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Morning Coffee: How to leave Goldman Sachs for a small salary. And millennials can’t handle Deutsche Bank’s technology

Bloomberg columnist Matt Levine did the thing that many bankers only ever talk, endlessly, about – he left a successful career at Goldman Sachs to try and find something more interesting to do.  In an interview with the Recode Media podcast (non-iTunes link available here), he explained one of the distressing truths of investment banking, which is that once you get to VP level or higher, everything is basically a sales job. This is not ideal if you feel you have no aptitude or taste for selling product, and even if you do, you had better like airline food and chain hotels, because selling corporate structured equity products and convertible bond ECM is a game of long trips to hand over a slide deck in a headquarters building somewhere.

Having decided that the life of a structurer was making him unhappy and held no prospect of ever doing anything else, Mr Levine did the smart thing – he started saving money.  After a couple of years sticking it out (and since he joined Goldman in 2007 and left in 2011, those included some pretty solid bonus years as well as some poor ones), he felt like he had enough in the bank to take six months’ worth of sabbatical and decide what else he wanted to do.

The first attempt to get off the treadmill didn’t quite take – his boss managed to bid him back and persuade him to keep working until he had a plan.  But then he saw that scurrilous Wall Street gossip blog Dealbreaker was hiring.  New media journalism has never paid quite as well as Goldman Sachs, though.  In fact, rather than looking like a viable life choice, the initial Dealbreaker salary was only really enough, when combined with his savings, to extend the period from six months to twelve months before he’d have to do something that provided a proper New York lifestyle.

Anyway it all had a happy ending and he’s now the author of the widely-read “Money Stuff” newsletter for Bloomberg Opinion, and although the subject of his current paycheck was not really discussed on the podcast, he’s still living so he’s making a living.  But it’s clear that the financial shock is real – the only way that Matt Levine was able to manage it was by pretty much explicitly assuming that something would turn up, and by being in a situation where he’d psychologically come to terms with the idea that being poor would be better than continuing to work in ECM structured products (he had previously joined Goldman as a lifestyle move, from a law firm that had an even more horrific long hours culture).  Perhaps this is why so very many more people talk about leaving the rat race than actually do it...

Elsewhere, Deutsche Bank’s IT systems rejuvenation project continues, with something of a feel to it of Napoleon’s march into Russia but without the sense of occasional triumph.  The latest story concerns its membership of the UK’s large value payments system, where a plan agreed with the Bank of England to reduce the number of outages appears to have fallen behind schedule.  Interestingly, though, one of the reasons given is that “many younger, newer staff find it difficult to navigate the bank’s legacy technology”.

This is a surprisingly common issue in banking.  There are people who claim that one UK bank still has systems which calculate in pounds, shillings and pence, although they can never seem to agree which one.  The key issue here is that the word “legacy” in banking IT really means “tried and tested”; code stays around for a long time in payments systems because if it works, you don’t want to change it.  It’s very likely that the problems in Deutsche’s transaction banking systems aren’t due to “legacy” systems at all, but are attributable to all the bells and whistles that the bank tried to bolt on to the core system during the growth years of the 1990s and 00s. 

This is probably not much consolation for the youngsters who have to dig through old computer manuals to try and understand what’s happening in a programming language that nobody learns any more, but it’s endemic to the industry.  And even these millennials will end up being glad of it eventually; one day they’ll be old themselves and hauling in a good income as a consultant on things that are at the cutting edge today, but which will by then have become “legacy” themselves.

Meanwhile …

As KPMG starts to have a big reduction in partner numbers, a lot of issues are coming to the surface about how you allocate credit and reward in a professional services firm – balancing the incentives for collaboration against the potential for free riding.  There are going to be some awkward discussions. (FT)

“People familiar with the matter” suggest that regulators are complaining that playing water polo at the 1996 Olympics, followed by a period in management consulting and then running a sports non-profit organisation isn’t really enough of a background in banking or large organisations to be head of human resources for Deutsche Bank.  Christian Sewing praised Michael Ilgner’s “passion and fresh approach” and noted that other hires from outside the industry have done well at Deutsche.  (Bloomberg)

Some suggestions that the big news at Goldman Sach’s investor day might be that the bank will move away from its target of adding $5bn in new revenues (Reuters)

Jim Amine is stepping down as head of IBD at Credit Suisse, to be replaced by David Miller, the current head of credit.  It’s not clear what this means for the market share oriented restructuring plans that Amine outlined earlier in the year. (Financial News)

The UBS banker facing manslaughter charges in Anguilla has made it clear he won’t be going back to the island as he doesn’t believe he would get a fair trial (he’s pleading self-defence). (CNBC)

Quant labour markets are still hot – Manu Bakshi, a senior recruiter for WorldQuant, is leaving to start his own firm.  Not clear if the new firm will be a headhunter or a money manager, but either way he’s likely to keep looking for quants to hire. (Business Insider)

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AUTHORDaniel Davies Insider Comment

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