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Morning Coffee: The other disaster unfolding at Deutsche Bank. 35 year-old ex-broker’s harsh advice

Deutsche Bank shares bonuses

That smile may have been premature

Simon Adamson, banking analyst and CEO at independent research firm Creditsights, has a lot to answer for. Adamson, who perversely was once head of European credit research at Deutsche Bank, issued a note yesterday that questioned Deutsche’s ability to pay coupons on its riskiest CoCo bonds in 2017. Adamson’s note seems to have contributed to a nearly 10% fall in Deutsche’s stock in the past 24 hours.

As the Financial Times helpfully points out, Deutsche’s stock is at it’s lowest level since 1999. It’s down 39% since the start of 2016, and 88% from its high of May 2007.

This would be painful at any bank, but as you may already know – it’s worse at Deutsche. Since 2012, the German bank has forced its most senior managing directors to wait a full five years before they can even get a sniff at their bonuses. While bankers at other firms might be able to cash out of some of their employer’s falling stock before the rout, Deutsche’s MDs are therefore powerless to do anything but watch as the bank’s shares – and their deferred bonuses, collapse in value.

Things might improve. Deutsche has insisted that it does have the cash to pay Adamson’s disputed coupons. However, the cost of credit default swaps on Deutsche’s five year senior debt jumped to an eighteen month high yesterday, implying a 16.5% probability of default. Deutsche’s senior bankers need to hope the market is wrong. Adamson himself is in the clear – he left Deutsche in 2003, well before the bank’s incredibly long deferrals were phased in.

Separately, Charlie Stenger, a currency-broker-turned-recruiter, who works for search firm Sheffield Haworth in Chicago, has some blunt things to say to anyone concerned about the durability of their job in finance. Firstly: you need to start saving money now. -Stenger lost his job at ICAP and says it’s a whole new world when you’re not employed. “There were periods where I wouldn’t make money for 90 days at a time,” he tells Bloomberg, “and the insurance bill was still due every month, and the rent and the car payments.” Secondly, you need to dispense with the idea that you’ll find a new job paying the same as your last one. “Your stock goes down once you lose your job, and that’s just the nature of the beast,” says Stenger: plan for a 25% reduction in pay.

Meanwhile:

Barclays shares were suspended amidst volatility yesterday. When trading resumed they fell 5.3%. (Reuters)

Remember when banks paid an average of $395k per head? Not any more. (New Financial) 

From 2009 to 2014 CEO pay at Credit Suisse halved, as did pre-tax profits. (Financial Times)

54 year-old head of M&A dies of a heart attack. (NY Times) 

You will soon use your own phone at work. “The line is getting more blurry between work and personal.” (Financial News) 

Humans breathe “restorative sighs” about once every five minutes, often without noticing. (WSJ)

Commuter horror in the City of London. (Evening Standard)

New way of avoiding jet lag. (Medical Express) 

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