Morning Coffee: When 40 year-old partners buy 25 year-old associates drinks after work, and Deutsche Bank tries once more to get its tech under control
It’s been a year in which the title of “Worst Drinking Culture In Finance” has been keenly contested, with the Lloyd’s market in London coming in an early first place. Now, however, we have a new and slightly unexpected contender in the inebriation stakes: Freshfields, a buttoned-up London law firm.
Details of the apparent (outside of work) drinking at Freshfields have been emerging in a Solicitors Disciplinary Tribunal panel which is investigating allegations that a male insolvency and restructuring partner behaved inappropriately with a junior female colleague following a work event where the wine was "unlimited."
During the corporate event in question, it seems the alcohol began with champagne at 10.30am, continued with a quantity of wine at lunch limited only “by the amount of alcohol that the venue contained” and ended up with a pub crawl and pina coladas back in London. With the benefit of hindsight, the questioning seems to have gone, was it possible to see how things could have been handled better?
Apparently not. In the opinion of the partner under investigation, it would have been “madness” to limit the amount of wine available, as this might have made the people at the lunch unhappy. In any case, he said, “people are perfectly capable of regulating what they drink.” - Why, then did it end up in a disciplinary tribunal?
It's not only corporate events at Freshfields that appear indelibly associated with alcohol. After-work-Thursday drinking also seems to have been a thing. The 20-something associate who's accusing the 41 year-old partner of multiple incidents of inappropriate behaviour says it was common for people at her level to be very hungover on Friday mornings after Thursday evening office drinking sessions where the partners were buying. The partner in question admits that such drinking occurred (driven, he says by the firm's associates), but denies the Friday morning hangovers, which he says would be inimical to Freshfield's profitability.
If you work in banking today, this might all seem a bit old-fashioned. All day lunches on Thursdays and Fridays, free booze for junior staff and hung-over late arrivals in the office are reminiscent of London before the American banks arrived. For most finance professionals, they fall into the category of, “Things That Only Over-Fifty Year Old Bankers Will Remember”. Bankers today are worried about drinking wine at a Christmas party, let alone drinking pina coladas after a full day of imbibing.
The current tribunal case suggests, then, that Freshfields could be a bit of an anachronism. Lessons should be learned. In particular, 40 year-old bosses should not be picking up the bar tab for 25 year-old juniors on Thursday nights. - It’s socially quite difficult to turn down an offer of a glass of wine from a manager, and harder to regulate your own consumption when free drinks are being placed in front of you. The situation is inappropriate on both sides. It’s worth asking yourself if you might not be happier paying for your own booze and choosing different company to drink it with.
Separately, Deutsche Bank is forming a new technology division, with the aim of “reducing complexity”, “lowering costs” and “transforming systems that have held the company back for years”. If this sounds familiar, that’s because it is – the “legacy systems” of Deutsche Bank have been a rock on which many COO, CFO and even CEO careers have foundered. They’ve been described as “lousy”, “vastly complex” and “the most dysfunctional I’ve ever seen”. Now Bernd Leukert, a SAP veteran hired last month, is going to be the next one to try to slay the beast.
This isn’t going to be a short term task and we shouldn’t expect Mr Leukert’s program to lead to immediate job losses – the memo announcing his appointment makes it clear that Deutsche will continue to invest in legacy systems while it tries to move things to the cloud and rationalise the number of applications and systems it maintains. Deutsche may even end up increasing the number of full-time employees while reducing contractors and consultants. But at present Mr Leukert’s LinkedIn describes him as having responsibility for “€3.4bn service revenue, 11bn maintenance revenue and +25 600 FTE” and at some point he will be judged on his ability to get at least some of those numbers lower.
Blackrock has a new global head of human resources, although still no more public details about why the last one left beyond “failing to adhere to company policy” (FT)
Is the metaphorical stock market beauty contest a literal beauty contest too? In the Institutional Investor All-America Research Analyst surveys, women are more likely than men to be selected (controlling for experience and stockpicking skill), but those judged (by some means or other) to be “more attractive” are penalised. In China it’s the opposite way around; women are discriminated against despite having better stock performance, but it helps to be pretty. (Institutional Investor)
Blackstone isn’t worried about Brexit and plans to add another 35 people to the 350 currently working in its London office (Financial News)
For the quants – the difficulties of trying to reproduce public consumer confidence indicators with private surveys, and how regression models can fail you. (Medium)
Watch out if you live in New Jersey, work in finance and have a holiday home in the Catskills or the Finger Lakes. A hedge fund manager has just lost a case in which New York claimed that if you spend more than 183 days a year in the state and have a house there, you’re liable for New York income taxes. (Fox Business)
Credit Suisse employees’ email is scanned by Palantir, looking for evidence of compliance failures. Employees are also discouraged from sending confidential or client information via WhatsApp, although the rumour that WhatsApp itself is banned is apparently untrue. (Sonntagsblick, via Finews)
Presumably Uber were hoping for some bankers to see their new helicopter service to JFK as a status symbol. Unfortunately, from Midtown it’s no faster than the subway (New York Post)
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