Morning Coffee: Dedicated bankers sleep in the office for weeks on end. Finding God on the IPO roadshow
The occasional all-nighter is part of the fun and games of banking, particularly at the junior levels and in capital markets and advisory. But it’s usually a matter of staying up all night working. If you find yourself needing to sleep at the office, the approved locations used to be forty winks at your desk, a quick and private nap on the toilet floor or a longer snooze during a town hall strategy update. Bringing a sleeping bag or camp bed to the trading floor is usually frowned on.
But these are abnormal times. Traders in Shanghai seem to have been caught out by the very rapid rise in coronavirus cases, which has hit their city considerably harder than the first wave in China did. Not all firms set up proper work-from-home arrangements in 2020, and China's traders are addressing many of the familiar issues of compliance, reliable internet and private space for the first time.
That means that some traders on both buy and sell-sides are finding themselves unable to stomach the risk that they might be locked out of their trading floors at a time of elevated volatility. The local government in Shanghai is taking the approach of locking down entire buildings, so there’s also a risk on any given day that you might want to leave for home but not be allowed to. Plenty of bankers are, consequently, packing suitcases and getting ready for an extended stay at the office.
How badly is this going to suck? On the one hand, logic suggests that it will be pretty bad. Employers are doing their best to provide airbeds, instant noodles and hygiene products, but an office building is simply not designed for habitation and there’s no way that living in one can be anything other than squalid.
On the other hand, there’s a sort of camaraderie that develops in shared hardship. Although it’s a more intrinsically boring location, camping out in the office is not that much different from camping out in the woods in terms of physical comforts, and the market itself is likely to make up for the missing excitement. As long as it doesn’t go on too long, these traders could be, perversely, making memories for the future. At the very least, they’ll have some good war stories and an unbeatable putdown when future generations complain about not having their Saturday afternoons respected.
In fact, bankers elsewhere might have cause to be worried. If it turns out that the long stayers of Shanghai have a strong bonding experience and end up effectively communicating and coping better with the volatility for their clients, other banks may copy them. We could see the “camp-out on the ninth floor” become part of every internship or associate program, or whole teams being forced to “live in” during market crashes. We’ve suggested in the past that a reasonable way to forecast trends in the industry is to ask yourself what would be most unpleasant for employees, and this might be a post-pandemic future to fear.
Elsewhere, an IPO roadshow is not a normal place to have a spiritual experience. Most of the time, a fortnight’s worth of punishing travel schedules, late night alcohol and repetitive PowerPoint presentations will have people questioning their existing faith in God, not discovering a new one.
However, strange things happen on the road. According to Stu Fuhlendorf, formerly CFO of tech company Isilon, he had a drunken conversation about Karl Marx and religion in Soho with his Morgan Stanley tech bankers after nine presentations and a long dinner. His ensuing reflections on the “opiate of the people” started a train of thought which ended up with him quitting the world of finance and dedicating his life to the church.
Stu’s account seems to skip over a few interim stages, referring to “lawsuits and bad investments” generically rather than to the rather large earnings restatements which came shortly after that very business trip, but these are presumably dealt with in more depth in the autobiography he’s currently promoting. It just goes to show, you never know what the client in the airline seat next to you might really be thinking when they reorganize their slides for the hundredth time.
Announcing that you’re going to pull out of Russia is one thing, but actually doing it is a bit more difficult. Several banks, including Bank of America and JP Morgan, have been paying local staff their next four months’ salary in advance, in an attempt reassure the people that they need to manage the process that they will still get paid. (Financial News)
Not every M&A deal can be a glamour job. Spare a thought for the Bank of America team who might have been sent to do due diligence on a transaction involving four holiday parks in North Wales, in February. (Daily Post)
A “quick-talking hockey pro turned junior banker”, an “investment banking analyst whose financial brilliance is only matched by his insatiable libido” and a “wily and golf-loving managing director”. The film version of a novel called “Discussion Materials”, complete with solid B-minus-list romcom cast, doesn’t really look like it’s going to be a balanced and nuanced portrayal of the industry. (Deadline)
After all the entertainment that the Roger Ng / 1MDB trial has been giving us, it would be an anticlimax to find out that the proceeds of the deal had been spent on prosaic banker goodies like cars and penthouse apartments. In fact, the money has been traced to the purchase of, among other toys, a $20k gold-plated hourglass. (Bloomberg)
Anne Clark Wolff of Independence Point Partners says that client demand and staff retention will be the main drivers of improving diversity rather than regulatory targets, and that “we’re close to that point where shareholders can quantify the benefit that they attribute to these firms” (Financial News)
Warren Buffet has adjusted the bid price for list latest acquisition to make it clear to the selling shareholders that they, not he, will be paying Goldman Sachs’ $27m fee on the deal. (Bloomberg)
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