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Morning Coffee: Barclays and Deutsche bonuses to fall foul of Swiss franc? Goldman Sachs’ plan for world domination

Swiss france: scratching out the bonus pools

Swiss france: scratching out the bonus pools

We’re in 2015. What happens now should not, in theory, affect the bonus pools for last year. – Any losses of hundreds of millions of dollars in January should be immaterial to bonuses that have already been allocated, but not announced. At least this is what FX traders at Barclays and Deutsche Bank need to hope.

The Wall Street Journal reports that Deutsche Bank and Citi each lost $150m last week as the Swiss franc soared against the euro. Barclays is said to have lost “tens of millions” in the same process. Citi staff should be safe – their numbers were reportedly imparted last Friday. However, FX traders at Barclays and Deutsche won’t be told how big their bonuses are for a few more weeks – giving banks plenty of time to trim them in light of recent events.

Separately,Goldman Sachs has a plan – and it may involve some hiring. During the conference call accompanying last week’s fourth quarter results, CFO Harvey Schwartz sidestepped a question about headcount and hiring with the revelation that Goldman wants to take a, “leadership role,” in creating global trading venues and processing systems. Crucial to this are, “the way things are processed, the way information is managed, the way transactions are confirmed and things are reported,” said Schwartz, seeming to suggest that Goldman’s emphasis is going to be firmly on hiring technologists and individuals with operational expertise.

Meanwhile:

Counting the companies cudgeled by the Swiss carnage. (Quartz) 

Hedge fund which had $830m of assets has been forced to close by the franc move. (Bloomberg) 

The Swiss franc is bad news for Swiss hedge funds. Brevan Howard may be one of the funds forced to move staff back to London. (Financial Times)

You can’t have an equities-style circuit breaker in FX trading because the FX market’s much more messy, with far more trading venues. (WSJ

The very large jump in the Swiss franc happened so fast that everyone tried to close out their trades at the same time. Liquidity disappeared, making it impossible to execute the trades and allowing losses to spiral upward. (WSJ)

Goldman Sachs says its losses on the Swiss franc were ‘immaterial’. (Bloomberg) 

Sanaz Zaimi, a senior managing director at Bank of America Merrill Lynch, said: “Everything the industry has tried [for increasing the number of senior women] for the last 20 years hasn’t really worked. So why not try quotas?” (Financial Times)

Goldman Sachs has an onsite nursery for up to 48 children at its London office. ““My son needed me [during the day] for feeding because he was allergic to formula milk. The people here were so helpful for the transition.” (Financial Times) 

Four good reasons why the SNB has removed the floor on the Swiss franc/euro. (Polemics) 

How to answer the question, ‘Why do you want to be a banker?’ – Last week Jamie Dimon solemnly told Maria Bartiromo on Fox Business: “JPMorgan is the best thing I can do for country and humanity.” (Financial Times). 

Morgan Stanley broker admits to eating napkins upon which he wrote illegal stock tips. (Reuters) 

How to modulate your voice during bonus negotiations. (New York Times) 

 

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