Morning Coffee: The strange quality that JPMorgan’s top recruiter wants you to demonstrate, and the true cost to Britain of losing bankers to Brexit

Thanks to a report from Bloomberg, we have some more details on pymetrics, the lowercase named, “neuroscience based” video games company that is already providing services to Accenture and Unilever and whose games you might to have to play if you want to get an internship with JPMorgan in the near future.  Matt Mitro, JPMorgan's head of campus recruiting has now put up a blog post on the JPM careers site adding some detail on the overall hiring process and the current experiment with pymetrics.

Apparently what they’re proposing to use is “a series of engaging online games, based on decades of scientific research that have shown to be very accurate in measuring a wide range of relevant social, cognitive and behavioral features – things like attention, memory and altruism”.  The idea is that “there is no right or wrong answer, no ‘smart’ vs ‘not smart’”, just better or worse degrees of match to existing high performing JPM employees.  So far so … hang on?

Attention to detail and memory are pretty obviously valuable characteristics for a budding investment banker or sales & trading employee.  But altruism?  That’s not usually a trait that people would associate with success in the finance industry.  Or is it?

Well, maybe.  In general, the personality type that has tended to get ahead in investment banking has tended more toward the “ruthless competitor” end of the spectrum rather than the “chilled out do-gooder”.  But that might be something that the software can take into account.  It’s likely that what pymetrics and their decades of scientific research measure as “altruism” is the same thing that Goldman Sachs’ Lloyd Blankfein used to call being “long term greedy”.

It’s still irksomely difficult to find a way to play pymetrics’ games without finding a recruiter from a client company to give you a login to do so.  But it might be that among the other things they measure might be something like the traditional business school example of the Iterated Prisoner’s Dilemma, a game in which players can gain an advantage at each other’s expense in any given short period, but where both can do better in the long term by co-operating.  The ability to spot situations where passing up the immediate gain might lead to a more profitable long term relationship might be exactly what JP Morgan is looking for.

And indeed, the old stereotype of the super-aggressive, short term oriented self interested trader might be on the way out.  That’s the personality type that gave us the London Whale and the 1MDB scandal, after all.  We don’t really know which existing JPM employees have been invited to set the corporate standard for pymetrics’ game strategies, but it wouldn’t be unreasonable to surmise that some of them might be in the compliance department - or at least that the cultural exemplars might have been picked for reasons other than their short term revenue generation.  Maybe altruism really is the characteristic of the successful banker of the future.

Elsewhere, there have been plenty of estimates of the impact of Brexit on the financial services industry in London, many of them pretty obviously ideologically motivated.  But now EY have put some numbers up, not only on the attention grabbing headline issues of the gross notional assets that might need to move to Euroland for clearing purposes, but to the more economically significant issue of job losses and tax revenue.

The latest survey suggests that contingency plans already triggered are likely to have moved 7,000 jobs so far, accounting for a contribution of £600m in direct taxes.  This would imply total comp of £200k per head, suggesting that the average job being transferred is at the junior end of the material-risk-taker level – the top of the associate ranks or the low end of VPs.  According to EY this is unlikely to be the end of the job moves; the European regulators have been reasonably co-operative so far in allowing corporate centre functions and risk management to remain in London, but are likely to insist on further relocations in the long term.

Meanwhile …

One of the less talked-about forms of illegal employment discrimination, but one that comes up surprisingly often in employment tribunals in investment banking is ageism.  Niels Kirk, former chair of the energy and natural resources group at Citi’s London investment banking franchise, has launched an unfair dismissal claim against the bank for having been let go at the age of 57. (Financial News)

Perhaps related, retirees heading for the Mediterranean are getting younger and younger (WSJ)

CLSA, once the champion brokerage in Hong Kong, seems to be losing its way, its league table rankings and now its CEO after being taken over by Citic.  The company appears to be relying more and more on its parent’s franchise in China, with consequences for its historic role as an independent voice. (Bloomberg)

Bad news on the outlook for Q1 from Sergio Ermotti (“one of the worst ever in recent history”) seems to be the message from the industry as a whole rather than specific to UBS.  The well-known capital markets problems at the start of the year may be a special factor, but it’s still not a happy place to be in going into the results season (Bloomberg)

Familiar names – Simons, Dalio, Griffin – on the “top earning hedge fund managers” list, but the TwoSigma founders are now secure in their place in the top ranks (Forbes)

“He and his friends think he is funny”, was the best that the defence lawyer could come up with in the case of a drunken boor being sentenced for assaulting a female customer and the barman at a pub.  An inter-dealer broker for Mint who is apparently “setting up an investment fund” and worried about the regulators, it’s good enough for the tabloids to call him “an investment banker” (Daily Mail)

Deutsche is still hiring in key roles, taking Don Lee from Credit Suisse to be head of APAC execution (The Trade News)

It’s all very well for investment banks to be introducing casual dress codes, but who else is going to buy silk ties for two hundred dollars?  Luxury goods company Hermes has had to adapt by focusing on ladies’ scarves and leather goods (Bloomberg)

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