Morning Coffee: Barclays identifies perfectly obvious place for its job cuts. Sycophantic bankers in pop star shoes
If you're paying a group of management consultants to take up residence at your head office in Canary Wharf and brainstorm a new strategy, you might expect them to produce something more than you could have come up with yourself. And yet, four months after people from Boston Consulting were first seen lurking around, Barclays' opening gambit for its restructuring seems to be to do the obvious thing and cut jobs in its shared support functions.
Reuters reports that Barclay's revelatory plan involves removing up to 2,000 jobs from a unit called Barclays Execution Services, where all the bank's back office staff sit. They are the people who provide the technology, operations and functional services for the rest of the bank. The cuts would amount to nearly 9% of Barclays' Execution Services' 22,000 staff.
The revelation that Barclays will be cutting all the most obvious people instead of tackling the investment bank, which accounts for 64% of its risk weighted assets, will be fine news for everyone working for the investment bank, but less welcomed by everyone who already anticipated that Boston Consulting wouldn't get to grips with the problem.
Barclays' CEO, CS Venkatakrishnan, already indicated that he probably wouldn't be doing much about the investment bank in the restructuring. “Rebuilding [the investment bank] took time, treasure and persistence,” Venkat told the Financial Times last week. “We are now at scale and it has helped diversify our returns, but it has grown to two-thirds of the bank, so we need to rebalance and grow the rest of the businesses outside it.”
In other words, the strategy is to hold the investment bank, growth other businesses, and shrink the back office. Maybe the consultants should stay for longer.
Separately, investment bankers have a history of sublimating themselves before clients and trying to seem that they understand the product. Previous instances of this include David Solomon wearing Lululemon pants (in the American sense) to pitch the leisure company, Michael Grimes driving an Uber to land the Uber IPO, and Goldman MD Srujan Linga sitting in an ice bath to impress Adam Neumann at WeWork.
Such behaviour continues. Bloomberg reports that 'at least 20 bankers' wore Golden Goose sneakers, costing $600 each, to pitch for Golden Goose's imminent Milan IPO of $3.3bn+. The sneakers, worn by celebrities like Taylor Swift, have a pre-used look suggesting they were left in the back of the cupboard after soiling 15 years ago. Bankers who rushed to buy them in Milanese shops reportedly discovered their colleagues had been there first. If you see someone in a smart gilet and dirty footwear, this is why.
Private equity firm says people are having second thoughts about private equity jobs and there's a hiring freeze. “The [labour] market is tough. We are seeing some people questioning their future careers and looking around to see which firms are faring well because their funds are not able to meet their targets or are reducing the size of subsequent funds,” observes Kerry Heaton, chief people officer at Hg Capital. (Real Deal)
Sergio Ermotti says Swiss taxpayers have nothing to fear from UBS and that if the bank were to blow up, he'd want an international trade buyer anyhow. "Even in the unlikely event of something going wrong at UBS, we have enough cushion before even speaking about a resolution of the bank and its very unlikely risk of a loss for the taxpayer." (Reuters)
Sergio Ermotti would like to see Credit Suisse executives punished. “It should be easier for the bank, or the regulator, to go after people who demonstrated great negligence.” (Bloomberg)
HSBC is hiring Karim Tannir, a JPMorgan veteran, as vice-chairman of global banking for HSBC across the Middle East, North Africa and Turkey. (Bloomberg)
Sir Christopher Hohn’s activist hedge fund TCI has opened an office in Abu Dhabi. (Financial Times)
Banks are busy selling loans for cars to people who can't really afford cars, securitizing them and creating tranches that they say are a solid investment. Sounds familiar. (Bloomberg)
Beware nasal spray dependency. "Nasal sprays work by stimulating the nervous system into forcing blood out of the nose tissue, which gets rid of the swelling that causes the blockage." The instant relief that follows is what gets people hooked, as well as the fact that our bodies start relying on the spray to do what it should be doing naturally. (Vice)
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