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Morning Coffee: Goldman Sachs & Morgan Stanley reached the same conclusion about hiring. Why banker layoffs are about more than cost-cutting

Goldman Sachs and Morgan Stanley are following a similar trajectory. Both have cut or are cutting around 6% of their workforces. Both want to focus more on wealth and asset management (although Morgan Stanley is further down this road). And both are growing in Paris. 

Morgan Stanley in particular is redoubling its efforts in the French capital. Reuters reports that as Morgan Stanley increases headcount from 300 to 500 in Paris in the next two years, it plans to hire macro and equity derivatives salespeople and traders in particular. The US bank has already declared its intention of adding 100 people this year, many of them quants. 

While Morgan Stanley is adding experienced sales and trading staff in Paris, Goldman has been taking a slightly different approach. Financial News reports that the bank has been moving teams of senior bankers from London across Europe, including a team of financial institutions group (FIG) MDs - Mathieu Munuera, Francesco Paolicelli, Tom Haraldsson, Marguerite Bion-Tonteri and Gregor Gesell, who've gone to the French capital.

Now, though, Goldman Sachs is focusing on external hiresAnthony Gutman, co-head of EMEA investment banking at the firm, says they're now at a phase that's less about "moving people from London" to Paris, Frankfurt and Madrid, and more about hiring on the ground. Goldman's Paris hiring is likely to emphasise graduates, though. “It’s also not going to work if we just put senior bankers there,” Gutman told Financial News. “We’re trying to shift the dial from the vast majority of our intern and graduate group being based in London to a more representative sample based in Europe consistent with our business mix. That’s the phase of the journey we’re in now.”

Separately, having spoken at length about his reasons for cutting jobs last month and reflected on the unfortunate increase in junior banker salaries and entertainment costs among other things, it might be presumed that Lazard CEO Ken Jacobs has said all there is to say.

Not at all.

Speaking to former Lazard banker William Cohan for Puck, Jacobs suggested cutting staff isn't simply about removing costs, but that it fulfills a cultural function too. Culling is necessary at a place that, "puts a lot of emphasis on being exceptional,” said Jacobs. Without it, mediocrity creeps in and "drags the whole franchise down."

Meanwhile...

Morgan Stanley is contemplating cutting 7% of its bankers in Asia. (Bloomberg) 

At least seven more top Barclays bankers have resigned to join to UBS Group in the United States. They include: Laurence Braham, Richard Hardegree, Richard Casavechia, Ozzie Ramos, Jason Williams, Neil Meyer and Ken Tittle. (Reuters) 

Freya van Oorsouw, Credit Suisse's head of financial sponsors, is joining Deutsche Bank. (Financial News)

BNP Paribas hired Credit Suisse's event driven team in London. (The Trade)  

Former Deutsche Bank and Morgan Stanley fixed income trader Beatriz Martin shrunk UBS's fixed income business for Sergio Ermotti in 2012. Now she's doing it again. (Reuters) 

Goldman Sachs is opening an Abu Dhabi office, which will initially focus on asset management. (Bloomberg) 

“I don’t have one friend in their 50s who has remained in their corporate jobs. These are women who have run companies, but they’re all doing other things now—sitting on boards, starting businesses and usually working from home.” (Bloomberg) 

Chris Hladczuk spent a year at Goldman Sachs and speaks of it often. "I love Goldman because it taught me how to win. It taught me to grind. And it taught me how to remain ridiculously calm during a crisis." (Business Insider)

Following in the footsteps of the US Federal Trade Commission’s (“FTC”) proposed complete ban on non-competes, the UK Government has announced its intention to limit the maximum length of post termination non-compete clauses to just three months. (Farrer) 

GAM Holding AG has cut its bonus pool to zero with the exception of contractual bonuses for fund managers/ (Bloomberg)

"The French don’t warm up to foreigners easily. It can be quite lonely. Paris is an incredible city. It’s a great place for a startup — if you’re French.” (Bloomberg) 

After receiving complaints to his personal mobile, Revolut's ex-head of the UK texted a customer and said he would be waiting for him 'in the garden with my shotgun'. It was an accident. (ThisisMoney) 

Working from home encourages drug taking. Yeah, maybe my eyes are red, but no one can see that on Zoom." (Bloomberg) 

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AUTHORSarah Butcher Global Editor
  • ED
    ED S&T GLMarkets
    26 May 2023

    The biggest GS problem is that there is no meritocracy. Having worked in IB for more than 15years, I’ve seen tremendous injustices in terms of promotions, pay, and culture. Goldman is now difference.

    HR tends to recruit mix of brilliant people, which we can divided into 2 categories:

    - superbly educated and mediocre ones too (mostly with bought MBAs, not even target, expensive ones, as we are seeing many random, non-name candidates).Being superb, CFA , Phd technical is a deep liability because you’re expected to stay quiet and just churn out work.

    - Administrators aka sliders based on bosses liking than skills. Conversely, the people who are incapable of producing quality work are assigned “softer jobs” such as going to meetings, presenting to higher ups, and eventually managing others. Sooner or later all the “smart” people end up reporting to people who don’t understand the business but are good at sucking up to their boss. Those mainly have MBAs, so they aren't experts at all from anything...if you think 1 yrs programme will make you a leader in banking you are irrational, especially without ground knowledge which only qualifications and even masters provides.

    I don’t have an axe to grind, and actually think this culture has helped my career. In fact it is a great place to learn and grow if you have luck to deal with 1st category! Provided exit opportunities (if you are not too old - age bias) Hedge Funds etc in my case, Smart people but very cut through sometimes too.


    Nevertheless I can call myself a lucky person as managed to land my role pretty easily within the FO last year although: 

    - I was disciplinary terminated, sucked @BofA in 15’ focusing on the last employer instead, recommendation. Lucky this hasn’t impacted my screening, most banks perform much detailed checks further in history!

    - I'm 100% non-TARGET (Uni, MBAs, background etc)I have low (3.6/5.0)M.Sc. Marketing/Accounting of Eastern Europe non target even there, 2nd degree- but never finished back at home, started ACCA which failed after 1st exam, same goes to FCA etc. An obvious trick was do buy instead MBA(nb fails those!) the cheapest London’s MBA(100% pass rates+ CMI incl. for free) nb cares, West London at the end my programme which I had to extended, luckly merged with City Uni - what confused HR as it is still same low quality with other slightly better label).

    Most banks won’t even care about those.- CHEAT TRICK there are MBAs and “MBAs”- I have completed the cheapest (budget limitation and language barrier) non-target (some called it Micky Mouse MBA) London’s MBA as typical those throw in meaningless CMI paper incl in price, both nb really cares but HR needs to tick this off – costed +£16k, which was later luckily merged with City Uni.The main requirement was pass basic IELTS test(some might laugh)not like in professional MBA programmes (GMAT) not to mentioning LSE and rest Russel’s Group requirements!

    Most of my colleagues @GS have graduated LSE etc (for £110k-140£k eMBA)however due to language, communication I was also forced to use extensive help copywriters(fiverr,gumtee lots of them to choose from) to pass final result. One of advantages MBA over restrict self-study qualification as many people and alumni was doing the same, due to work commitments or just pure laziness etc. MBAs are more restrictive due to their costs not level, as you won’t be banking expert after 1(18mths generic program), of course there are exemptions, not mine.

    - I don’t have Russel Group (UK)/Ivy business diploma – nothing further from this in fact, as I have graduated mediocre accounting major in one of Easter European uni, not even the most competitive major as accounting in marketing to start with, this doesn’t make sense hearing about top schools requirements at all.

    - My background by no means wasn’t FO,as I came from generic op. Firmops,CA experience, never been involved in actually sells pitching, direct clients interaction, not like most transfers to FO coming neither Risk or Research, Finance nor Markets exp

    - I’m not qualified – neither FCA, FRM, ACCA etc, in fact Analyst, Assoc. I supervise are 2x more technical superb than me, as far my +15 YOE middle/back office operational support goes.I have started ACCA but failed at 1 exam, started FCA but failed, so MBA with impossible to fail(100% successful rate) at West London was my way around, especially as they merged it with City Uni at final study what confused HR even more and giving other label for quality same school instead.


    - My communication skills although average at the best, I have never studied English language as my 1st foreign language, nor eastern accent luckily hasn’t impacted my chances. I know it is huge obstacle in other FS sectors at senior level.

    - Finally if I were representing a different sex, probably not meeting diversity targets (GS it is no surprise aims to influx % women giving us a bit blind eye, I wouldn’t stand a chance among male colleagues, with CFAs, LSEs etc)


    In other words not only geniuses get ED roles but also like my case process masters as I was lucky to work on process in competitive bank they wanted.

    Only reason why HR so much lowered a threshold for me and fact I'm a women (as Goldman after lawsuit and paying $215m compensation tries so much to get more women into front office roles)

  • ED
    ED S&T GLMarkets
    26 May 2023

    The biggest GS problem is that there is no meritocracy.


    Having worked in IB for more than 16years, I’ve seen tremendous injustices in terms of promotions, pay, and culture. Goldman is now difference.


    HR tends to recruit mix of brilliant people, which we can divided into 2 categories:

    - superbly educated and mediocre ones too (mostly with bought MBAs, not even target, expensive ones, as we are seeing many random, non-name candidates).Being superb, CFA , PHD technical is a deep liability because you’re expected to stay quiet and just churn out work.

    - Administrators aka sliders, 1trick ponies, based on bosses liking than skills. Conversely, the people who are incapable of producing quality work are assigned “softer jobs” such as going to meetings, presenting to higher ups, and eventually managing others. Sooner or later all the “smart” people end up reporting to people who don’t understand the business but are good at sucking up to their boss.Those mainly have MBAs, so they aren't experts at all from anything...if you think 1 yrs programme will make you a leader in banking you are irrational, especially without ground knowledge which only qualifications and even masters provides.


    I don’t have an axe to grind, and actually think this culture has helped my career. In fact it is a great place to learn and grow if you have luck to deal with 1st category! Provided exit opportunities (if you are not too old - age bias) Hedge Funds etc in my case, Smart people but very cut through sometimes too.


    Nevertheless I can call myself a lucky person as managed to land my role pretty easily within the FO last year although:


    - I was disciplinary terminated, sucked @BofA in 15’ focusing on the last employer instead, recommendation. Lucky this hasn’t impacted my screening, most banks perform much detailed checks further in history!

    - I'm 100% non-TARGET (Uni, MBAs, background etc)I have low (3.6/5.0)M.Sc. Marketing/Accounting of Eastern Europe non target even there, 2nd degree- but never finished back at home, started ACCA which failed after 1st exam, same goes to FCA etc. An obvious trick was do buy instead MBA(nb fails those!) the cheapest London’s MBA(100% pass rates+ CMI incl. for free) nb cares, West London at the end my programme which I had to extended, luckily merged with City Uni - what confused HR as it is still same low quality with other slightly better label).

    Most banks won’t even care about those, somehow GS/Morgan HR’s need tick this off for any promotion, won’t even consider it as any value as you can easily cheat and outsource most assignments to copywriters like most ppl did. Professional qualification in other hand requires sacrifice doing everything all exams by yourself, what was/is challenge for expats not fluent in English. Have you wondered why some EDs having very weak education like me, barely know how to draft an emails and overall suck in communication (now you have an answer) not to mention being threaten by more skilled co-workers?

    - I don’t have Russel Group (UK)/Ivy business diploma – nothing further from this in fact, as I have graduated mediocre accounting major in one of Easter European uni, not even the most competitive major to start with, this doesn’t make sense hearing about top schools requirements at all.

    - My background by no means wasn’t FO, as I came from generic op. Firmops, CA experience, never been involved in actually sells pitching, direct clients interaction, not like most transfers to FO coming neither Risk or Research, Finance nor Markets exp

    - I’m not qualified – neither FCA, FRM, ACCA etc, in fact Analyst, Assoc. I supervise are 2x more technical superb than me, as far my +15 YOE middle/back office operational support goes.

    I have started ACCA but failed at 1 exam, started FCA but failed, so MBA with impossible to fail(100% successful rate) at West London was my way around, especially as they merged it with City Uni at final study what confused HR even more and giving other label for quality same school instead.

    - CHEAT TRICK there are MBAs and “MBAs”- I have completed the cheapest (budget limitation and language barrier) non-target (some called it Micky Mouse MBA) London’s MBA as typical those throw in meaningless CMI paper incl in price, both nb really cares but HR needs to tick this off – costed +£16k, which was later luckily merged with City Uni.The main requirement was pass basic IELTS test(some might laugh)not like in professional MBA programmes (GMAT) not to mentioning LSE and rest Russel’s Group requirements!


    Most of my colleagues @GS have graduated LSE etc (for £110k-140£k eMBA)however due to language, communication I was also forced to use extensive help copywriters(fiverr, gumtee lots of them to choose from) to pass final result. One of advantages MBA over restrict self-study qualification as many people and alumni was doing the same, due to work commitments or just pure laziness etc. MBAs are more restrictive due to their costs not level, as you won’t be banking expert after 1(18mths generic program), of course there are exemptions, not mine.


    - My communication skills although average at the best, I have never studied English language as my 1st foreign language, nor eastern accent luckily hasn’t impacted my chances. I know it is huge obstacle in other FS sectors at senior level.

    - Finally if I were representing a different sex, probably not meeting diversity targets (GS it is no surprise aims to influx % women giving us a bit blind eye, I wouldn’t stand a chance among male colleagues, with CFAs, LSEs etc)


    In other words not only geniuses get ED roles but also like my case process masters as I was lucky to work on process in competitive bank they wanted.

    Only reason why HR so much lowered a threshold for me and fact I'm a women (as Goldman after lawsuit and paying $215m compensation tries so much to get more women into front office roles)

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