One in, five out; that’s certainly one way to slow down headcount growth. UBS has apparently communicated an informal policy to its wealth management back office to the effect that they can only hire a new person if they can demonstrate that five are leaving. It’s partly a response to the extremely tough Q1 revenue environment, and partly a way of implementing already announced cost control targets.
On the face of it, this seems like a slightly horrific policy – one gets a dystopian vision of showing up for your first day of work, and seeing a row of empty workstations either side of your chair, which you’re expected to operate as well as your own. Or having to do a walk of shame across the trading floor, under the glowering looks of all the friends of the five people who were sacked in order to bring you in.
The reality might not be quite as bad; wealth management back office has been investing a lot in automation over the last two years, and it’s quite likely that hiring managers will be given “credit” for jobs that they were getting rid of anyway. In February, UBS announced that it was launching 500 “robots” to turn its employees into “superhumans”, and once you look through the fanciful language, this means that it’s carrying out significant process improvements which will, indeed, potentially allow one employee to manage business functions which previously needed a team.
It gets harder to maintain the optimistic view, though, when you hear that a similar policy has been brought in for client-facing employees, albeit with a two-to-one rather than five-to-one ratio. Even with the best relationship management software in the world, there are only so many hours in the day. The arithmetic of client contact is simple - if you get rid of two customer-facing employees and recruit one, the customers are going to have be faced a little bit less often, which has implications for revenue.
And bringing in new hires in an overall environment of job cuts is a lot more difficult to manage in terms of the interpersonal awkwardness when it happens in the front office. There’s not so much scope for process improvement and automation to conceal the link between the redundancies and the hiring. The people brought in will be serving the same clients and covering the same sectors as the departed, and both clients and colleagues will notice.
It’s not clear how much of the bank is to be covered by these informal policies. Presumably, UBS won’t be subjecting the high-rolling Asian private bankers who are the lynchpin of its profitability to any five-out-one-in policies. But across the rest of the bank, this looks uncomfortably as if another big player has fallen victim to the biggest fallacy in financial markets – the belief that you can grow a franchise by cutting it.
Elsewhere in the world, people are beginning to notice that although Goldman’s David Solomon is an intrinsically interesting guy, his Instagram feed is almost unbearably bland. No Lloyd Blankfein-style Twitter quips, no #brand #banter, not even any clips of his DJ sets (those are on his secondary personal Insta account, which has 6,600 more followers than his CEO one). Just pictures of D-Sol, in a suit, in an office, usually in a group photo with other suit-wearing extremely rich white guys. It doesn’t feel like it’s meeting his stated goal of reaching out to millennials and being “a little more available, a little more vulnerable”.
But this is probably the right decision. Although it’s nice to say that sort of thing, it seems unlikely that the CEO of Goldman Sachs really wants to be either vulnerable or available, particularly not on social media. His Instagram feed is there, showing that he knows what’s going on, and it provides a reasonably truthful record of the prosaic day-to-day life of a senior banker. It doesn’t create any horrible political disasters for him, like the JP Morgan Chase one which managed to judge the tone of a tweet so badly as to get Washington politicians replying #TimeToRetireThursday at Jamie Dimon. It may not be the most exciting gig in social media, but the twentysomething intern who probably runs this feed has got the right idea.
Hans Syz-Witmer, chairman of Swiss private bank Maerki Baumann, probably doesn’t need an intern for his media profile. He’s also a prolific producer of feature films and adverts, and claims to have invented the purple cow that promotes Milka chocolate. (Finews)
Compliance officers – the new kings of the banking world (The Economist)
A sceptical profile of Revolut as it tries to cope with the wave of bad publicity earlier in the year. From a banking point of view, though, it seems that the stories are more about online behaviour and aggressive recruiting practices; the company defends itself strongly on the issue of the sanctions-approval system (Wired)
Martin Blessing took a team of senior UBS management through the Zurich marathon, running his 17.5km leg in just under two hours. The story also gives UBS bragging rights for the year, as the main “UBS Bellringers” team came in way ahead of “CS Speedy Gonzales”. (Finews)
Another week, another whistleblower case; according to court filings, when Barclays trader Brian La Belle complained about being asked to process trades during his block leave, he got the response “How could you be so [expletive] stupid as to put that in an email”. (Reuters)
Citigroup are working on an artificial intelligence system to handle credit scoring and compliance on trade finance – this is how headcount gets freed up. (Finextra)
Platinum Partners fell apart in 2016 after accusations of bribing municipal pension fund executives. Now its former COO is on trial for allegedly concealing the fund’s true financial condition (Bloomberg)
US stress test season is coming round again and – despite large scale investment in systems, and management claims of a better relationship with the Fed – European regulators are worried that Deutsche Bank will fail. (Reuters)
In-depth article on the news that the Trump family are countersuing Deutsche to try to make it refuse to comply with congressional subpoenas relating to their financial affairs (Vanity Fair)
This is why you can't learn to speak French fluently well beyond the age of 18. (New York Times)
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