Some investment banks are finding it increasingly difficult to recruit the best new graduates. After the global crisis and all of the LIBOR, FX and money-laundering scandals, millennials no longer seem to view finance as the most desirable career and prefer to go for jobs at tech companies. But there are some exceptions to the rule. Michael Baldinger at UBS claims to have had so many applicants for the 20 jobs he advertised in the last nine months that the HR department complained to him about the additional workload.
So what’s the “Silicon Valley of Finance” that still has pulling power for applicants? Ethical investment, apparently. Baldinger was brought in from RobecoSam three years ago with a mission to make UBS Asset Management number one in environmental, social and governance (ESG), and he’s found no shortage of people – experienced hires as well as graduates – who want to come along for the ride.
It’s not surprising that ESG is seen as a desirable place to work at the moment. Compared to most other kinds of active asset management, it’s still growing and it’s less likely to be undercut by index funds. It also combines the intellectual interest and challenge of trying to beat an index with the emotional and spiritual pleasure of being really judgey while you’re doing it. You not only get to look down on all your less ethical, sustainable and governancing competitors, you get to look the world’s biggest CEOs in the eye and spend five minutes per quarter giving them the full Greta Thunberg treatment. And unlike a normal environmental activist, they have to sit there and listen to you respectfully while you pick up a significantly better wage than you might if you were spending all your time on protest marches.
But, perhaps for some of these reasons, it’s a competitive field at the moment, and investors seem to have a pretty limited tolerance for any suggestion that adding ethical filters to their funds might affect performance. If you think about the likely sectoral implications of adding ethics and sustainability to your investment process, what you’re effectively doing is ensuring a large underweight in energy and extractive industries and an implicit overweight in tech. Some of the time that sectoral allocation is going to outperform without much effort, but some of the time it’s going to be a drag factor that’s very difficult to overcome with stock picking.
That’s why Michael Baldinger needs to recruit young geniuses away from Google and Facebook. The ambition is to build in ESG metrics to all of their portfolios, developing a competitive advantage in understanding exactly what kinds of trade offs they might be making. They also want to push the companies themselves to improve, which might end up slightly embarrassing one day; the other “hot” recruitment field at UBS appears to be activist defence in corporate finance, where they’ve relocated Darren Novak from New York to London to grow their advisory practice in this field. It holds out the possibility of an ESG-challenged company hiring a UBS banker to protect them from activism by their UBS investors. And so the circle of banking life is complete.
Separately, “no mobile phones on the dealing floor” for bankers continues to be about as viable a policy as “no mobile phones at the dinner table” for teenagers. Regulators hate personal devices because they’re a potential conduit of inside information; managers hate them because people can use them to arrange job interviews and the like (or just waste time playing Candy Crush when they should be working). But nobody wants to be phoneless from six in the morning until market close.
Barclays is the latest firm to put out an all-hands memo on the phone policy and although it’s being described as a “crackdown”, it looks rather similar to the HSBC policy from two days ago that was thought of as a liberalisation. The new etiquette appears to be that you can have your personal phone on the desk, you can plug it in and let it charge, but you can’t touch it and if it rings you have to move off the trading floor and into a corridor, conference room or other designated “Unrestricted Area”. When you get a rash of announcements like this, it’s often the case that a regulator (in this case possibly the FCA) has given some informal guidance, so we might be able to take this as the current state of the rules on phones. This means that for the time being, the average trading floor is more lenient than the average high school.
He’s a part-time movie actor who was suggested by an advisor to the Qatari royal family who he’d defended on Libor-rigging charges. Meet Stefan Simon, Deutsche Bank’s surprisingly colourful new Head of Regulatory Affairs, and hope that there aren’t too many future occasions on which the press may wish to reprint the photo of him in 1940s military costume. (FT)
Interesting moves just below the bulge bracket in London as Rothschild take a significant, but apparently strategic, minority stake in Redburn Partners, the well-regarded research-driven equities brokerage. (Financial News)
The latest growth area in wealth management, and quite possibly a challenging one for people with too much Wall Street in them – providing tax, business and advisory services to YouTubers. (Bloomberg)
Ioannis “John” Piplis has confirmed his departure as Deutsche Bank’s head of fixed income, as a result of the reorganisation. (Financial News)
Boris Jordan made a small fortune advising on Russian privatisations at Credit Suisse – he’s now turned it into a large fortune by making an early private equity investment and financing the cannabis dispensary roll-up Curaleaf. He also has a pot-focused hedge fund that is going long US cannabis stocks versus short Canadian ones. (Bloomberg)
GOOO or GOVO? It makes all the difference if you’re a contract programmer working for Alphabet. In a “Google Owned, Google Operated” building, you get free catering and all the perks. But more and more contractors are getting moved to “Google Operated, Vendor Occupied” places where it’s “grim” refrigerated sandwiches and vending machine food. (Business Insider)
If you’re thinking about “reaching out” to one of your business heroes on LinkedIn, here’s how to maximise your chances of getting a reply (Harvard Business Review)
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