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The best PhD for banking?

Morning Coffee: Science graduates earn $350k and keep respect of their professors. Deutsche bankers are facing a sweaty summer

One of the psychic costs going into a career in banking for PhDs is the knowledge that your old academic mentor probably thanks you are a sell-out and a disappointment. This cost is, of course, usually offset by the tangible benefit of a load of money, but wouldn’t it be wonderful for science types if there was a way to pull in an investment banking salary but still have the old professor thinking you were putting your learning to good use?

For experts in environmental science and energy policy, it seems like there is. As well as making basic salaries between $175k and $350k, (and possibly up to 7 figures if you can get into private equity investing), advising banks on climate risk and green energy gives off good vibes, according to people like William Boos, an associate professor at Berkeley.

It’s another sign of how the wheel of public opinion has turned, and the days when bankers were the favourite villains are receding into the past. Scientists moving into big tech firms now get stigmatized as “helping sell widgets to people that are not tremendously useful”, while ESG bankers are seen as helping to save the planet.

And although sustainability investing itself has its critics, there seems to be more to scientists work on the sell side than just crunching numbers to create another proprietary carbon dioxide intensity index. (Although there does seem to be a lot of that too). The war in Ukraine has created a brand new audience for bankers who understand energy efficiency and consumption, while deal teams are beginning to understand the value of having someone involved in the pitch who understands the difference between a kilowatt and a killer whale.

At present, demand for science postgrads with enthusiasm for investment banking culture is greatly outstripping supply. According to headhunters at Korn Ferry, banks and private equity firms are enthusiastically attempting to poach from each other, with bid-back offers of as much as 30% pay increases. Even more startlingly, some financial firms are trying to attract and retain talent by making promises about how their work will directly influence future business strategy.

But in the long term, people with a passion for science always seem to end up going back to science. Sarah Kapnick, for example, recently ended a two decade banking career (at Goldman Sachs and JP Morgan, where she ended up as senior climate scientist and sustainability strategist) to go back to the US government’s National Atmospheric and Oceanographic Administration. And that might be a path that other scientist-bankers will follow; it's possible to have the money and the prestige as well.

Elsewhere, employees walking into the Deutsche Bank head office in Frankfurt will soon notice that the fountain outside has been switched off. It's part of a set of energy saving measures including switching off illuminated logos, raising the air conditioning thermostats from 25°C to 27°C and only providing cold running water in washrooms. These measures are intended to save nearly five million kilowatt hours a year, the equivalent of 1,600 households’ worth of electricity. Deutsche will also be saving energy from the planned reduction of its real estate footprint, and from natural gas consumption measures soon to be agreed with the German government.

Obviously, although there will be some relatively small cost benefit, this isn’t a key part of the Deutsche cost cutting strategy.  It’s part of an overall effort to reduce consumption in the face of a likely continent-wide shortage of natural gas as a result of the conflict with Russia. Because of this, we’d expect that other banks will follow Deutsche pretty soon in making announcements that they will be doing their bit. So bankers across Europe might be advised to switch to a stronger brand of anti-perspirant, and to hope that sweating a bit in the summer might save them from having to turn the thermostat down too far in winter.

Meanwhile

Although most bankers have got the message now with respect to the protected categories of race, gender, sexual orientation and age, financial services still has a problem with destructive “banter”. One employee surveyed by the Chartered Institute of Securities and Investment actually ended up leaving a firm because he was so sick of jokes about his height (Financial News)

Wirehouse brokers in the USA have a reputation for being the kind of guys who would rip off their own grandmother if the commission was right. While that's something of an unfair stereotype in most cases, brothers Evan and Avi Schottenstein seem to have done exactly that, filling their elderly relative’s portfolio with structured products and forging her signature for a private equity transaction (ThinkAdvisor)

There now seems to be a “thing” with Hong Kong financial IPOs surging to implausible prices when introduced to the US market. The latest one is called Magic Empire Global, a capital markets boutique with one flotation to its credit, which went up 6000% in its first trading session, then back down 89%. (Bloomberg)

Jamie Simon’s son-in-law, Apollo Global banker Joey Romeo, is facing a deposition in an arbitration case with a former executive of an oil company acquired by Apollo. The plaintiff, Varun Mishra, describes Romeo as “snooty and sarcastic”; Apollo describe Mr Mishra as “disgruntled” and his claims as “baseless” (New York Post)

Smart people who had been making careers in Russia are beginning to show up elsewhere; Sandeep Batra, until recently Citi’s head of consumer banking in Russia, is now head of wealth and personal banking for HSBC in India. (Finews)

One justification for unlimited paid time off might raise more questions than it answers for bankers in roles where it's offered – “By giving 20 days off, you’re implying that there are 20 full days that they wouldn’t need to check in. Why would you do that?”, according to one consultant. (Bloomberg)

“Squeezed spenders” are people without financial goals, who often end up continuing to buy expensive toys and treats even when it becomes financially disastrous to do so. Some advice and some uncomfortable home truths. (FT)

Photo by Viacheslav Bublyk on Unsplash

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AUTHORDaniel Davies Insider Comment
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  • Ma
    Marko
    13 August 2022

    Basic salary of $175k in investment banking? Where?....

    Most are lucky to get half and work 80 hours week.

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