If you were hoping 2017 would be the year when banking revenues pick up, fueled by fixed income trading and a rush of Trump-inspired deal making, you’re probably wrong. A quick read of UBS’s latest annual report will unburden you of your optimism. UBS doesn’t think 2017 will be better than 2016: it says it will be the same, maybe worse.
Financial News notes that UBS is predicting ongoing industry-wide gloom in the preamble to its 2016 annual report. During 2017, the Swiss bank expects cost-cutting to “span all functions” of the business, revenues to remain subdued, cost pressures to stay elevated and banks to continue jettisoning existing operating models. UBS expects banks to retrench to “core markets” and to abandon “international expansion.” It also expects competition to intensify as banks each try gaining scale in the same markets. Worst – if you work in a support role – UBS’s 2016 reports repeats CEO Sergio Ermotti’s previously stated conviction that individual banks will split out their infrastructure functions into a few shared services companies which will work across the industry, implying the obliteration of thousands of contemporary back office jobs in the process. Time to get out your umbrella.
Separately, every young bankers’ idol has spoken of the moment he conceived of the business idea which would change his life. He was a 25 year-old analyst working for Morgan Stanley in London’s Canary Wharf. “Within the first five days of arriving in London, we realized we could not get food delivery,” William Shu, told the South China Morning Post, “For anyone who has lived in New York for a long time, this is something you take for granted.”
Shu is the ex-Morgan Stanley, ex-SAC Capital analyst who co-founded Deliveroo, the successful UK-based food delivery company with a valuation of around $600m and $200m of funding. In order to become an entrepreneur, he says he had to overcome the finance mentality: “In finance what you think a lot about is risk communication and hedging – especially at a hedge fund. When you are building a company, especially at the beginning you are not trying to mitigate risks otherwise you wouldn’t do anything.” You also have to make a leap of faith: “You have to really trust certain decisions that can seem really crazy sometimes.”
HSBC’s new chairman once played professional football for Wolverhampton Wanderers. (Financial Times)
John Cryan might stay on at Deutsche Bank past 2020. (Handelsblatt)
J.P. Morgan is building its ETF business outside the U.S. and has hired Byron Lake, formerly of Invesco, to help. (Financial News)
Theresa May tried to reassure Morgan Stanley about Brexit during an event at the British Museum. (Reuters)
“There are services that you have to leave in London simply because London is better at them,” said Hans-Peter Friedrich, head of the Brexit working group in Merkel’s Christian Democrat-led caucus in Berlin. (Bloomberg)
Frexit is an issue. “The Paris hub is hoping to become more competitive after the elections,” said Arnaud de Bresson, head of Europlace (the French group promoting Paris as a financial sector). (Bloomberg)
The European Union is still talking tough on post-Brexit equivalence rules. (Politico)
There’s a hedge fund event at Mar-a-Lago. (NY Times)
Ex-Deutsche fund manager with country-estate suffers “get of my land” syndrome. (Daily Mail)
Goldman Sachs is the 62nd best company to work for in the U.S. (Fortune)
The American airlines which offer the most leg room. (Busines Insider)
How to get a bottle of free champagne when you’re staying at a Marriott Hotel. (Quartz)