Morning Coffee: The people banks really want to hire are walking away. Goldman's pay problem

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It’s bonus season. Banks are trying hard to keep their rainmakers happy with large pay-outs, while locking them in for the long term with deferred stock.

But keeping hold of investment bankers may prove the least of their concerns this year. A more serious problem is emerging and it doesn’t involve big swingers in the front-office: just as banks are looking to hire more technologists (a quarter of Goldman employees work in tech) start-ups are managing to lure staff away from banks in ever greater numbers.

The ‘tech threat’ is no longer confined to a handful of developers moving to poorly-paid jobs at early-stage firms with tiny headcounts. Cloud platform Anaplan, for example, hired 35 people into its London engineering team in 2017 alone, and many of them came from top-tier banks such as Morgan Stanley, J.P. Morgan, Deutsche Bank, UBS and Goldman Sachs, said CEO Frank Calderoni in a Bloomberg interview.

It’s a similar story elsewhere: UK online lender MarketInvoice employs 85 people, three-quarters of whom come from a large financial or accounting firm. Its competitor LendInvest now has a 130-strong workforce and has hired 30% to 40% of them from major financial institutions.

What’s making technologists leave the big banks? The answer is two-fold. Surprisingly, the larger start-ups are now managing to match and even exceed the banks’ compensation levels. Software developers at digital lender Monzo Bank in London earn £64k on average, which is £5k more than their counterparts at UBS, according to Glassdoor figures.

Fintech bosses also say many of the recent movers are fed up with the hierarchical culture at their banks, which stymies their ability to get things done. Rolling out projects in the banks is “painful” because it takes too much time, MarketInvoice CEO Anil Stocker told Bloomberg. Techies at banks also have to battle a growing regulatory burden and much of their time is taken up with modernising ancient software systems.

Separately, a Bloomberg columnist believes that there's a painful but simple antidote to Goldman Sach's disappointing 2017 results: cut the pay of its expensive bankers, who earn more than their counterparts at other US banks. “Goldman's biggest expense is pay. Its compensation bill last year was more than 12 times its entire tech budget. If Goldman were to cut that expense by 10 percent, it would save nearly $1.2bn.”

Meanwhile:

Treat data with respect, or lose your job, says Man Group boss. (Financial News)

UBS Chairman Axel Weber says cryptocurrencies are speculative, risky and “not an investment we would advise”. (Guardian)

Lloyd Blankfein bigs up Emmanuel Macron. (Standard)

Twitter’s operating boss is set to join online lender Social Finance as chief executive. (WSJ)

Harold Ford Jr. wasn’t fired for sexual misconduct, says Morgan Stanley. (New York Times)

Christine Novakovic has been appointed head of UBS wealth management for EMEA. (Reuters)

Goldman Sachs is set to reopen in Geneva. (Bloomberg)

Credit Suisse’s former Greater China CEO, Mervyn Chow, is joining Hillhouse Capital. (Reuters)

Citi has got the green light to launch an investment banking unit in Saudi Arabia. (Business Times)

Why you should be working at J.P. Morgan’s US retail bank. (New York Post)

The future office: amoebic studio pavilions set in a tropical garden. (Guardian)

Image credit:  Noel Hendrickson, Getty

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