Morning Coffee: Barclays' boss has wild commuting schedule amidst job cuts. Banker resurfaces after alleged inappropriate comment
The prophesied third-fourth quarter banking layoffs is coming to pass. It's not just Goldman Sachs that has a new round of cuts in mind: Barclays is preparing to make some too.
Bloomberg reported on Friday that Barclays plans to cut around 5% of front office jobs in its trading business as well as "some" dealmakers globally in a round of cuts that are likely to reach hundreds in total. It's part of an annual cull of underperformers.
Barclays' decision follows a 33% year-on-year decline from equities trading revenues and an 18% decline in debt capital markets revenues in the second quarter. Operating costs increased 6% during Q2, reflecting what CFO Anna Cross said was "selective investment" in the client franchise, even while the bank remained "focused on capturing cost efficiencies."
One person who won't be cut in the coming round at Barclays is Cathal Deasy, Barclays' co-head of global banking, even though he's not entirely popular internally. Deasy was appointed co-head of global banking with Taylor Wright in January, and his arrival was followed by the departure of around 30 senior Barclays dealmakers. Barclays insiders told us the exits reflected a lack of confidence in Deasy, who was deemed difficult to understand and less talented than many incumbents. It didn't help that Barclays had also allegedly failed to honour promotion and pay promises for some of the senior people who departed.
As he attempts to swim against a tide of disgruntlement, the London Times reports that Deasy is engaged in a demanding commuting schedule, in which he alternately spends a week working in London and a week in New York, alongside Wright.
Deasy and Wright told the Times they're untroubled about all the senior banker exits this year, which they said simply reflect Barclays' shift out of slow-growing areas and into sectors like healthcare and climate technology. Nonetheless, Barclays seems to be plugging its gaps. Marco Valla, its very popular head of financial sponsors left to run banking at UBS in June and Barclays just hired Christian Oberle from JPMorgan to replace him.
Like many of Barclay's senior hires this year, Oberle is likely to have come on a large guaranteed bonus. While Barclays cuts costs with one hand, it's adding them with the other.
Separately, Financial News reports that Jan Skarbek, the former head of UK investment banking at Citigroup, has resurfaced after quitting his job last year.
Skarbek quit after allegedly telling a junior she needed "love and affection" on a work trip to Spain. Skarbek left the bank before an investigation into the incident was completed.
In his new role, Skarbek will work for boutique firm Europa Partners. He declared himself "excited" and said he was looking forward to, "offering clients discrete, impartial and conflict-free advice".
Goldman Sachs' CEO David Solomon: “It’s not fun watching some of the personal attacks in the press. I don’t recognize the caricature that’s been painted of me.” (Reuters)
Ex-Goldman Sachs CEO Lloyd Blankfein says the feud between he and David Solomon is overplayed. “You should know David and I speak regularly, twice in the last week or so. I am having dinner with him this weekend and I am going to an event at his home later this month.” (NYPost)
SoftBank’s $50bn flotation of Arm is more than five times oversubscribed but this may not be a good thing. “The fact that everyone is coming to us with their Arm pitch feels like something that happens at the end of a cycle when it is difficult to sell a story...It’s not good optics if this is supposed to be the start of the AI cycle.” (Financial Times)
When you meet a man at the airport who says he went from Harvard MBA to investment banking in NYC… to an existential crisis at 35 where he lost himself, gave it all up, found himself, met his wife, and built multiple business. (Twitter)
Hedge funds Schonfeld, Balyasny, ExodusPoint have had a challenging month. (Bloomberg)
Credit hedge funds are thriving. "I think this is a golden age for fresh credit because legacy credit has a lot of flaws in it, not least a lack of covenants. We can come in with very good covenants and shape the transaction any way we like.” (Financial Times)
ExodosPoint is reopening to fresh cash for the first time in three years and will want to hire some traders. It's added 40 people in the past year. (Bloomberg)
Mizuho's plan to conquer America. It wants “to be solidly inside the top 10 corporate investment banks within three years. - We’re growing and most of the foreign banks are not growing.” (Financial Times)
Jefferies wants to expand in Dubai and France. “We launched our investment banking business in Dubai this year and see this region as a key opportunity for growth. We have had a capital markets team there for two years already and our focus is now on expanding our investment banking presence in the broader Gulf region. (Financial News)
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Former Goldman Sachs banker Hugh Stephenson went to Burning Man and considers it a fixture in his calendar. “It was when the mud started caking onto our shoes, bikes, wheels – that’s when we thought, ‘shit’. But it’s also at the point you just have to let go … and say ‘f--- it, you’re in the desert’, and you just embrace it.” (AFR)