Morning Coffee: Young bankers struggle with ethics. Wall Street sweats on J.P. Morgan hiring probe

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Ethics, as we’ve pointed to before, is becoming an increasingly important part of investment banking, so much so that financial institutions have felt the need to put 10,000 new recruits through the CISI’s IntegrityMatters exam launched in April.

Most, you’ll be pleased to hear, passed, according to The Times. However, 1,100 failed to make the grade and 200 of these scored only a C,D, or E grade. This is not a trying test: “You have to work quite hard to do that badly,” Andrew Hall, the head of professional standards at the institute, said.

In case you’re wondering, this is something you have to get through, and a number of banks have said that they would consider firing anyone who repeatedly failed the exam.

Separately, investment banks will be anxiously watching how the SEC’s investigation into J.P. Morgan’s questionable hiring tactics develops. Bank of America, Citigroup, Credit Suisse , Goldman Sachs and Macquarie have all hired relatives of top Chinese officials in recent years, says Reuters.

The Chinese business culture has long been dominated by the “guanxi” system of personal connections and therefore firms have been keen to hire so-called princelings – the sons and daughters of influential officials. However, as the FT says, just because something is the cultural norm in a country, it doesn’t mean that international banks should buy into it.


Investment banks are failing to cut costs, but headcount and bonuses are not the problem – instead IT, travel and communication costs have increased by 15% (Financial News)

“If JPMorgan Chase is found to have violated the Foreign Corrupt Practices Act by hiring the children of the elite, then the entire financial services industry is probably in a heap of trouble” (Dealbook)

Male managers receive twice as much in bonuses as their female counterparts (Financial Times)

Now J.P. Morgan is under investigation for possible energy market manipulation in Japan (Telegraph)

Hedge fund manager Phil Falcone has agreed to pay $18m to settle with the SEC over “multiple acts of misconduct” (Time)

UBS has secured the services of another investment banking big-hitter (Financial News)

Iceland playing up elves and glaciers, rather than its banking industry (Bloomberg)

Happiness keeps you happy (Alphaville)

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