If your bonus is down for 2017, there’s someone you might want to blame: Markus Jooste, the South African tycoon who went AWOL after “accounting irregularities” were discovered in his empire in December 2017. In his last public statement, Jooste said, “Sorry that I have disappointed all of you and I never meant to cause any of you any harm.” He was apologizing to his 130,000 staff, but bonus-light bankers might want to partake of the contrition as well.
Jooste was the man at the helm of Steinhoff, the retail firm and Pounland owner whose collapsing share price left many banks with large losses on margin loans just as 2017 bonuses were being finalized. Citi was worst hit, with a loss of $370m. Bank of America followed with $292m. Goldman Sachs, HSBC and BNP Paribas are reportedly down $125m each. Commerzbank, Mizuho, Nomura and UBS also have wounds.
While banks haven’t explicitly cited Steinhoff as a cause of diminished bonus pools, losses this large won’t have helped. It’s all the more galling, therefore, that before he went missing Jooste was living the life of a managing director in an investment bank circa the mad-bad years of 2003 to 2006. He had a farm, a jet, a holiday house so large that it merited a separate guest entrance. He had a stable of race horses, a passion for polo, a wife and children, and a girlfriend in a white Ferrari.
Now Jooste’s whereabouts are unknown and his assets have been seized. Someone scrawled the word, “thief” on the wall of his home; it probably wasn’t a Citi banker whose bonus was disappointing, but it might easily have been.”The more money you have, the more money they want to give to you, so your access to capital becomes cheaper,” Jooste said of banks’ eagerness to fund him in 2016. Banks’ employees will hope for a little more circumspection in future.
Separately, the Financial Times’ Lex column has been thinking the unthinkable when it comes Deutsche Bank. Following Friday’s revelation that Deutsche’s investment bank made a fourth quarter loss and achieved a return on equity of less than 2%, the FT says it might be time to call it a day. The investment bank is worth next to nothing, says Lex. Closing it would save €4bn in staff costs and allow €40bn of capital to be redeployed more effectively elsewhere. Unfortunately (or fortunately), shuttering Deutsche’s investment bank won’t be cheap – RBS’s experience suggests that running down its risk weighted assets alone would entail costs of €8bn+. Even so, the FT says Deutsche may not want to put the idea to bed entirely – particularly if the investment bank continues to perform poorly as the year goes on.
Front office employees at Deutsche Bank are at a three year high. (Financial News)
Ex-Goldman trader, Karim Moussalem, is launching a new London hedge fund called Cedar Capital. (Financial News)
Lazard’s CEO is feeling all optimistic about U.S. M&A: “”I think the clarity around US tax policy removed some of the uncertainty that hindered large-cap M&A business.” (Business Insider)
Morgan Stanley’s Colm Kelleher says banking regulation has become excessive. (The Times)
A British banker who was a member of Oxford University’s Bullingdon Club and who helped bailout banks just set up a private equity fund. (Telegraph)
AI professionals consider Amazon below them: “Why would I want to work at Amazon—I’m not interested in selling people products!”. What about banks? (Wired)
UBS might ask staff to seek approval before trading cryptocurrencies in their personal accounts. (Bloomberg)
Engaged-exhausted workers are passionate about their work, but also have intensely mixed feelings about it — reporting high levels of interest, stress, and frustration. (HBR)
The case against being a techie leader. (Lcamtuf)
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