Goldman Sachs is getting mean about use of the company expense account. So says Bloomberg, which reported on Friday that Goldman is 'increasingly rejecting bankers’ spending on airfare, hotels and entertainment unless it directly serves clients.' Bloomberg said the cuts are part of Goldman's "biggest cost-cutting push in years," as it attempts to extract an additional $1bn from the bottom line.
Sounds mean - especially if you've just got back from a transatlantic peregrination which you'd assumed would be fully subsidized and so completely free. However, Goldman is simply following where other banks have already been. J.P. Morgan sacked two bankers for the misuse of 'client-related expenses' fourteen months ago. Barclays sacked several of its bankers for attempting to pass of an extravagant meal as client expenses in 2002 and banned its staff from "giving or receiving" entertainment to brokers two years ago.
Curtailed use of expense accounts is in keeping with finance culture. While Silicon Valley-type technology firms have made work-perks a source of competitive advantage, banks like Goldman have long made a virtue of keeping them to a minimum. Google provides its employees with free food throughout the day, but Goldman will only give you a Seamless order if you work late. The free fruit at Goldman was scrapped over a decade ago and while the firm offers free coffee, it won't be made by a Google-style barista. Goldman Sachs might be utilitarian, but (in London), it still has a cafe, a dry cleaner, and a windowless gym. Most importantly, it still pays an average of $345k a year globally - or $400k if you have the good fortune to be working in Fleet Street.
Separately, a former banker has taken to Reddit to explain why it is that after working in the industry for many years, you might have little to show for it. Firstly, he says you need to spend your money to let off steam. Secondly, you need to, 'spend money getting in with the 'banker social circles that are a necessary way to network and get promoted.' Thirdly, you need to, 'look sharp to get ahead.' Anthropological journalist Joris Luyendijk. discovered much the same thing when he interviewed bankers for a book a few years ago. “I spoke to senior bankers who said it was important to project success in the way they lived. They needed to signal their intention to go all the way and that meant sending their children to private schools, living in the right areas, wearing the right kind of expensive watches,” he told us.
Goldman Sachs will also be practising the art of "choosing not to fill open positions." (Bloomberg)
Core operating” revenues at Citi’s “Institutional Clients Group”–that is, it’s investment bank–fell by 1%. Expenses rose by 5%. (WSJ)
It makes it much easier for any single bank to slash costs and headcount when everyone's at it. (Gadfly)
Various banks have banned staff from buying shots for clients. (Gawker)
Steve Cohen has got a new hedge fund. It's called Stamford Harbor Capital. (Fortune)
Aviva Investors has cut around 20 staff from its fixed income, real estate and infrastructure teams. (Financial News)
Remember, Brian Moynihan thinks IBD could bounce-back: "If we continue to see the stability, you'll see it come through ... But there's still a few more weeks of stability that you have to see for people to actually pull the trigger on financings." (Business Insider)
Anthony Whittemore, Deutsche's US co-head of M&A, resigned. (Reuters)
Cinema chain Vue and the owner of Britain’s TV masts are plotting blockbuster market floats - next year. (Sunday Times)
Stuart Gulliver will be leaving HSBC in two years. (Sunday Times)
Deutsche's new global head of compliance comes from Citi and will be based in London. (Reuters)
It’s time for financial data specialists to be thinking about nano satellite data. (Quandl)
Hedge funds will want machine learning professionals. (Financial Times)
Start-up name generator. (Tiffzhang)