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Morning Coffee: HSBC shines harsh light on fanciful post-Brexit banking fantasy. Barclays’ trader’s dog troubles

Brexit pills

Heard of reverse solicitation? It’s a subject close to the hearts of Britain’s pro-Brexit politicians and is one reason for their claims that the City of London will be untroubled by the loss of its passporting rights after Brexit.

Reverse solicitation works on the principle of, “It wasn’t me.” The basic notion is that so long as a client in Europe rather than a bank in London instigates a cross-border transaction, it will be able to go ahead irrespective of the post-Brexit regulatory landscape. Brexit-backing MP Jacob Rees Mogg referred to the ploy during a parliamentary hearing in January and Financial News says HSBC was asked to investigate its viability.

HSBC’s investigation is now done and the bad news for anyone hoping to play the reverse solicitation card is that it won’t work. It’s too vague. And it asks banks to go out on a regulatory limb.

Most modern banking businesses are “relationship based,” says HSBC. Transactions take place in the context of ongoing client relationships and establishing which party instigated each individual transaction is impossible.  “The critical determinant of applicability – who said what to whom when – is extremely difficult to identify, and even harder to record in a fashion which would definitively satisfy investigating authorities,” HSBC adds, before concluding that, “For a firm to organise its business in this way would require that firm’s board to be prepared to accept a high level of compliance and regulatory enforcement risk. Categorically this is not the stance of the larger London-based institutions.” Back to the drawing board then.

Separately, a London trader at Barclays is having dog issues. Florian Kuehn, a rates trader at Barclays, is in court over his wife’s attachment to their terrier, Vinnie. Dogs aren’t allowed in the Kuehns’ Limehouse flat, but the Kuehns claim to have negotiated an exception allowing Vinnie (described by his wife as a therapeutic dog to alleviate stress) to inhabit the premises with them. Now the neighbours are complaining about late night barking, growing and whining and Vinnie might have to go. The Kuehns are fighting their corner in a case which may cost them £50k ($62k). It’s bonus time soon at Barclays; hopefully rates traders had a good year.

Meanwhile:

There are now 363 people earning more than €1m at HSBC. A year ago there were 453. (Bloomberg) 

Citi is inclined to move hundreds of jobs out of London and into Frankfurt. (Reuters) 

Jes Staley himself is leading roadshows for the Snap IPO. (Bloomberg) 

Senior bankers are being ejected from SocGen in Paris. (Bloomberg) 

Goldman stock is at a record high, Again. (CNBC) 

Returnship scheme enables a former Merrill Lynch equities broker with six children to return to work 14 years later as a conference organizer and charity ambassador. (Financial Times) 

How UBS is trying to be cool and reach Millennials. (Campaign Live) 

People keep leaving banking to become gamblers. (Gaming Intelligence) 


Contact: sbutcher@efinancialcareers.com

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