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Morning Coffee: Deutsche Bank’s cash bonus cap. FX chaos. How to retire in your late 30s, still

Death in the FX market

Death in the FX market

When Anshu Jain presented Deutsche Bank’s fourth quarter results last week, he said the bank would be retaining its five year ‘cliff deferral’ for managing directors, under which MDs have to wait until year five to get all of their bonus. Now Reuters reports that Deutsche is also maintaining heavy deferrals for its bankers all the way down the line.

Reuters says Deutsche has capped cash bonuses for its staff at €300k (£249k) for the second year running. However, the scheme is more complex than a simple cash cap. For bonuses of between €100k to €200k, 50% will reportedly be deferred. For bonuses of €200k to €500k, 75% is deferred and for bonuses of €500k to €1m 85% is deferred. Beyond €1m, 100% of Deutsche Bank’s bonuses are said to be deferred. Below managing director level, it seems Deutsche’s bonuses are paid over three years – with a third paid in 2015, a third paid in 2016 and a third paid in 2017.

Deutsche’s deferrals look particularly punitive in comparison to Citigroup, where the Financial Times recently reported that even bankers awarded bonuses of $5m (£3m) for 2013 will receive 40% in cash.

Separately, the FX market has been thrown into turmoil by a series of dismissals and the news that New York’s top regulator is investigating more than a dozen banks for fixing FX trades, Deutsche Bank and Goldman Sachs included. Yesterday, Goldman reportedly dismissed two of its partners: Steven Cho global head of spot and forward trading of G-10 currencies in New York, and Leland Lim, co-head of macro trading for Asia ex-Japan. Deutsche Bank also reportedly terminated FX traders Diego Moraiz, Robert Wallden and Christopher Fahy, along with an FX trader in Argentina. And Citi lost Anil Prasad, its global head of FX – although Prasad’s departure wasn’t said to be related to the ongoing investigation. The UK Financial Conduct Authority has said the FX fixing allegations are at least as bad as those relating to LIBOR.

Lastly, Marketwatch has come across a former financial services professional and his wife who retired at 38 despite not having huge net worth. Aged 36, it seems  Billy and Akaisha Kaderli were working 60-80 hour weeks (he as an an investment manager, she as a restaurant manager) before they decided to retire at 38 with £310k ($500k) in the bank. They’re now 61 and have spent the past 23 years living on £18k a year and travelling the world. Their secret is extreme parsimony. They also don’t have children.

Meanwhile:

Credit Suisse reported a pre-tax loss of CHF40m in its investment bank, as revenues in its core businesses dipped, pay costs rose and litigation provisions hurt. (Financial Times)

Lazard’s profits rose 38% last year. (DealBook) 

Nomura’s hired Mike Ward, a former equity salesman at Bank of America who left for a hedge fund. (Financial News)

Bank of England regulators are facing pressure from the EU to explain why they’re allowing ‘novel forms of fixed pay’ to help sidestep the bonus cap. (Financial Times) 

Should you do an MBA or learn Mandarin? (Financial Times)

What it really takes to get a job in high frequency and algo trading. (Quantnet) 

“You have three strikes against you. How can I hire you? You are the wrong gender, wrong colour and wrong country.” (Reuters)

 

 

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