Morning Coffee: Three banks announce job cuts in one day. Why crypto bros make terrible boyfriends
In the novel version of Goldfinger, James Bond gets told that “Once is happenstance. Twice is a coincidence. The third time, it’s enemy action”. There might be a version of the same proverb for banking redundancies – although the announcements at Barclays, Citi and RBC are none of them particularly big, and neither are they wholly unexpected, to have three of them hitting the headlines on the same day can’t help but worry people in the industry in London. Maybe the good times aren’t back? Maybe the job cuts haven’t finished?
It's important not to blow things out of proportion. The timing appears to be genuinely coincidental. It was reported a month ago that Barclays was planning to cut 5% of customer-facing roles in its trading business along with “some dealmakers”, and it appears that fifty senior bankers on the IBD side might be the first ones to be informed. Similarly, RBC said at its most recent results announcement that it was cutting as many as 1,800 jobs across the bank, so it can’t be considered completely a surprise that some of them were in the London investment bank. And Jane Fraser has made it clear that the overall reorganisation at Citigroup is going to involve “saying goodbye to some very talented and hard-working colleages”.
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So it’s not new news – and nor are any of the announcements, taken in themselves, particularly big news. The Barclays cuts apparently represent 3% of the relevant division (the company isn’t commenting to confirm this). Citi has placed 250 jobs under review in its UK operation, which is proportionately in the same ballpark, particularly when one takes into account that not all 250 of them will be cut; the bank says that “decisions on which of the 250 roles fit into its new structure will be completed by the first quarter of 2024”, and those affected will be given a chance to move internally if they can. RBC is making cuts, but it isn’t all that big in London (unless you're in the real estate team), and it isn’t closing down, so it can’t have much effect on the local labour market.
But all that said – it is a dramatic reminder that when you add up all the structural reorganisations, annual performance-related cutting exercises and everything else, there are quite a lot of bankers receiving bad news.
And when you look back to the positive statements that CEOs were making a few weeks ago about the deal pipeline, they tended to involve such statements as “now that the risk of a US government shutdown is behind us”, which might now seem a bit premature. It’s now the “base case” to happen in Q4 for the Goldman Sachs economics team – presumably they have been giving the same message to their chief executive. Add in a bit more bad news from the Treasury Bond market eroding banks’ capital base with unrealized losses, and the Q3 board meeting strategy presentations might make frightening reading.
Elsewhere, it’s been possible to guess that Sam Bankman-Fried might have been a terrible boyfriend for a while – little things like sending Caroline Ellison’s diaries to the New York Times are definitely a few steps beyond the norm. But it seems from Michael Lewis’s book that long before the arrest, he was already acting in a way that would get any non-billionaire in banking added to a dozen “DO NOT DATE” Facebook groups. If someone’s idea of a love note begins “In a lot of ways, I don’t really have a soul”, it’s only likely to go downhill from there.
So, for the benefit of the crypto community, a few “Be Less Sam” relationship tips. Even if it’s true that you’d rather spend sixty hours a week working on crypto than a single evening with your partner, it’s considered ungentlemanly to say so. Claim that you’re building for the future or something. Similarly, however much you “really like [physical relations]”, don’t put it in a bullet point, let alone twice in the same list.
To his slight credit, Bankman-Fried did seem to realize that it was problematic to be in a relationship with one of his employees at all. Although this didn’t stop him continuing to do so for a long time; he just put it in another bullet point that he felt uncomfortable about it. Early on in the crypto boom, people suggested that they were determined to reproduce all the worst mistakes of traditional finance; now we know how true that really was.
Meanwhile …
“A power couple is only as strong as its weakest member” is apparently also the message of “Fair Play”, an “erotic thriller about forbidden lust at a hedge fund” which is getting good reviews. (FT)
The distinct “getting the band back together” vibe continues at Jain Capital – Anton Merlushkin, a twenty year veteran of Credit Suisse is getting on the Jain Train as head of quant modelling and analytics. (Bloomberg)
It seems that United Capital (the business disposed of by Goldman Sachs in August as they reversed their wealth management strategy) has been losing advisers at a fast enough rate to generate speculation in the wirehouse community as to how the deal was structured and who takes the risk. “This is a potential disaster for at least one of the parties involved”, according to someone familiar enough to call United “the old Joe Duran unit”. (RIA Biz)
“In conversations with UK-based compliance professionals, we know that their US colleagues are feeling the heat from the SEC on WhatsApp record-keeping. It’s also clear that if the same thing was asked of them by the FCA that they would also be unable to deliver”. And the FCA has confirmed they’re thinking about doing exactly that. Well isn’t that just wonderful. (Financial News)
Part of the reason why people call multistrategy firms like Balyasny Asset Management “pod shops” is that they act as escape pods for portfolio managers who have succumbed to the unenviable economics of trying to run a small hedge fund. Kevin Cottrell will be starting there as a TMT specialist next month, after KCL Capital wound up in August. (Bloomberg)
“The rich, as everyone knows, don’t try to look rich”. But they do spend a lot of money on clothes and jewellery, which appears to be the secret to it. (FT)
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