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Morning Coffee: Meet the stingiest CEO on Wall Street and the new big bank CEO from a mediocre university

stingiest CEO, HSBC, John Flint, Michael Corbat, Citi, Citigroup, Wall Street, banks, banking, bankers

Scrooge

Is Citigroup CEO Michael Corbat the stingiest bank boss on Wall Street? His mantra is tightly managing expenses. He broke out his old cost-cutting playbook, pushing managers to tamp down spending, leading to a 2% reduction in third-quarter costs.

Citi’s investment bankers, stock traders and lending operations are having a great year and are carrying the load for Citi’s weaker fixed income sales and trading operation. The latter is a problem because the bank gets more revenue from fixed-income trading than any of its other Wall Street businesses, according to Bloomberg.

Corbat’s career has been characterized by cost-cutting, from his time running Citi Holdings, a collection of unwanted assets tagged for sale, to leading the bank’s operations in Europe, the Middle East and Africa. Since taking over as CEO, he has kept expenses in check by cutting headcount and selling underperforming businesses and the company’s real estate.

Citi’s expenses hit a 13-year low at the end of 2016 but ticked up in the first half of this year as it set aside bonus funds to reward traders.In July, Corbat declared that the bank’s “restructuring is over” and set new financial targets, including annual efficiency savings of $2.5bn within the next three years.

Corbyn has personal reasons to be parsimonious. In February, Citigroup’s board of directors cut Corbat’s compensation by 6% after the bank missed financial targets in 2016 and one-third of its voting shareholders disapproved of his prior pay package. Corbat is doing whatever he can to make sure that doesn’t happen again.

Separately, forget Oxbridge and the Ivy League. Even if you attended a mediocre university, there is hope that you could rise to the very top of banking.

Take John Flint, who studied economics at Portsmouth Polytechnic, now known as the University of Portsmouth, which ranks 56th among U.K. universities in the University League Tables 2018. He worked his way up to become the number-two global markets executive at HSBC in the aftermath of the financial crisis before moving to head up the bank’s asset management division. For the last four years, he had been running retail banking and wealth management. Now, the HSBC lifer is the CEO of the entire bank, tasked with boosting growth, cutting bureaucracy and increasing returns, according to Financial News.

Meanwhile:

Citi was the best performer in Asia-Pacific in the first half of the year, while Goldman Sachs stumbled. (Bloomberg)

Deutsche Bank, Citi and Barclays among the institutions that could struggle to remain sufficiently profitable in coming years, according to the IMF. (Financial News)

CEO Jamie Dimon said, “I’m not going to talk about bitcoin anymore.” (Bloomberg)

Cost controls remain in check at J.P. Morgan: The bank is on track to hit its targeted 2017 expense figure of $58bn. (Bloomberg)

Evercore MD: “Our model is a little unusual compared to the big banks where many of us once worked. We don’t have coverage people and then execution people: we just have investment bankers. I don’t take clients for dinner and then hand it over to junior people to do the deals.” (Euromoney)

Bankers are concerned with Wall Street’s ability to recruit and retain young talent given the competition from tech giants and startups that offer juicy perks, a more relaxed lifestyle and an exciting, entrepreneurial environment. (Business Insider)

Morgan Stanley’s research department is testing artificial intelligence to take over the grunt work involved in covering earnings and churning out 50,000 reports a year – a brutal ritual that leaves analysts poring over filings and listening to executives talk for hours. (Bloomberg)

Dutch bank ABN Amro is building its equity capital markets business in Amsterdam as deal activity rises, hiring several City bankers. (Financial News)

Passive investments, already eating active managers’ lunch, are getting a further boost from MiFID II. (Bloomberg)

The brave new world of big data-driven investing is something of a regulatory grey area – at what point does some exclusive, real-time look through into a company’s performance constitute insider trading? (Newsweek)

Deloitte’s been hacked. (WSJ)

America’s top colleges don’t enroll enough students from poor backgrounds, but there’s a way to fix that. (Bloomberg)

Highly educated people still relocate for work, but exorbitant housing costs in the best-paying cities make it difficult for anyone else to do so. (The Atlantic)

Briefcases and messenger bags are out; backpacks are in. (WSJ)


media inquiry: ysbrandcosijn/GettyImages

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