What goes on in the New York offices of European investment banks? Are they iniquitous pits populated by the unscrupulous and the incompetent? Maybe not. But it’s a question worth asking in light of all the recent issues to pop out of them.
Deutsche Bank is the latest to fall foul of the curse of U.S. incompetence. As we pointed out earlier today, the bank has had problems with its U.S. regulatory reporting process since 2002. It’s been aggressively trying to sort out its U.S. regulatory reporting problems since 2010. It hasn’t gotten anywhere, and suddenly its whole strategy is jeopardized.
How too about Barclays? Now that it’s cutting back on fixed income sales and trading, the British bank was sort of relying on its equities sales and trading business for future revenue growth. Suddenly that looks like wishful thinking. Thanks to the badness of some of the New York-based bankers propagating its U.S. dark pool, one banking analyst says Barclays’ whole equities strategy is at risk. Barclays’ bankers everywhere have reason to curse their New York brethren.
And then there’s BNP Paribas, which is rumoured to have put all of its fixed income hiring on hold everywhere following the gigantic fine levied against its U.S. office.
What’s going on? Are European banks unable to tame animal-spirited American employees? Is the Atlantic too wide? Are European houses so desperate to hire U.S. bankers that they’ll recruit just about anyone (why else did Barclays recruit a dark pool executive who’d recently been ditched by Goldman Sachs for issues similar to those which drained its own body of water)? We suspect all are a bit true. However, it’s also worth pointing out that U.S. banks sometimes have the same problem – when Goldman defector Greg Smith issued his tell-all book a few years ago, he claimed Goldman’s London office was a bit unruly, too.