Morning Coffee: Bank head says "thoughtful" layoffs coming in weeks. Peculiarities of the Goldman Sachs partner pool

When is a job cut a tolerable thing? Maybe when it happens at SocGen and involves voluntary departures and extravagantly generous severance packages. Or maybe when it happens at HSBC and is a cerebral sort of occurrence. 

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Michael Roberts, the man recently appointed to lead HSBC's corporate and institutional bank, has told Bloomberg that job cuts are coming "very, very quickly" at the bank, but that they will be done in a "thoughtful way" to minimize disruption and distraction. By February, the cuts will be done and HSBC will have a new "organizational structure," says Roberts. 

It's probably no coincidence that HSBC pays its bonuses in February, and that the cuts will be complete before the people who'd hoped to receive those bonuses are gratified. It's also worth observing that "very, very quickly" and "thoughtful" are not usually synonymous. Maybe, though, the two things are mitigated by a) severance pay and b) the additional thoughts of consultants like BCG who have "simplified" HSBC before and been thinking about the bank for a long while, therefore.

There are echoes of Citi in HSBC's approach. As at Citi, the cuts are expected to take out layers of management. And when Citi made its cuts this time last year, also before bonuses and with the aid of consultants, it too proclaimed that it was being deliberate and thoughtful in the process. 

If you're on the receiving end, the reality is probably that job cuts never seem totally thoughtful. There's always an element of subjectivity and politics. At Citi, there have been suggestions in recent months that some of the wrong people might have been let go, particularly in control functions. 

Martin may really have been addressing claims that HSBC's people were left "bewildered" by its last round of changes, which resulted seven demotions from the executive team and the formation of new geographical units that looked like the precursor to splitting the bank into Asian and Western operations, but which HSBC insists were not. More will become known in February, when CEO Georges Elhedery will provide a strategy update, long after the thoughtful cuts have taken place. 

Separately, Goldman Sachs announced its large new class of 95 partners yesterday, and observations are being made about the names on the list. 

The Financial Times notes that they include five new partners in the Paris office, which is the first time that anyone has made partner in France for eight years. There are also three new partners in Japan, which is the first time anyone made partner there for six years.

Meanwhile...

BlackRock is in early-stage discussions with Millennium Management about taking a minority equity stake in the hedge fund. (Financial Times) 

The joys of being a Goldman Sachs partner. “Random people will infer characteristics about you — integrity, commercial acumen, intelligence, teamwork — simply based on the fact that you are, or were, a Goldman Sachs partner.” (Financial News) 

“If there’s any negative feedback you don’t make it,” said one former Goldman partner. “It’s like a beauty pageant. And if there are any blemishes it’s bad.” (Financial Times) 

As of March, roughly two-thirds of the women who were partners at the end of 2018 had left Goldman or no longer had the title. The same could be said of just under half of male partners at the time. (WSJ)

Hedge fund manager Scott Bessent might become Trump's Treasury secretary. He has some peculiar ideas like nominating a “shadow” chair of the Federal Reserve, who would not sit on the US central bank’s policymaking committee but would give guidance on the future direction of monetary policy. (Financial Times) 

Citi is going to pay higher bonuses to bankers who move clients’ assets into investment accounts, and less to those who sell new loans. (Financial Times) 

Carlyle reported its reports best results since recruiting Harvey Schwartz as chief executive. (Financial Times) 

The number of US borrowers in danger of defaulting a second time on commercial property loans is at the highest level in 10 years. Extending and pretending these loans by offering breaks to property owners to delay write-offs may have concealed systemic risk. (Financial Times) 

Santander is having messaging issues. “SanCap is cooperating with the SEC in connection with an inquiry focused on compliance with business-related communications on messaging platforms that were not approved by SanCap.” (Bloomberg)  

Daniel Mayston, the head of electronic trading at BlackRock, has gone. (The Trade) 

It wasn't easy for Binance's ex-CEO in prison. “I usually stick to a paleo diet, just proteins and veggies. That’s not possible there.” (Bloomberg) 

Brush your teeth in the middle of the day, even in the office. (WSJ) 

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