Morning Coffee: Barclays goes from selective hiring to (more) selective firing. Retired banker living his best life called back to the fray
When Barclays cut junior bankers in November, concerned insiders at the bank told us they feared it was the start of something. Cuts were likely to go "on and on and on," one told us, with more rounds likely if dealmaking didn't pick up.
Four months later, dealmaking hasn't exactly picked up, and cuts at the bank are indeed recurring: Barclays is cutting 'more than 100 roles' in its investment banking division, according to Sky News. Barclays isn't commenting, but the latest trimming will reportedly be spread across multiple countries and multiple functions.
Barclays isn't due to report its first quarter results until April 27th. JPMorgan and Citi's Q1 results last week gave a taste of what's probably to come: ECM, DCM and M&A are all down year-on-year, even if they're up on the final few months of 2022. The pipeline is still full. The trigger is ready to pulled on deals if things improve, but improvement doesn't seem to be coming soon. "Conversion is sensitive to market conditions and the economic outlook. We expect the second quarter and the rest of the year to remain challenging," declared Jeremy Barnum, JPMorgan CFO, on Friday.
Barclays has presumably decided it can't wait any longer for all those potential deals to convert into actuals. 100+ cuts isn't a big number, but the risk is that other banks reach the same conclusion: productivity in the investment banking business was down 25% on 2020 last year and if revenues don't recover, more cost-cutting is assured. Barclays said in February that it was planning some selective hiring for its investment bank and that it wanted more healthcare and technology bankers in the US and Europe; it's not clear whether this is still the case.
Separately, the last time Tom Naratil was out in public, he seemed to be accompanied by a professional photographer who was cataloging his departure from UBS after 39 years with a series of smiling photos showing the statuesque leader to good effect. Beyond enjoying his retirement, it's not clear what Naratil has been doing since, but he may now be recalled. Bloomberg reports that Sergio Ermotti is summoning former heavy hitters at UBS to return in its hour of need. Naratil, who was CFO and co-head of wealth management at the Swiss bank during his long tenure, has reportedly received the call just six months after he sailed off into the sepia sunset.
Credit Suisse is doing much better than UBS in investment banking in Singapore. According to recent data from Refinitiv, it jumped to fifth in investment bank fees there in Q1, up from 18tha year earlier. UBS didn't even make the list of the top ten. (FiNews)
Singapore will do well from Switzerland's travails. "Right now, Singaporeans are opening the Champagne. This is going to be the turning point.” (Bloomberg)
Singapore doesn't want to draw attention to all the Chinese money flowing into the city state. (Financial Times)
Former Barclays banker Louis Philippe Samnick says he and other French bankers were discriminated against and called the “French legion". (Bloomberg)
Stefan Hoops, the chief executive of Deutsche Bank's asset management arm, has invited staff, students and future asset managers to make specific calls on the markets, geopolitics or basketball, and is willing to bet a drink of a coffee on them being right or wrong. (Bloomberg)
Nassim Taleb says young people today are blinkered and engrossed in a cult of youth. "When I was a trader in my twenties, I picked the brains of every older trader who had survived. And that was not just me. When I look back, I see people who have survived have the same attitude." (Bloomberg)
Former Goldman Sachs CEO Hank Paulson is living in Barrington Illinois. He built a house there, next to his parents, when he started making money at Goldman. (Financial Times)
The SEC is "gathering market intelligence” on the risk posed by non-bank institutions like hedge funds. (Financial Times)
Lloyds chief executive Charlie Nunn was raised by a single mother who left school at 16 and was forecast bad A level grades, so didn't apply to university. When he achieved unexpectedly 'stellar' results, he applied to and was accepted by Cambridge. (The Times)
The best predictor of academic performance and subsequent career success is not cognitive ability, it’s the sociocultural context. It’s whether your parents have money. (ElPais)