Everyone knows that life as a junior in an investment banking division (IBD) can be harsh, but is your youth spent any more productively as an analyst or associate on a trading floor?
As a trading analyst, you might think you’ll spend your time updating financial models and performing regression analyses, but you may be disappointed. Bloomberg sketches the existence of an archetypal “desk bitch” and it’s a lot more to do with servitude than securities. You’ll be expected to, “run errands,” fetch breakfast, and load Jay Z tracks onto your boss’s iPod. You’ll also be expected to uncomplainingly stay on the floor when everyone else has gone, making sure the day’s trades have been properly documented.
Of course, the advantage of working in trading over IBD is that if you’re good you can progress very quickly indeed. The “desk bitch” Bloomberg refers to is Tim Wiswell, who went on to become head of Russian equities for Deutsche Bank in 2008 aged just 29. As a young man, Wiswell made a lot of money, but he’s also accused of going seriously off the rails. Bloomberg says it’s thanks to Wiswell that Deutsche’s Russian trading floor, which once employed 200 people and made $500m a year in revenues, is now dark. It’s also thanks to Wiswell that Deutsche’s entire investment bank in Russia is all but closed.
For those unfamiliar with Wiswell’s rise and fall, he’s accused of laundering around $10bn for Deutsche’s Russian clients through a series of so-called “mirror trades” in which Russian clients used accounts with Deutsche in Russia and Deutsche in the UK to sell Russian stocks and convert rubles into Western currencies. Circa 2009, Bloomberg says Wiswell and his Moscow-based counterparts were, “making double or even triple” what their peers were making in London and New York and were, “living like [debauched] rock stars.”
Now, though Wiswell has lost his job at Deutsche and been unsuccessful in his attempt at claiming compensation. Aged 37, Bloomberg says he’s, “hunkered down on a surfer’s beach in Indonesia.” That might not sound so bad, but with two young children it may also not be ideal. Wiswell is an extreme case, but he underscores the problem with some trading careers: they begin with mundanity, shine brightly, and end prematurely when you fly into the flame.
Separately, Theresa May is not like David Cameron. While Cameron was sympathetic to banks, Bloomberg says May is not. She will not accept what banks at face value and she will get annoyed if banks threaten to move jobs out of the UK after Brexit, Oh, and she won’t be granting any special concessions to banks during Brexit negotiations – or giving them the five years’ breathing space J.P. Morgan says are necessary to avoid “pandemonium.” Right then.
Banks’ Brexit lobbying has been confused: “Every bank seems to feel they are uniquely entitled to speak for the industry.” (Reuters)
The new merged fund management group, ‘Henderson Janus’ is to have its headquarters in London in a signal that the City remains at the heart of the world’s financial system. (Guardian)
At Henderson Janus, Bill Gross wants to, “create a monster fixed income franchise again… having the greater distribution reach this business provides in his eyes is manna from heaven for him.” (Financial News)
“The Brexit debate will be seen as a drop in the ocean in the timeline of our business,” says Andrew Formica, the (Australian) chief executive of Henderson. (Guardian)
How much staff or capital would a bank really want to allocate to a place like Luxembourg or Dublin before Brexit is done and dusted? Probably as little as possible. (Bloomberg)
While big hedge funds threaten to withdraw prime brokerage business from Deutsche, small hedge funds can’t find anyone to service them. (CNBC)
German economic minister: “I didn’t know whether I should laugh or be furious that a bank which turned speculation into a business model now declares itself the victim of speculators. I’m really worried about the people employed at Deutsche Bank.” (Financial Times)
Deutsche was the highest-valued bank in Europe, worth the combined totals of Santander of Spain, Société Générale of France, and the UK’s Lloyds and Midland Bank (now HSBC). Each of this foursome is valued today on average at thrice the size of now-humbled Deutsche. (Financial Times)
The two global banks with the largest derivatives exposures are J.P. Morgan and Deutsche Bank. The derivatives exposure of J.P. Morgan is around $70,000 billion and of Deutsche Bank €55,000 billion. These figures are, respectively, about one-and-a-half times the total value of all the assets in the USA, and twenty times German national income. (John Kay)
Prizes for illicit cross-selling at Morgan Stanley: The incentives were: $1,000 for 10 loans, $3,000 for 20 loans, and $5,000 for 30 loans. (Reuters)
While European banks flounder, US banks are doing fine: Every big US bank is now ahead of the minimum capital levels required by 2019 under the Basel III standards. (Financial Times)