Morning Coffee: The 40 year-old M&A banker who generated $50m in fees in four months, and the trader-manager who spent too long in the air

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Morning Coffee:  The 40 year-old M&A banker who generated $50m in fees in four months, and the trader-manager who spent too long in the air

Bernard Mourad is a rainmaker. Not just any rainmaker, but the sort with an ability to bring about a deluge at the bank which houses him.

Now aged 44, Mourad is head of investment banking in France for Bank of America.  But a couple of jobs ago, he had a particularly wet patch at Morgan Stanley. Mourad is currently in court, where his lawyer is reportedly arguing that “in a four month period in 2015, Mourad generated $50m in fees” for the U.S. bank.  Impressive, even for Mourad.

The matter is clouded, however, by the fact that Mourad resigned from Morgan Stanley in February of 2015, suggesting that those fees came in after he left. It seems likely they were a hangover from the $100m of fees Mourad generated in 2014 through his relationship with the TMT entrepreneur Patrick Drahi and Drahi’s purchase of French mobile company SFR. 

Mourad presumably quit Morgan Stanley after collecting his 2014 cash bonus. He left to join Drahi in the company that is currently named Altice.  Not a particularly unusual move, but the deferred compensation consequences have just set a very interesting precedent in a French court.

The Morgan Stanley deferral scheme was not particularly unusual.  Some of the compensation Mourad earned between 2012 and 2014 was paid out on a multi-year vesting schedule.  Morgan Stanley argued that the purpose of the scheme was clear to all – you had to stay in employment at MS in order to collect it.  In this case, Mourad had the equivalent of €1.2m to lose.

But … schemes of this sort are not necessarily legal under French employment law, unless the employee has explicitly agreed to them (according to Mourad’slawyer at the start of the case, “it’s like saying that your salary for July will only be paid if you’re still working for the company four years later”).  Mourad said he hadn’t. His case in the French labour courts rested on the claim that he had never signed anything, electronically or otherwise, to agree to have his pay deferred or to have his terms of employment governed by New York, London or any other than French law.

The French courts seem to have been sympathetic.  Full details of the ruling won’t be available for a few weeks, but yesterday Mourad was awarded the full amount of the €1.2m, plus another €250k for a separate bonus.

Morgan Stanley will presumably appeal, but his case is a reminder to banks that deep-pocketed star members of staff can challenge accepted norms. Moreover, if Mourad’s argument is upheld, the dynamic in the French market is likely to change just as Brexit dictates that more staff move there. Senior bankers are likely to flock to Paris, if they can get to keep their deferred bonuses when they switch jobs there.

Elsewhere, a different example of how important things can slip between the cracks.  In the aftermath of the conviction of Deutsche Bank’s Euribor trader Christian Bittar for quote-rigging, some senior management figures at DB are being brought into the net and charged with conspiracy.  Andreas Hauschild’s defence is that he never made Euribor submissions himself, and although he knew that Bittar was speaking to the submitters that Hauschild managed, he wasn’t privy to the conversations himself because he was hardly ever at his desk and spent most of his time stuck on a plane.

As a defence, it might raise some eyebrows, but it’s got a horrible ring of plausibility to it.  As you climb up the ladder, if you’re not careful, you spend less time on revenue generating activities and more on endless management meetings.  There’s no limit to the amount of cross-bank initiatives, standing committees and task forces that a top-heavy investment bank management structure can proliferate.  The added overhead of international travel tends to create a “death spiral” of meetings – if you’ve flown from Frankfurt to London just to attend a meeting, you’re likely to end up joining a few more committees while you’re there just to justify the trip.  So take Mr Hauschild as a terrible warning of the pitfalls in store for a trader joining the management track – the whole franchise can end up in the worst possible trouble if the boss isn’t minding the shop because he’s always on a plane to another meeting.

Meanwhile …

Comparing surprisingly strongly with banking, the parent company of Uniqlo is considering introducing a new fast-track for graduate entrants which could have them earning the equivalent of $280,000 after three years (Bloomberg)

“How do you know that your banker will still be at the firm in six months’ time?”  In a development almost as surprising as “sharks eat wounded tuna”, competitors are visiting Deutsche Bank’s corporate clients and playing on fears of staff turnover to win business (Financial News)

The joys of Rotterdam, and in general of business travel’s tendency to take you to places that you’d never otherwise visit (the sculpture park in Des Moines, Iowa, is a particular favourite of mine) (FT)

Barclays retains a top five position in its own home market, but other than that, it’s all U.S. firms in the UK investment banking revenue table. (Financial News)

Vontobel’s CEO regards the Swiss bank’s notoriously high wages as “a hygiene factor”.  Apparently people shouldn’t want to work there just for the money, but “we wanted to say […] we pay well. (Finews)

The City of London Corporation will be flying rainbow flags from Tower Bridge and the Guildhall to celebrate Pride (Financial News)

Uncertainty about the future government of the UK and a desire not to tie the next Prime Minister’s hands mean that the selection process for thebest/worst job in banking, Governor of the Bank of England, is still open (FT)

Some hedge fund managers support the Robin Hood Foundation, some the Ira Sohn.  Others plough a different furrow, and direct their charitable contributions to the largest anti-vaccination group in the USA (Vanity Fair)

And the stuff of nightmares – after falling asleep on a flight from Quebec to Toronto, Tiffani Adams was somehow missed by the staff and ended up spending the night in a dark, freezing parked aircraft. (BBC)

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