SocGen's equity derivatives professionals are hot. And the Jérôme Kerviel affair presents the perfect opportunity for them to go somewhere else.
After the roguish Kiervel lost $7.2bn for the bank and a further €2.5bn was written down on a skirmish with subprime, there are numerous reasons why SocGen just might prove a less attractive place to work. And they are -
Chairman Daniel Bouton has already volunteered to go without, but the real question is whether everyone else will suffer.
According to a trader at a rival firm in Paris they will, and bonuses will be zero. Various alternative rumours are swirling around London. "Bonus payouts are being delayed until June and will now be declared in March," says one headhunter. "They are due to declare bonuses on February 8th and there has so far been no change to that," says another. "People are being told they will be between zero and half of last year," says a senior equity derivatives trader at a rival bank.
Will write-downs and Kiervel combine to force job losses? SocGen has never been quite as nifty with its axe as other banks, making only a few hundred people redundant back in 2002 while everywhere else hacked away vigorously. Analysts say SocGen is due to unearth a rationalization plan when it announces its fourth-quarter results. "Usually that kind of thing contains an element of resource reduction," says Jean Pierre Lambert, analyst at Keefe Bruyette & Woods.
Even if SocGen's equity derivatives team end up with big bonuses that are paid on time, and none lose their jobs, can they live with the uncertainty that the following months are bound to bring? A merger with a rival bank hasn't been ruled out. According to the Guardian, the French government has already sounded out BNP Paribas and Credit Agricole to establish whether they might be interested. Nuptials with either bank would create significant overlaps, and job losses would be all but inevitable.
With most banks looking to hire opportunistically in equity derivatives this year, SocGen's stars are also likely to be presented with ample opportunity to move. "Every headhunter in town is going to be all over them like a rash," says one search consultant.
For the moment, however, headhunters say SocGen's equity derivatives pros are playing a game of wait and see. "They're toeing the corporate line and saying they've got no interest in taking headhunters' calls," says Jason Kennedy of Kennedy Associates. "However, this may change as time progresses."