Morning Coffee: The Citigroup cost-cutter encouraging people to stop managing-up. Goldman Sachs' partner party is coming
Andy Sieg, the newish head of wealth management at Citigroup, looks a little older than his 56 years. This might be because managing wealth managers is a stressful business, and he oversaw 25,000 of them at Merrill Lynch before joining Citi last September. Or it might be because he is wise.
Sieg needs both his wealth management expertise and his wisdom in his new job at Citi. Citi CEO Jane Fraser sets great store by him and mentioned him twice in the bank's last investor call. "He's off to a strong start," Fraser said of Sieg a few weeks ago, referring to Sieg as one of a few "selective" external hires.
Sieg's role at Citi is to get to grips with the wealth management business, which is barely profitable. Profits there fell 64% last year, generating a return on equity of just 2.6%. In an interview with the Wall Street Journal, Sieg said he's cutting "several hundred million" in annual costs from the unit. Unnamed sources 'familiar with the matter' said this will amount to 1,000 jobs.
As jobs are slashed, Sieg is deploying his wisdom to defuse politicking. He's reportedly told people at town halls to spend less time managing-up, and has received a "flood" of supportive emails from people who presumably thought this was a problem. He's also been spending his days travelling the world and talking to people in all the offices where costs will be cut (50% of the revenues and presumably the costs come from outside the US). A planned debit card project has been canceled in the UK. People seem to like him all the same; in Singapore he was asked to roll a pineapple for good luck.
If Sieg gets it right, and people do their jobs instead of focusing on flattering their bosses, he can help heal Citigroup. There's a reason other banks have focused on wealth management: as the WSJ points out, it uses little capital, generates steady fees and rich people usually repay their loans. But Citi's eclectic business needs a lot of work. Sieg is optimistic: “We have the brand, the clients and the capabilities to be the number one wealth business in the world," he declares. A lot of costs need to be cut first.
Separately, fresh from the departure of the surprisingly youthful-looking Jim Esposito from Goldman Sachs as he goes in search of his lost Mojo, CEO David Solomon is preparing for the partners' meeting.
The WSJ reports that the meeting will occur this week in Miami. It's more than just a meeting but a days-long agenda of talks, eating and events for 400 people. Last year, it occurred in the Miami Beach Edition hotel, where coffee cost $9 and the lobby smelled of soap.
This year, there will be Espo's exit to consider, plus other machinations at the top. The WSJ reports that Solomon has been shuffling the management committee: Alison Mass (chairman of the investment bank, head of the alumni group) and George Lee (head of the office of applied innovation) are out. Will Bousquette (chief operating officer of asset and wealth management) and Kathleen Connolly (global director of internal audit), may possibly be in. Partners might want to spend some managing up and ingratiating themselves with Solomon at the events this week.
Citi is offering one month's salary for every year of service to departing bankers. UBS did the same, but capped payments at £250k. (Financial News)
A London bank tried to cut salaries and had to stop. “Everyone was p----- off, [the changes] were scrapped after everyone moaned. People were concerned about school fees or because they like the money to punt around investing.” (Telegraph)
Bank of America cut Brian Moynihan's pay to $29m, down 3% on the previous year. This was the second year running that his bonus was cut. (Financial News)
executive Brian Moynihan $29m for 2023, down by 3% on the prior year, as Wall Street rivals have hiked pay for their top executives.
DWS, the asset manager majority owned by Deutsche Bank, plans to triple its graduate intake over the next year. (Financial News)
JPMorgan wants to trade private credit loans. This will create a need to constantly value the assets on a marked-to-market basis, and private credit lenders are apprehensive. (Bloomberg)
Mark Maislish, Goldman's head of equity syndicate in Europe, is joining Citadel. (Financial News)
Female executives who use “uptalk” — rising intonation at the end of a declarative phrase - on results calls will find their stock marked down. (Financial Times)
A banking couple helped the victims of the acid attack in London's Clapham. (The Times)
Elon Musk like taking drugs with everyone and they feel compelled to oblige him It's not clear whether this includes his bankers. (WSJ)
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