Morning Coffee: HSBC’s strange new setup. 46-year-old’s new job earns him $640m
The old Chinese proverb has it that “the mountains are high, and the Emperor is far away”. Or in the case of HSBC’s new setup, the ocean is wide and the global head of division is in Hong Kong. As trailed earlier in the year, Greg Guyett (co-head of global banking and markets), Nuno Matos (chief executive of wealth and personal banking) and Barry O’Byrne (chief executive of global commercial banking) will be relocating from the UK to HK next year, along with Nicolas Moreau (head of asset management).
The announcement is surrounded with slightly mixed messages, as you’d expect given that it’s directed toward two different audiences. On the one hand, HSBC is keen to emphasise that the moves mean that divisions accounting for nearly all the revenue will now be managed out of Hong Kong. On the other hand, after having considered a complete relocation, it’s also making it clear that CEO Noel Quinn, the board and the legal domicile remain “fully committed to the UK”.
A banking proverb of somewhat more modern vintage would say “when you’re not sure about the strategy, watch the desk moves”. Only “some roles that work directly” with the top brass are expected to move and “we are not planning any large-scale movement of jobs to Hong Kong”. So it very much appears that the structure of the business is not changing to reflect the top managers’ physical location. That could cause problems.
It’s noticeable, for example, that Georges Elhedery, the other co-head responsible for the markets side of HSBC’s investment banking franchise, is staying put in London. This makes a lot of sense in risk terms. Showing commitment to the Greater China region and driving new business is one thing, but the final authority for a sales and trading franchise really needs to be in the same time zone as the biggest risk and funding demands.
The dangers associated with geographical remoteness aren’t so immediate in other business lines, but they are real nonetheless. Geographically remote investment banking franchises tend to either drift into laziness and politics, or to start setting themselves up as alternative power bases. That’s one of the reasons why the global IBD heads at US banks used to spend so much time on aeroplanes.
It’s also harder for bankers to impress the boss when they’re on another continent. Next bonus time, Guyett may find himself uncomfortably reliant on second or third hand reports from the other side of the world. It’s just slightly unnatural to have the decision makers so far away from the source of revenue.
Of course, the moves may be looking forward to an anticipated future in which the “centre of gravity” of HSBC’s revenues moves a few thousand miles to the East. If things develop according to one set of forecasts, in ten years’ time it will be entirely natural to have the global heads based in the Asian region, as the majority of the money-makers will be there too. But then London will be a minor branch office, which just happens to have the CEO, board and main global regulator based there? Is that any more consistent? It feels like this is the beginning of a story rather than the end.
Elsewhere, a smartly-timed job move has left Surojit Chatterjee in the kind of wealth territory that has even low-double digit employee number Googlers envious. He left a job as VP of Product for Google Shopping last year to become Chief Product Officer at Coinbase, with an up front options package valued at $180m on the basis of yesterday’s first day of trading, with another $465m to vest over the next five years.
Plenty of techies and bankers have shared a chuckle at the news that former colleagues have gone chasing a Bitcoin fortune over the last few years, with an increasing degree of desperation behind the sarcasm. Of course Mr Chatterjee’s ability to realise his paper wealth will depend on cryptocurrency continuing to be a thing, and Coinbase’s ability to continue to dominate its particular space facilitating trading. On the other hand, people were saying the exact same thing five years ago
Meanwhile
How to land the internship that you want? If you’re an extremely wealthy Chinese student, you can pay a consultancy with a name like “Wall Street Tequila” to set you up with “mentors” in the junior ranks of top banks who will take you out to a happy hour, explain the rules of lacrosse and generally give you the boost in soft skills that might take you where you need. (Bloomberg)
Houlihan Lokey has raised the ante in terms of using perks as a subtle show of how much business you have on – they’re paying $10k spot bonuses to juniors and offering everyone an all expenses paid “global getaway” so that investment bankers can have their choice of a ski trip, beach spa or culinary experience ruined by some Zoom calls. (Financial News)
The Kuwaiti government is subtly beginning to “encourage” global banks to put more local citizens in senior executive positions rather than expats. (Bloomberg)
“Three am is wanting to take off your shoes and not getting to, and going to one more bar when you should go home “. A melancholy meditation on the kind of things that junior bankers are missing. (Substack)
First year analysts who have only experienced working from home would rather be in the office; second years prefer working from home. A majority think the meal stipend is inadequate and one prominent bank is “still a sweatshop full of a-holes”. The annual Wall Street Oasis survey of junior investment bankers is out. “Bonuses better be good this year because I know for sure the bank is not suffering.” (WSO)
Teams can be significantly stronger than their host banks. The six-person brokerage team led by Stuart McLandish not only survived Vontobel’s decision to close down investment banking, it’s now hiring to build up a US presence under new ownership at Zurich Kantonalbank (Finews)
Not necessarily a common problem in banking, but here’s what to do if you just love your colleagues so much that you find yourself oversharing with them. (WIRED)
Image: unsplash
