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Late Lunchtime Links: Why people may be trying to leave all French investment banks

La defense

Anecdotally, we hear that persons working in French banks are keen to get out. “In the French banks, everyone thinks they’re not going to get paid,” says the head of one fixed income search firm. “They all want to get out, especially from SocGen.”

This may be true, or it may be exaggeration. However, what seems certain is that French banks will not be a happy place to be in the event that Francois Hollande wins the French presidential election in May. Right now, this looks quite likely.

Hollande has manifested himself today, calling for a cut in the retirement wage, an increase in taxes on the rich, “more fairness” and a “reining in of the financial industry.”

He’s also said he will seek to force banks to separate off some of their operations, pay more taxes in profits, tax financial transactions, ban stock options and that he will back the creation of a European ratings service.

Coincidentally, Credit Agricole has said it wants to get out of commodity and equity derivatives. 

Meanwhile, at Davos:

Angela Merkel said that the failure to fully endorse the financial transaction tax (FTT) was one of the key areas where European efforts to stem the crisis were “insufficient.” (Telegraph)

Christian Meissner: “The first three weeks of this year have been much better than the final quarter of 2011, so that’s good news” (Bloomberg) 

Anshu Jain: Investment banks face “powerful consolidation” that may help offset the effect of stricter capital rules on profits. (Bloomberg)

Anshu Jain: “We have not seen a significant diminution of talent in the industry, I would dare say, and certainly not at Deutsche Bank. We’re committed to paying competitively for the best talent.”  (Bloomberg)

Anshu Jain again: 2012 is starting “on a mildly better note” than 2011 ended. A lot of bad news is already “priced in.”  (Bloomberg)

Anshu Jain again again: Deutsche has been a “big winner” in gaining market share from competitors.  (Bloomberg)

Bob Diamond: We risk the Balkanization of international banking; and Barclays has considered “all scenarios” on whether to maintain the universal model or break the bank up.  (Bloomberg)

Vikram Pandit: Citigroup remains committed to businesses including equities, though it will resize those units to what clients need. (Bloomberg)

Jacob Frenkel, chairman of JPMorgan Chase International: there is an excessive focus on taxing the rich.  (Bloomberg)

Meanwhile, in London:

The bonus for Hester of approximately 3m shares (about half his entitlement) will equate to between £800,000 and £950,000 at yesterday’s closing share price. It will be paid entirely in RBS stock and will be deferred for three years. (Sky) 

“If you think of one person who deserves a million quid it’s Hester. (The Sun) 

The focus on Hester is all wrong: it’s Hourican who should drop his £5.6m bonus. (Telegraph) 

“RBS has been one of the best performing European banks this year (up c.40% y-t-d), adding c.£8bn of market value and thus £6.5bn to the taxpayers’ investment. In our view, a key catalyst for this has been action to address under-performance within the investment bank.” (Guardian)

Cenkos Securities, rumoured to have been checking out RBS, actually wants to merge with Panmure Gordon. (The Times)

HSBC wants to hire “50 international commercial managers” as it hits it lending targets under Merlin. (Bloomberg) 

Elsewhere:

Michel Barnier says Basel III ratios are currently ‘under negotiation’  (Bloomberg) 

Train to be a trader for £20. (Groupon) 

BofA is paying 75% of the ‘cash portion’ of bonuses over $100k in its shares, which hare immediately vested. The remaining 25% is real cash. (WSJ) 

Most people I know in banking view owning any of your company’s shares for more than one minute after they become transferable as definitive proof of financial illiteracy. (Dealbreaker)

Yesterday. Just decided. Just like that. ‘Oh, what shall we do today? I know, let’s fine Einhorn £7.2 million. We need some new carpets.’ Absolutely outrageous! (MoneyistheWay)

On Wall Street, insider information is generally deemed to be news leaked or used in breach of a duty to keep quiet. In the UK it is, more broadly, price-moving information that only a few have access to. (Financial Times) 

Comments (1)

Comments
  1. French banks are very simple to understand. Take as an example BNP Paribas: (1) massive peripheral offices, where reducing headcount ranges between the expensive and the impossible, (2) a strong and almost impenetrable French inner circle that prefers to hire, promote or protect its own kind and (3) a pyramidal power structure where most of the money, influence and decisions sit with management within the inner circle but most of the risks lie at the very bottom of the pyramid, (4) a balance sheet that is simply not available to the innovators but only for traditional banking business. I could be describing a postal office or an old fashioned patriarchal corporation. The very best employees are sitting in London and still the bank finds it acceptable to leave peripheral offices virtually untouched by the cuts. How many people have been let go in Paris or Milan? How many employees did receive a doughnut bonus in the past couple of years because the money had been spent to finance the New York office hiring spree? Should it not be the shareholder that pays for the expansion of business in any industry? You simply cannot make your own fortune there. But there is nothing new in what I am saying. What is new is that the industry is contracting and if you are stuck, you will be in the freezer for a very long time.

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