Morning Coffee: Deutsche Bank's interview cheat sheet for students with terrible CVs. The UBS/Deutsche Bank merger that never was
Like most investment banks, Deutsche receives applications from far more students globally than it could ever accommodate. Last year, 110,000 of them wanted to work there. This year, that was down to 80,000 - but this was still around 100 per role. What can you do, then, if you aspire to work for DB when you leave university, but you can't even spell words on your resume properly, let alone string a grammatical sentence together?
It turns out that Deutsche might give you a helping hand. The son of a state-owned company in China had this problem and the bank found a solution. - The DB coverage banker who wanted to hire the son, reportedly had an "interview cheat sheet" put together to help the son along. It's not clear what was on this sheet and even with its assistance, Deutsche's interviewers thought the son was one of the worst candidates they'd seen. But guess what? - He got hired anyway.
The case is one of several in Deutsche's iteration of the Chinese “princeling” cases. It seems that, rather than having a separate “sons and daughters programme” like some other banks, Deutsche attempted to ease 'special' candidates through the normal hiring process. The Wall Street Journal reports that Deutsche Bank has settled a resulting Foreign Corrupt Practices Act case with the SEC, without admitting or denying the findings.
The case is a reminder of how biased banks' recruitment process can be at the best of times, let alone when there might have been a separate agenda to hire relatives of government officials in China (and in Deutsche's case, Russia too). That candidates like cheat-sheet-son got hired reflects the reality that banking recruitment always works on at least two levels. There’s the level of process, core competencies and values put in place by human resources departments to get the objective best candidates. And then there’s the level of commercial reality in which the “best” candidate is the one that can help you get deals, whatever their personal qualities or lack thereof.
In the real world – and this is by no means confined to emerging markets – untalented candidates get hired every single day on the basis of having good relationships with people who can deliver business. It doesn't help that it's hard to second-guess a senior banker’s choices. And it's a fairly intrinsic attribute of the rank of Managing Director that those who have achieved it are allowed to decide who they want to have on their team
Elsewhere, it appears that even after the Commerzbank deal fell apart, Tadhg Flood was still working hard to find alternative options for Deutsche Bank other than closing down the investment banking franchise. We now know that he was also to be found advising Garth Ritchie and Alexander von zur Muehlen as they attended a secret meeting in Milan with UBS, aimed at forming an “alliance” in which UBS would cede business in fixed income in return for Deutsche referring equities clients, with somewhat more complicated arrangements relating to advisory business. If the alliance worked out and the regulators were happy, then things might even have progressed to a full merger.
It never happened, of course, presumably for many of the same reasons that talks on merging the two banks’ asset management businesses also failed. Revenue allocation is a fraught business in banking at the best of times and even between divisions of the same bank, let alone in any sort of joint venture or alliance structure. Neither side would be wholly in control of the investment banking franchise, and the danger would be that this would have been a way to get nearly all the negative revenue synergies of a deal combined with hardly any of the cost gains. As a historical curiosity, it’s probably best seen as further evidence that the eventual Sewing plan really was a final option after everything else had been tried.
Meanwhile …
The daughter of the low-budget horror film director, Lloyd “Toxic Avenger” Kaufman, decided that the best way to rebel against her father would be to become an investment banker. Unfortunately, she ended up in commodity derivatives sales, possibly one of the few places which could compete with Troma Productions for misfits, bad language and (read the story) projectile vomiting. (Huffington Post)
As a sell-side analyst, Huw van Steenis was renowned for his despatches from the World Economic Forum (he went there every year for Morgan Stanley and reported back on what the CEO class was thinking). Now, after a short period as an advisor to the Bank of England, he is back at UBS as head of investor relations and chair of their Sustainable Finance Committee. Does this mean a return to Davos? (Financial News)
A possible sign that the reputational cycle is turning; big tech firms are now finding it harder to attract the top graduates who flocked to them when investment banking lost its career appeal in the aftermath of the financial crisis. (FT)
Goldman Sachs demonstrates the power of continuity – the team that has won them all three of the top tech M&A deals this year and taken them to the top of the league tables has been together for twenty years (CNBC)
Jes Staley is determined to be the “last man standing” in European investment banking, but he will have to deliver profitability soon. (FT)
Details coming out about the Deutsche/BNP prime brokerage and technology deal; about 800 jobs will be transferred (Reuters)
And banks in Hong Kong have asked for help from the City Mental Health Alliance as their staff begin to suffer from stress and uncertainty during the protests. (Financial News)
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