Morning Coffee: Tiny clique of surviving traders fear they too may be culled. Yoga instead of your Christmas party

In many ways, it’s a good thing to see excess capacity being taken out of the market, and marginal players ceding their market share rather than hanging around spoiling the pricing environment.  Unless you’re part of the excess capacity that’s being taken out, of course -  then it’s not so wonderful.  It looks like things are under way at NatWest Markets, where the divisional CEO and CFO (Chris Marks and Richard Place) have stepped down and treasurer Robert Begbie has taken the reins. It’s hard not to speculate that another reduction in numbers is on the way, particularly as new group CEO Alison Rose has said that the business will need further changes. 

In many ways, it’s a story of resilience that there are even any jobs left there to cut.  Once upon a time, this franchise was called RBS Greenwich, and it was credibly knocking on the door of the bulge bracket.  That all fell apart pretty spectacularly in 2007, but it got a second lease of life as RBS Securities, with a large injection of the parts of the disastrous ABN Amro acquisition that nobody else wanted.  The rebrand to NatWest Markets happened in 2016 (taking back an old identity which it had traded under in the 1990s).  The trading operations have been walking wounded for as long as many can remember – way back in 2015 there were rumours of 90% cutbacks.  But even today, it’s not exactly a slimline operation – it accounts for a fifth of the RBS group’s capital, and it’s certainly capable of moving the dial on group profits, albeit usually in the wrong direction.

Even now, according to CEO Alison Rose, the trading operations aren’t going to be closed down entirely.  The debt capital markets, currency trading and interest rate products are necessary to serve the corporate banking clients – “NatWest Markets plays a crucial role with RBS, allowing us to provide our customers with the products and services they need to succeed”.  And not all of these jobs can yet be replaced by robots or outsourced.  So there will still be NatWest Markets trading jobs for years to come.  A search is under way to fill the divisional leadership posts, “both internally and externally”, and might even attract some external interest, particularly as HSBC is also scheduled to be losing a lot of jobs soon.

Traders with a bit of experience shouldn’t turn their noses up.  Natwest Markets has a good reputation as a rates house and the more people get fired from a markets operation, the better the job security of those that remain. At some point RBS will reach the point at which no more cuts can be made without literally turning the lights off, and it’s said it won’t do that.  The bonuses and risk limits are unlikely to be the best in the market, but expectations will be low and the majority of the client base will be effectively captives of the banking relationship.  So although they are likely to be fewer in the new year, the band of brothers and sisters who bear the NWM logo on their business cards might still be surprisingly happy.

Separately, some Wall Street parties this year have embraced the inevitable and decided that, from a compliance and human resources point of view, there is no safe level of corporate-sponsored alcohol.  And if you go booze free, you need to find something to do rather than stand around making awkward small talk, so the festive event for some banks was a yoga class and a competitive bootcamp workout.  With smoothies and vitamin water.

It’s not all that way though; other banking events apparently featured professional contortionists and limbo dancing and were described as “merry and lit” by Reuters.  We are told that “lit” means “lively and fun”, although the same person told us that “merry” referred to a general sense of friendly well-being, so we have our suspicions.  And frankly, knowing bankers, we’re not completely sure about the yoga parties either.  An official policy of no booze is, as anyone who’s chaperoned a high school dance will tell you, often a de facto unofficial policy of surreptitiously smuggled illegal substances.  But however you choose to enjoy yourself, a happy, merry or indeed lit holiday season to all our readers. We'll be back on January 6th.

Meanwhile …

Someone goes out to look for the “Old City” – the mythical past of lunchtime drinking, Essex banter and relaxed attitudes to market conduct regulation, and claims to have found it at an unnamed brokerage (Evening Standard)

Has Wall Street avoided its #MeToo moment with a conspiracy of silence?  A compendium of the scandals which actually did come out, which might be thought to sound just a little bit bitter that there weren’t more of them. (Bloomberg Businessweek)

In a follow-up interview, Michael Platt says that the woman in the cab with him as he gave his “Mr Ferrari” interview was not actually his girlfriend, just a friend.  The cab driver confirms that he left a massive tip. (New York Post)

A “former investment banker” has been convicted for selling “machine gun conversion devices” for Glock handguns in Utah.  Sadly the story does not say which bank he worked for and LinkedIn is no help. (KSL.com)

At some point in the last year, Tidjane Thiam did an incredibly awkward interview with French television in which he described surveillance as “a legitimate weapon” (NZZ)

Michele Faissola used to be a high-flyer in Deutsche Bank – he got John Cryan to wear a monogrammed baseball cap to celebrate his third anniversary in one role.  Now he’s appealing a conviction in Italy over the Monte dei Paschi affair, but he’s still an important guy at Deutsche because of his relationship with the Qatari royal family (Bloomberg)

One to show your kids to make sure they still grow up to be bankers – the alternative career ambition for teenagers, being a YouTube star, is nothing like as much fun as it looks and people are burning out. (WSJ)

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