So, Sajid Javid, the former head of credit trading at Deutsche Bank is the UK’s new home secretary. The Exeter University graduate has come a long way since structuring CDOs at DB in 2006. He’s also come along way since growing up the son of a bus driver from Rochdale.
How much did Javid make in banking? When he became an MP in 2009, the Evening Standard said Javid took a 98% pay cut.
With MPs on salaries of £67k, the implication is that Javid was earning around £3.4m a year when he left Deutsche Bank, where he was a managing director with responsibility for global credit trading in Asia ex-Japan, based in Singapore. In 2014, the Daily Mail estimated that Javid was earning £3m a year 'at the height of his career' and accused him of channeling some of this through a tax haven.
Some credit headhunters said this sounded high. “Our 2006 pay survey found that structuring MDs at tier 1 houses were earning salaries of £130k with bonuses of £1.5m- £2m. If Javid moved to Singapore he would have received an additional ex-pat package of around £200k, making a total of £2.3m [$3.6m],” said the head of one credit search firm.
Javid spent 18 years in banking after starting in the industry in 1991. Although he's unlikely to have made seven figures during his early years, it's probable that he made seven figure sums annually from 2000 onwards.
While Javid’s past compensation is unlikely to recommend him to the UK public, former Deutsche Bank colleagues have suggested he was worth it.
In 2015, a former colleague at Chase in NYC told the Guardian that Javid was introduced to him as, “Off the charts good.” The man was: “Like a priest in a suit…disciplined as they come. – Very methodical, spotless,” he added.
Another ex-Chase colleague gushed that Javid was: “very creative, very energetic, and a very likable guy”. He was driven, but not “aggressively ambitious.” A US-based economist says Javid was just, “very, very clever.” At Deutsche, Javid was deemed good at, “crisis situations,” an “avoider of conflict,” “an internal thinker,” and someone who could negotiate Deutsche’s, “political waters.”
Javid will need all these skills as he replaced former U.K. home secretary Amber Rudd and tries to fix the UK’s Windrush immigration scandal.
Sajid Javid and the financial crisis
Meanwhile, although Javid's former boss Rajeev Misra told the Guardian Javid had absolutely nothing to do with collateralized debt obligations (CDOs) while he was at bank in Asia, suspicions remain that Javid was working on the controversial products behind the financial crisis during the six years he spent at Deutsche Bank in London.
One former colleague told Euromoney he was astonished at how Javid was, "spinning his former career” as a sober investment banker when he was in fact a structured credit trader at the heart of the business that precipitated the financial crisis.
IFR reported last week that Deutsche still has €60bn of toxic securities on its balance sheet, of which €20bn are credit positions. Those who created the problem have long since left the bank. "All the P&L was taken upfront and bonuses paid on it,” one ex Deutsche board member told the publication.
In 2015, Javid slammed 'banker bashing' at a private dinner in the City of London. “I don’t see ‘parasites’, I don’t a see problem that needs solving,” he told attendees. " - I see talented, hard-working, dedicated men and women at the top of their game." People who work in banking are, "good people, hard-working people who have made a lot of money for this country and paid a lot of money in taxes,” Javid added.
Btw, here is Sajid Javid in August 2006 talking about emerging-market credit derivatives pic.twitter.com/Sn0dCx6DoN
— Sid Verma (@_SidVerma) April 30, 2018