Morning Coffee: The other big European bank that may need retention bonuses. New multistrategy hedge fund has interesting hiring approach
Now that Credit Suisse's deferred bonuses are worth around a third of their expected value at the start of the year and may yet be clawed back altogether, the many deferred payment mechanisms deployed by Credit Suisse to retain its staff last year seem suddenly inconsequential. But this doesn't mean they won't be used elsewhere.
European banks have a long history of using retention bonuses to hold staff who are a flight risk. The latest bank that may need that playbook is Barclays, where a torrent of significant departures has hit the US M&A business.
It began with the exit of Marco Valla and two others for UBS in late April. While Valla, who worked for Credit Suisse before Barclays, doesn't seem that popular among Credit Suisse bankers, he was much liked at Barclays, where the hope was that he would become the new global head of M&A. The unexpected appointment of another Credit Suisse banker - Cathal Deasy - as Barclays' M&A head instead, seems to have been the catalyst for all the exits. Another 10 Barclays bankers followed Valla and quit for UBS in mid-May. And then last week, John Miller, Barclays' former co-head of investment banking, plus two managing directors Kurt Kohlmeyer and Richard Siegel, left for Jefferies. Around 24 have gone so far. Most of those leaving are the experienced US M&A bankers that Barclays acquired when it bought Lehman Brothers in 2008.
The exodus has not gone unnoticed. Reuters reports that Barclays last week appointed Jean-Francois Astier, its ex-Lehman former co-head of M&A who was displaced by Cathal Deasy as global head of financial sponsors. Barclays' chief executive C.S. Venkatakrishnan then held a special virtual town hall last week to discuss the management changes, and informed attendees that they were simply all about succession planning, smart use of the balance sheet, and helping private equity firms.
Will this be enough to stem the flow? Someone reportedly asked Venkat about bonuses, to which he replied that they would reflect employees' value and performance. Burned by the apparent failure to recognize Valla's value, some Barclays' US bankers might want something more definitive instead.
Separately, now that multistrategy hedge funds are offering by far the highest pay in the industry, applications to the established multistrat names are only likely to increase. Fortunately, then, new players are emerging.
They include ClearAlpha Technologies, a new fund managed by Brian Hurst of AQR and Elisha Wiesel of Goldman Sachs. Bloomberg reports that Hurst and Wiesel already have several hundred millions of dollars committed and that within a year they expect to have $1bn to deploy across 13 teams running 20 strategies, which suggests a lot of hiring is coming soon.
ClearAlpha plans to focus on unusual strategies like temperature arbitrage, and Bloomberg says it will have a commensurately unusual approach to hiring. When they first interview portfolio managers, Wiesel and Hurst reportedly refuse to look at their track records and instead ask them where they get their ideas from. The intention is to avoid people who follow the pack.
Recruits so far include a team of former Swiss Re traders working on temperature arbitrage, but Goldman Sachs may prove a fertile hunting ground in the future. - Wiesel was Goldman's former chief information officer, and had 9,000 engineers reporting to him at the firm.
Meanwhile...
UBS will complete the Credit Suisse deal on June 12th. (UBS)
UBS is supposed to report its results on July 25th but might delay them until the end of August. (Financial Times)
Bank of America expects investment banking fees and trading revenues to be broadly flat this quarter. (Reuters)
So far, BOA hired 700 people in May, compared to the 3,000 people that were hired at the same time last year. “We’re not making layoffs. We’re trying to do it by attrition, but even the attrition slowed to half what it was last year. And when I talk to other companies, I get the same input.” (The Hill)
Kathy Elsesser is leaving Goldman Sachs after 30 years. As chair of the consumer and retail banking group she was best known for getting David Solomon to dress up in yoga wear to pitch to Lululemon. (Bloomberg)
An MBA used to be a necessity in private equity. Not anymore. (WSJ)
Bad luck for British bankers sent abroad - it's no longer easy to get cheap mortgage deals on your house at home. (Financial Times)
Gwen Billon, head of services investment banking for Europe, the Middle East and Africa at Morgan Stanley, who also leads Morgan Stanley's aerospace and defence dealmaking team in the region, is joining PJT Partners in as senior role. (Financial News)
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