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Morning Coffee: The non-bank, non-hedge fund traders whose bonuses are big. Junior bankers are an unaffordable luxury

Last year was a good year for commodities traders. This year may be as good, if not even better: Coalition Greenwich thinks that commodities trading revenues in banks alone will increase 88% in the second half of the year. If you're a top commodities trader at trading house Trafigura, this year's bounty will be welcome but not exactly necessary: you're already doing well thanks to your enormous stock-based windfall of 2021. 

Trafigura made $105m in share-based payments last year, according to its annual report. This was down from the $130m in shares it paid employees in 2020, but that didn't matter: since that stock was awarded, Bloomberg says the preference shares have soared in value by 247%. Recipients have made a paper profit of $259m in the last year alone.

Unfortunately, this doesn't mean that Trafigura traders can rush out and sell their shares. Nor does everyone get them. Around 1,000 top employees receive the shares in the parent company (Trafigura Beheer B.V) according to Trafigura's annual report, and they can only sell them once they've vested and if they're given the permission to do so. Trafigura Beheer B.V. determines the price, based upon its own calculation of their value, and buys back a proportion of the shares each year from top staff as part of their remuneration. Traders have recently been informed of the new price and their great good luck.

The shares form an important part of Trafigura's compensation for top traders, and were offered to hundreds of new hires last year, but they are not the only element of pay. Last year, Trafigura also paid its 9,000 employees an average of $140k each in salary. When this average salary is added to the new value of last year's preference stock payments, the implication is that Trafigura's top traders were paid the equivalent of $500k for 2021. That may not sound much compared to the many millions earned by commodities traders at banks and hedge funds, but it's not bad, particularly given that many of Trafigura's traders are in south and Central America where it's cheaper to live. 

Separately, while Brazilian commodities traders are celebrating, junior bankers in London and New York may want to watch their spending this Christmas. Financial News reports that senior bankers are coming to the conclusion that they're both incompetent and overpaid. 

“This has to be one of the worst classes of analysts in my 20 years in the business,” one head of debt capital markets told FN. “To make matters worse, they are very entitled — pushing back against working late or refusing to do what it takes for clients.”

Another head of European leveraged finance informed FN that juniors have become "a fairly significant cost base" by virtue of their increased salaries. Unless business comes back, they are expensive luxury: "having juniors just hanging around as a nice-to-have is no longer viable.”

Meanwhile...

Credit Suisse shares have hit fresh lows. (Bloomberg) 

It's not that Credit Suisse's Swiss clients have closed their accounts. It's just that they've withdrawn their money. (Reuters) 

Now BlockFi is making 250 people redundant as it files for bankruptcy. (Bloomberg) 

Leon Black, the co-founder of Apollo Global Management, is accused of raping a woman at Jeffrey Epstein’s New York home. Black's lawyer says the allegations are ‘baseless’. (Financial Times) 

The London Metals Exchange says it had to cancel billions of dollars of nickel trades in March because they would have led to the simultaneous bankruptcy of multiple clearing houses and created systemic market risk. (Financial Times) 

Put your children to work on YouTube. Toy makers are paying young celebrities up to $300k to play with their products. (WSJ)

Goblin mode has become a thing. It means being “unapologetically lazy, slovenly, greedy and self-indulgent, typically in a way that rejects social norms.” (WSJ)

Now that people are back in the office, they're complaining about colleagues' noise. “When you’ve spent two years alone, you become very sensitive to noise. What we’re hearing from HR departments is that people are hypersensitive to their environments.” (Financial Times)

The banking trick of soft-job searching to get an offer of higher pay and leverage that to get a pay increase where you are, is catching on. (Business Insider) 

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AUTHORSarah Butcher Global Editor

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