In theory, the working hours in investment banking jobs improve with time. The all-nighters are replaced with late nights and the late nights dwindle into early evenings punctuated by client meals and trips to the theatre. That's the theory. The reality - as has been pointed on various occasions, is that managing directors (MDs) in banks can work just as hard as everyone else, maybe harder when the relentless travel is factored in.
Matthew Grounds, regional CEO of UBS in Australia is one of these highly-driven MDs. Grounds announced his retirement yesterday, and the career obituaries are flowing in thick and fast.
Australian investment banking is also not a game for people who need eight hours’ uninterrupted sleep; it’s in a tricky time zone for everyone else. In 2011 Grounds was made Joint Global Head of Investment Banking Advisory alongside fellow earth-movers Simon Warshaw and Jimmy Neissa. This meant having two weekly conference calls at 1pm and 2pm New York time, which were convenient for Neissa but equivalent to 3am and 4am in Sydney. Then aged 42, Grounds endured that for three years.
How do you maintain this kind of pace? In his valedictory interview, Grounds suggests “Don't do it for the money, do it for the excitement. You either enjoy it or you don't”. Some rivals seem to take a different view though. One told the Financial Times that while Grounds is certaintly intelligent and charming and good with clients, he's also very motivated by money and quite ruthless. "Don’t come between Matthew and a dollar,” the unnamed 'other banks' disclosed. “He is very competitive." So, maybe this is how you get yourself out of bed twice weekly at 2.30am and 3.30am?
Either way, Grounds, who ran an operation so important that it had its own bonus pool, is retiring before turning 50. “If I continue on, I can look back when I am 60 and say I've been here for 35-years. Is that the right thing to do? It doesn't create opportunities for others. It's not the right thing for the business and it's not the right thing for me personally,” he says. When the thrill is gone, it’s time to stop.
Elsewhere, there is disagreement over the cost of those suits that senior Deutsche Bank staff had tailors in to fit them up for while redundancies at the bank were being announced on Monday. Most news sources that picked up the story have followed the original Financial News scoop and called them “£1,500 suits” (some American sites have rounded down slightly to US$1800). The Guardian, however, seems to have spoken to the tailoring company and discovered that the starting price is a mere £1200, a little less than $1500. So it’s possible that, if they had chosen the very cheapest option available that the suits could have cost 20% less.
Does that make it 20% less annoying or 20% more annoying for the people who were losing their jobs while senior management stood around in their underpants talking about cuff buttons? My intuition is that it’s worse to do something as crass as this for a cheap suit than for an expensive suit, others may differ. It’s likely to become iconic, though; culture is formed by legends and the suits debacle fits neatly into a narrative of a bank that had become overloaded with Managing Directors who didn’t care about the franchise, and of an equities business that wasn’t even important enough to the fixed income and IBD top brass to cancel a tailor’s appointment for. Hopefully the people in question will suffer the consequences at bonus time, and end up wishing they’d bought something off the peg.
The maverick techies of the UBS wealth management innovation lab seem to have had their wings clipped; the team has been merged into a broader project and some of its projects cancelled. It appears that they struggled to get from freewheeling ideas to commercial products, and some of their inventions (like the robot chief economist) were seen as gimmicky by the bankers. (Finews)
More Deutsche repercussions – the fate of employees who were persuaded to move from New York to the “nearshore” centre in Jacksonville (and the UK one in Birmingham) is unclear. The flipside of a lower cost of living is that if something like this happens, you’re a long way from the labour market. (Bloomberg)
More Deutsche Bank as the new top management team is announced – but there’s still no change at the very top of the Supervisory Board (Financial News / Financial News)
And yet more – the reduction in employee numbers in Deutsche Bank equities is potentially a material earnings shock to Factset, where it was a major customer (Reuters)
But a deal with BNP Paribas could save 300 jobs in the prime brokerage and electronic trading businesses. The latter of these two is potentially a bigger industry development than it might appear; the Deutsche Bank “Autobahn SuperX” is not trivial. It’s half the size of CS Crossfinder, bigger than MS Trajectory or Bank of America’s InstinctX, and about five times as big as poor old Citicross was when it shut down. (Financial News)
Culture clashes, trading losses, zero bonuses and mass resignations – a review of how the Citic acquisitions of CLSA has gone so far (Bloomberg)
And some good news at last. Citigroup has ambitions to be in the top three and is hiring across a number of sectors and markets (Bloomberg)
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