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Morning Coffee: How it is when a bank really wants you. When Goldman bankers were known for their modesty

When banks are charming

When banks are charming

The resurgent fuss surrounding Tom Hayes, the ex-UBS LIBOR trader at the centre of the LIBOR scandal, is another reminder of how very charming a bank can be when you’re making it a lot of money.

To recap, Hayes was one of 33 people arrested last year for manipulating the LIBOR rate. UBS was fined $1.5bn as a result of Hayes’ alleged LIBOR rigging efforts and he is now facing a criminal conviction in the UK.

Before Hayes became a LIBOR-pariah he was, however, hot. Hayes made $260m in revenues for UBS between 2006 and 2009 and UBS paid Hayes $2m for his efforts. And then in 2009 Citigroup attempted to poach Hayes for $4m. The prospect of the golden goose departing for Citi set pulses racing at UBS, where senior executives sent a flurry of emails about their efforts to retain their favourite trader. These emails surfaced yesterday. Carsten Kengeter, then-head of UBS’s investment bank requested that Hayes be sent “words of comfort” from other senior executives. Thus “endorsed”,  Hayes apparently felt happy and decided to stay (but then left for Citi anyway). The emails are causing ripples because they clearly copy in Alex Wilmott Sitwell, the current head of Bank of America Merrill Lynch in Europe, who last year told a British parliamentary commission that he knew nothing about Hayes. Wimott Sitwell had already been deemed ‘grossly incompetent’ by the commission.

Separately, another ex-Goldman banker has written another book lamenting the passing of firm’s wonderful culture. Steve Mandis, an ex-Goldman M&A banker who worked at the firm from 1992-2004 has penned a tome saying how gentlemanly the firm was in the old days. In particular, Mandis says Goldman bankers used to be disinterested in the trappings of material wealth:

“Partners did not wear expensive suits or drive fancy cars (most drove Fords because it was such a good client and many partners got a special discount). They lived relatively modestly, considering their wealth. It was simply not in the ethos to be flashy but rather to be understated, with Midwestern restraint. The unwritten commandment to keep a low profile was not, until rather recently, violated casually.”

This seems to have changed, Mandis says. Greg Smith isn’t the only ex-Goldman banker to think Goldman has gone off. Mandis claims that, ‘some current and former employees say that there is “a sizable, yet silent contingent within the investment bank, a group of people who are increasingly frustrated with what they see as a shift in recent years to a profit-above-all mentality.”

Meanwhile:

Is Goldman Sachs overexposed to FICC? (Twitter) 

Are we on the brink of an M&A tsunami? (Telegraph)

US authorities will now be bringing criminal charges against ICAP for the Libor issue. (FT)

A few weeks after James Gorman said there wouldn’t be another financial crisis in his lifetime, Colm Kelleher says banks are still too big to fail. (Reuters) 

Credit Suisse is pulling out of all sots of small wealth management markets. (Reuters)

Top 10 signs you are super rich. (CNBC) 

Weirdly, women married to wealthy men have been working longer hours. (HBR)

 

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