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Morning Coffee: The most stressful job(s) at Deutsche Bank, and three key questions from Goldman’s former chief recruiter

One of the most unfair things in current investment banking – the fact that Christian Sewing does the Head of Investment Banking job at Deutsche Bank as well as his own, but only gets paid once – blew up today, as the Financial Times reported that the regulators had expressed concerns that the two roles were being combined.  The ECB later denied this, or at least denied that it had said exactly that in those terms, or denied that it wanted to fight the whole issue out in public.  But there were investors quoted in the FT story too, saying that Mr Sewing was spreading himself too thin, and they presumably stick by their words.  There is a real issue here.

It could be objected that Jes Staley also has direct oversight of the investment bank, and that Jamie Dimon takes enough of a direct interest to have been in there pitching for the WeWork IPO.  But these cases aren’t really comparable.  For one thing, Mr Sewing’s level of micromanagement is significantly more intense than any other CEO – he demands to personally sign off on new hires, for example.  And for another, there isn’t stability in the team two or three levels down – Deutsche has severe turnover issues at the regional and product head levels, which pushes more supervisory responsibility up the command structure.

Although about half of its risk weighted assets have been split off into the Capital Release Unit, Deutsche’s investment bank is still just under half a trillion euro worth of balance sheet, and that’s plenty big enough to get into trouble.  Problems happen in investment banks when people make bad decisions under stress, and when the consequences of those bad decisions aren’t immediately checked up on.  Deutsche is generating a lot of stress at the moment for plenty of its material risk takers, and it makes sense to worry that key reports might be getting sent to people who might not be able to give them the attention they deserve because they’re trying to be in three places at once.

Perhaps more worrying, though, is the message that it sends out.  The initial idea after Garth Ritchie’s departure was that Mr Sewing would lead things himself in order to push forward the investment bank’s restructuring and ensure that there was no resistance to cost cuts; that’s why there’s no management board representation for the investment bank.  But after a while, with the plan well into its execution phase and with a new board-level “Head of Transformation”, this rationale ought to begin to fade away.  It begins to look as if Deutsche has been unable to attract talent, or find anyone worth promoting internally. It also begins to look as if there’s no Head of Investment Banking because there’s no strategic direction and policy other than the cost cutting program.  And missed opportunities and bad deals can be much more expensive than people and Bloomberg screens.  There’s an old saying that goes “If you think education is expensive, try ignorance” and there might be an equivalent here.  If you think that top investment bankers are expensive (and they are), try running a hundred billion dollars plus of risk without any.

Elsewhere, Dane Holmes was Goldman Sachs’ Head of HR (and still is until the end of the year, when he leaves for a tech startup called Eskalera).  He came to that post via a circuitous series of internal moves, which took him from IBD to risk management, to investor relations and the internal leadership program Pine Street.  He says that in every case, he asked himself three questions – “Does [the new job] matter?”, “Do you want it to change a lot?” and “Do you think it needs new energy and strategy”.  If the answer to all three was “yes”, then he would say “Ok, I’d love to do it”.

Readers may have spotted a snag here, which is that this advice only works if you are in the happy position of always having people offer you interesting opportunities.  Although it’s “career advice” of a sort, it’s mainly applicable to people like Dane Holmes who are in the happy position of always deciding whether or not to turn job offers down.  But it might be worth adopting just in case you’re in that position – Holmes seems to have taken some counterintuitive internal moves, not all of which could have been seen as glamorous postings, and he ended up doing all right.

Meanwhile …

Another business school league table, with Stanford still at the top but Dartmouth climbing into second place.  Finance is now claiming fewer MBAs than management consulting, but still more than tech – since this is a notorious contrary indicator, it might be good news for the future. (Bloomberg)

Meanwhile, with applications beginning to fall, five business school deans try to make the pitch for why people should still spend the increasing amounts of money and get an MBA (Bloomberg)

As well as more generous parental leave, Goldman Sachs is now offering $20,000 of health benefit for employees who need to buy donated eggs. (Guardian)

Microsoft Japan’s “Work Life Choice Challenge” gave employees Fridays off on full pay and reduced meetings to 30 minutes.  Sales per employee went up! (Bloomberg)

Valuing a company like Saudi Aramco is an unenviable task for sell side analysts, but the range of estimates is unusually wide, ranging from $1.2trn to $2.3trn. (Reuters)

According to Reuters, out of 38 LinkedIn profiles for Macquarie staff whose job titled indicated they worked in equities, 20 had started in 2018 or 2019.  Now Macquarie is shutting down European equities.  Ouch.  (Reuters)

On the other hand, Kepler Cheuvreux is hiring, bringing in a sales trading veteran from JP Morgan to deal with the flow of business it expects to get from its new combined services agreement with Macquarie (TheTrade)

If you find a bug in an online broker’s software that allows you to buy $50,000 of options with only a $2,000 deposit, think two or three times before using it – you can turn your savings into a massive debt in a few minutes. (Reddit)

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AUTHORDaniel Davies Insider Comment

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