Morning Coffee: Deutsche Bank MD on $370k salary told that “office life is irritating”. The most awkward job at Morgan Stanley
A useful heuristic when deciding whether to say something in the office or not is to imagine it being read out slowly, in court, by a judge with no comic timing. For example, in the right circumstances and with a sufficiently light and friendly delivery, referring to a Managing Director in the Wealth Management business as “Christine Lagarde”, because she is French and has grey hair, might raise a mild chuckle without spoiling the atmosphere. Several years later, in a transcript, it’s hard not to agree with the assessment of Judge B Elgot that it was “rather silly and probably annoying”.
So what does that translate to in money terms? Perhaps surprisingly, nothing. Judge Elgot went on to say that this falls on the right side of the line in terms of the developing case law with respect to banter. The employment tribunal judgement in the case of Elisabeth Maugars against Deutsche Bank states, “We make no finding that this comparison was offensive or indicates a ’culture’ of discrimination against older women. It is part of the irritation of day-to-day office life which occasionally occurs”.
The legal reasoning goes on for thirty pages, but a key point is that Ms Maugars hadn’t actually complained about the joke at the time; she only raised it as evidence of a “culture of discrimination” after having been made redundant in Deutsche's 2020 round of staff cuts. None of the people involved in the decision to make her redundant had ever likened her to the President of the ECB; although she had as many incidents of sexist and boorish behaviour to raise as any female banker with a similarly long career as a woman on the Street, they were all from years previously.
In fact, there was a lot of evidence that Ms Maugars liked the culture at Deutsche Bank and really wanted to stay there. After having been put at risk, she spent an extended notice period trying to find other jobs internally. She even applied to be Deutsche’s Global Head of Training and Development, which wasn't exactly adjacent to her previous experience.
Unfortunately, the story that seems to come out of this tribunal is that when a bank is in a position like Deutsche was a few years ago, it can’t always make its cost reduction targets by only sacking people who deserve it. The “non-recourse lending” team that Maugars ran was small and looked like it was going to be hit pretty hard by the pandemic, so the executives one level up decided that it needed to be merged with a larger team, and that meant that there was no MD-level role left anymore. It didn't help that the revenue she generated was diminutive at £6m compared to £29million for her US counterpart. Nor did it help that Maugars complained that a male boss instrumental in her redundancy was spending a lot more time with her younger male colleagues, when he was in fact found to be working long hours and rushing home to be with a new baby.
It's a reminder that life in an office can seem unfair as well as irritating, but there’s a difference between the cosmic unfairness of the global economy and anything that might be legally considered “unfair dismissal”. It's noticeable, after all, that according to the judge, she was the only person in the 2020 Deutsche redundancy round to have appealed.
Elsewhere, (although thematically linked via the industry of “non recourse lending” to wealthy individuals) the Q4 results season seems to have confirmed that Morgan Stanley is gaining bragging rights over Goldman Sachs, and that it’s doing so mainly because of its better-developed wealth management franchise. However, it’s likely that a few MS bankers will be delaying the celebrations, because they’ve got a nasty conversation to have with one of their most famous ultra-high-net-worth clients.
That client would be Elon Musk, of course – although he’s set a Guinness World Record for the biggest loss of personal wealth, a bit more than half of “giga-mega-high net worth” is still ultra-high. But the awkward conversation relates to the amount of money that MS (and other banks) lent him to buy Twitter, on which the first interest payment is coming closer.
According to “people close to the matter”, Twitter might not have enough cash on hand to make the payment. And Morgan Stanley presumably don’t want to own Twitter. Which means that they are “in discussions” to try and replace some expensive unsecured debt with something secured on Elon’s stake in Tesla. It’s one of the most awkward conversations it’s possible to have in banking, where the friendly and helpful person who has built the relationship has to introduce their colleague, who is less friendly and more annoying and keeps talking about personal guarantees.
How can such an employee-friendly policy be made to sound so sinister? Citi is still committed to generous work-from-home arrangements, but according to CEO Jane Fraser, “You can see how productive someone is or isn’t and if they’re not being productive we bring them back to the office, or back to the site, and we give them the coaching they need until they bring the productivity back up again” (Bloomberg)
Crypto employees have been leaving their jobs as words like “toxic” and “layoffs” started showing up in their online reviews. But they haven’t been going back to banking; the top three destinations are software companies, internet publishers and other crypto firms. (Revelio Labs)
It’s not quite a promise you can take to the bank, but Ralph Hamers of UBS says “we are not in retrenchment mode”, with no large-scale cuts planned. Christiana Riley of Deutsche is also in Davos, and they are “selectively, opportunistically looking at what the market may present”. (Bloomberg)
Davos has its own succession issues, and its own nepo babies, as the question begins to arise of how things might continue after Klaus Schwab, and to what extent the Schwab family controls the World Economic Forum (Politico)
Mizuho has made another statement of how serious its ambitions are, hiring twenty traders from the securitized products business of Credit Suisse. (Bloomberg)
Anyone who thinks banks treat people badly during layoffs needs to read this account of the “extremely hardcore” last few months of Twitter, including people wandering around in Halloween constumes (The Verge)
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