If you're a European bank trying to get ahead in 2017, North America looks like the promised land. As Dealogic's recent review of capital markets activity in the first quarter explained, the U.S. is the only place where investment banking fees have been growing. Whether the Trump stimulus happens or not, the U.S. market is untrammeled by Brexit and with U.S. rates rising, the American market offers another year of opportunities to make money in fixed income sales and trading.
European banks are rising to the occasion. Or at least some are. Deutsche Bank and Barclays are trying to seize the day.
The Financial Times reports that Deutsche is so keen to hire juniors on Wall Street that it's offering an extra $125k (£100k) just to get them through the door. Juniors on $200k can jump to Deutsche for $325k. The German bank also wants to hire 16 directors and managing directors into its U.S. business this year and has been dispatching CEO John Cryan to make monthly pep talks to U.S. employees.
Not to be outdone, Barclays is reportedly activating CEO Jes Staley to win over U.S. clients. Business Insider says Staley will call the British bank's U.S. clients at two hours' notice on a Sunday afternoon. Barclays has already made 24 "big hires" in U.S. investment banking in the past two years and is now "completely set up" says John Miller, its head of corporate and investment banking in the Americas. Miller adds that America is a "must-win" market for Barclays, which has got a plan for ranking in the top five in every product and industry group.
Of course, it's not all win-win and high pay. Most European banks are struggling to make decent returns on Wall Street and Deutsche and Barclays have had to ditch some ballast in order to float. Both banks have jettisoned clients who aren't sufficiently large or profitable. Deutsche has also parted company with senior bankers in the U.S., most notably Jeff Urwin and Bill Woodley. And if the German bank is paying big money to attract juniors, it's also worth bearing in mind that this is probably because Deutsche has recently developed a reputation for paying incredibly bad bonuses to the vast majority of its staff.
Separately, Bloomberg has spoken to someone who points out the unavoidable weakness of trading strategies based on artificial intelligence (AI). Simply, what happens when there's no relevant data? “While deep learning techniques can work very well using millions, if not billions, of data points in currency and commodity markets that are correlated with each other, it is challenging to build a good model using only a thousand data points of single-stock daily data,” says Hitoshi Harada, co-founder of Alpaca, a startup that sells deep learning trading platforms to banks. Harada cites stocks that have been listed for less than one year as an example. Human traders and analysts will always be needed somewhere.
Donald Trump owes Deutsche Bank $300m. If he doesn't pay it back, Deutsche could seize his assets. Then again, it's under investigation by the U.S. government for spiriting $10bn out of Russia. (Bloomberg)
Investment banks are quietly involved in something called "Project Scalpel" which aims to cut billions from operational costs by creating a joint venture. (WSJ)
London is still the world's top financial city. European rivals Frankfurt and Dublin rank 23rd and 33rd respectively. (Bloomberg)
Bill Gross, billionaire, gets another $81m for his claim that Pimco ousted him unfairly. (Financial Times)
30 things I wish I knew when I was 20. (DariusForoux)
Cupboard inspections by an executive dietitian will cure your angst. (Bloomberg)
Girly with pony tail to inhibit bull for further 11 months. (NY Daily News)
Woody Sherwood, ping pong philanthropist. (Financial News)