With talk of hiring freezes all over the industry, it makes sense to be looking for ports in which to weather the storm. Banks can be safe employers through a downturn in one of two ways. Either they can have such strong franchises that their revenues are invulnerable to cyclical downturn. Or, perhaps more realistically, they might be in a competitive and strategic position where their hiring strategy isn’t so sensitive to the deal flow.
Some areas of Credit Suisse, for example, might be a better bet than others over the next few years. The Dealogic league table figures suggest that it’s been hit hard. For the year to date, it seems to have lost almost a third of its market share (from 3.4% to 2.7% of global investment banking fees) and has consequently fallen down the rankings (although it remains in the top ten). And yet, according to David Miller (and despite today's profit warning and intimation of cost-cutting to come) Credit Suisse's long-serving global head of capital markets and investment banking, they’re back.
Miller's ebullience seems curiously timed given the profit warning, but in employment terms, the Credit Suisse investment banking franchise is well below its target numbers; it lost 69 senior bankers over the period of the Archegos and Greensill scandals and although it’s made 55 Managing Director level hires, Miller has told Bloomberg that he still plans to take on another 40 MDs, mainly in tech and healthcare. Unless CS plans to get remarkably top-heavy, forty rainmakers will require a significant staff of Directors, Vice-Presidents and Associates to report to them; David Miller classes the hiring plans as “one of the biggest objectives we have right now” and says that he’s “talking extensively across the Street and we will continue to bring people in until we feel like we’re at the right spot”. If baseball metaphors mean anything to you, the turnaround is apparently in the last three innings.
The question that cynical bankers will be asking, though, is can he deliver it? Looking at past industry cycles, there are plenty examples of heads of investment banking who have been given a big mandate to hire, only to see it taken away and turned into a mandate to cut costs when the board gets nervous. David Miller has been pointing out to clients that the investment bank accounts for 44% of revenues at CS, but this isn’t necessarily a protection – in 2018, corporate and investment banking was 51% of revenues for Deutsche Bank, but that didn’t save it from Christian Sewing’s restructuring.
Mr Miller is likely to be aware of this – he’s a long term survivor at CS, who is now on his fifth CEO, having been through previous attempts by CEOs to treat the non-wealth management businesses as “ugly ducklings” And he seems to be acting in quite the politically astute manner to ensure that the franchise rebuild has support.
For example, he’s made sure to spend the last year carrying out a detailed education program for the CS top management to make sure they understand the investment banking business, taking advantage of the otherwise soul-destroying requirement to get board approval for every major deal after Archegos. And he seems to have been smart about going round all the important clients, promising that he can “deliver the firm”. Even this Bloomberg interview could be seen as a way of nailing his colours to the mast; as with a celebrity career, the first step toward bouncing back is to announce it to the world with complete confidence.
Elsewhere, the always interesting Sam Bankman-Fried has set out his thoughts on the “crypto winter” which has seen hiring freezes and staff cuts across the space. In summary, his view is that lots of crypto firms are having to think about cuts because they grew staff numbers much too fast and lost focus. He makes the interesting point that if you’re growing staff at 300% a year – not uncommon in crypto and fintech – then your new employees only have an average of four months learning your culture before they have to start mentoring new hires themselves. His company, FTX, slowed down hiring sharply when it hit 250 employees for this reason and so (as it apparently remains profitable) it won’t need to slow down hiring again and will still add more people than it loses. That might not be hugely encouraging for people scrambling round after having had their Coinbase offers rescinded, but it sounds like good news for job security for the employees who are already there.
Underlining its determination to maintain the franchise, Credit Suisse has got back to the leading edge of junior salaries - $110,000 for first year analysts and $125k for second years. (Financial News)
Citadel Securities is building a crypto trading marketplace. (Coindesk)
Can you wear shorts in the office? The Wall Street Journal says “maybe”, which feels quite unhelpful. (WSJ)
“ESG Advisor to the Pope” feels like it might be a joke, but Jean Pierre Casey, Giovanni Christian Michael Gay, David Harris and John Zona will be getting the pontifical equivalent of a LinkedIn endorsement as they join a special investment committee of the Holy See. (Vatican News)
Someone has showed up on Twitter claiming to have a massive archive of Telegram messages demonstrating massive malpractice in the crypto and VC industries. They say that they’re terminally ill and planning to release the lot to clear their conscience; it looks like a hoax, but the small chance it isn’t is keeping people on their toes. (Metacrunch)
Vassilios Maroulis now rules the waves at Citi – he’s been promoted from EMEA head of shipping investment banking to global head. (Financial News)
Wells Fargo’s “diverse slate” policy was a well-intentioned attempt to insist that half the candidates being considered for senior positions had to be from underrepresented groups, but it allegedly ended up massively wasting the time of women and minorities on “fake” interviews. The company has put the policy on hold for a couple of weeks while they work out what to do. (Business Insider)
A “caviar bump” is apparently the new name for licking fish eggs off the back of your hand, and some people are trying to make it a thing. (NYT)
Everyone is working harder and feeling awful, but productivity has stagnated. Are we all just too tired to do things properly? (FT)
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