise there, and the strategy is unchanged, according to regional CEO Patrick Burke.  This will be worth watching in the near future, as the combination of strategic ambition with cost-cutting is often difficult to maintain (FT)

According to the CEO of Virtu Financial, their profitability is heavily dependent on market volatility, which these days means that to a large extent it’s driven by Donald Trump’s tweets. (Financial News)

American workers, somewhat grimly, are speculating about their “what-if” plans in the event of a mass shooting happening in their workplace.  This is the sort of thing that can captivate an entire trading floor or banking office during a quiet August (WSJ)

 “Having an anonymous hotline signals that if you speak up publicly, you’ll probably be punished”.  Social psychologists think that group loyalty is often one of the biggest drivers of unethical behaviour in corporations. (FT)

Photo by Nick Torontali on Unsplash

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AUTHORDaniel Davies Insider Comment
  • Cx
    13 August 2019

    Fyi the carry over leave was taken out and top up is being given. So it's not a blow to the dB staff

  • ab
    9 August 2019

    Higher echelon bankers are grossly overpaid because of chummy herd relationships even between competing bankers.

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