The challenges of the investment banking industry rarely change; what changes are the ways in which successive generations of bankers deal with them. For example, getting clients to read your morning comments. Once upon a time, the way that one did this was by putting racing tips, restaurant reviews and dirty jokes at the end. These days, in a significantly different world, Bilal Hafeez of Nomura has chosen a rather different approach. Hafeez is supplementing his regular forex research with a personal newsletter packed with life hacks and vitamin recommendations. If you can get someone to open your emails (or once upon a time, pick up your faxes from the machine), there’s a reasonable chance that one day they’ll call you back and ask “what are you thinking about the dollar?”
It’s not just marketing material, however. Mr. Hafeez certainly walks the talk when it comes to his lifestyle tips. As well as being teetotal, he takes supplements of Lion’s Mane brain-boosting mushrooms and Cordyceps caterpillar fungus. He has a freezing cold shower every morning, during which he takes notes of his best ideas in a waterproof notebook. He won’t check his phone until he’s written his overnight thoughts down and does a workout consisting of one push-up and one sit-up, that being such a low number that he will never forget.
Possibly more relevantly to productivity in the market, he has also taken on board some serious time management tips from the modern self-help gurus. He only checks email three times a day and has some ferocious tactics (demanding minutes, agendas and accountability) for incentivising people not to invite him to superfluous meetings. The particular tips don’t seem particularly out of the ordinary – most of them are pretty widespread in the culture of people who seem to work twelve hour days marketing their books about working a four hour week – but it’s useful client service to edit out the ones that are relevant to a modern financial markets lifestyle.
Hafeez is the poster-child for a new generation. Knowing your way around a menu and being able to keep a clear head after three bottles of red are not exactly irrelevant skills in the modern markets, but they’re no longer mandatory. Today's trading desk is home more to triathletes, vegans and yoga practitioners than to hedonists, and the competitive instinct is channelled into sport and physical optimisation rather than poker and cars. Banks love it. - Ultra-marathons tend to lead to substantially fewer late-night personnel problems than wine-tastings and brain boosting mushrooms sound a lot less noxious than the powders and potions of the past.
Elsewhere, headline writers are having fun with averages; women at Goldman Sachs in London earn, on average, only fifty cents for every dollar earned by the men. Or, if you’re a bit more scrupulous about measures which are bound to be heavily distorted by a small number of very high earners, the median hourly wage for female Goldmanites is 35.8% lower than the men while the median bonus is 68.9% lower. This sounds bad but is actually an improvement on last year; the median hourly wage gap has narrowed by a percentage point and although the bonus gap is unchanged, the fact that bonuses were lower overall meant that the average compensation gap narrowed quite a bit; last year it was six percentage points wider.
Of course, the broad averages are also misleading because there’s no such thing as an average bonus or an average employee. In fact, on a cohort-by-cohort basis, according to Richard Gnodde, Goldman has relatively equal outcomes. The big male/female wage gap is entirely a result of the underrepresentation of women in the highest ranks, combined with the golf-tournament-like reward distribution common to investment banking. The government regulations which require the publication of these statistics for all UK employers require this averaging-out, but it’s clear that, although the average figures tell you that something’s up with gender equality at Goldman Sachs, it’s not necessarily contradicting Mr Gnodde’s rebuttal that “we set compensation by merit, not by gender or any other factor”.
Dropping the Merrill Lynch, but Bank of America still has top three ambitions in all its business lines and Matthew Koder has apparently been given the authority to hire 70 senior bankers in order to get the investment banking franchise up to the top (Financial News)
After the scandal at Citi in Hong Kong, a team of eight sales traders had to be moved quickly in order to fill the gap left by employees who have been fired after the investigation into whether they had disclosed to clients that they were acting as principals rather than agency brokers (Bloomberg)
Credit Suisse has handed out a lot fewer guaranteed bonus packages for this year. This usually means a bank is recruiting laterally a lot less. It sounds like a bad thing, but actually it’s generally better for employees; there’s nothing worse for morale when the pool is squeezed than to realise that a large proportion of it has already been promised away, leaving the non-guaranteed staff bearing all the downside. (Financial News)
JP Morgan is requiring as many as 300 staff to sign contracts committing them to relocate in the event of a no-deal Brexit (Bloomberg)
Of course, the flip-side of issues like Goldman Sachs’ pay differential is that if women are going to be promoted into the high-earning revenue-generating ranks, there has to be some mechanism for men to get a foothold in traditionally female strongholds like Human Resources (Financial News)
Deutsche ring the changes in their European wealth management unit, moving Tuan Huynh from Singapore to replace Stefan Junod (Finews)
The cultural problems at the FCA are underlined by new figures showing that regulatory staff there take an extraordinary number of sick days (Financial News)
A hairy-looking lawsuit involving a hedge fund manager nicknamed “Captain Magic”, a billionaire’s family office, an artificial intelligence trading system the performance of which is disputed and a bunch of fees, which are also disputed. (Bloomberg)
Former McKinsey partner, GS board member and insider dealing convict Rajat Gupta has a bone to pick with Lloyd Blankfein. Since that bone appears to be that Lloyd should have said “I don’t remember” rather than “yes, we did discuss confidential earnings data at board meetings”, he may not find much sympathy (FT)
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