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Morning Coffee: Deutsche Bank's new hiring focus revealed in Citi MD's return. Back to office push foiled by seating shortage

An AI generated image of Pedro drinking coffee upon his return

When a bank decides it wants to take market share in a new product or geography, nothing makes the statement like a high-profile hire. Deutsche Bank has gone for the splashy statement with the addition of Pedro Goldbaum as head of the US rates business.

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Goldbaum was previously global co-head of rates at Citigroup.  He disappeared unexpectedly last October, seemingly although not certainly one of the early casualties of the “co-heads will roll” restructuring and delayering of Citi's management structure.

His new title at Deutsche is one of those works of investment banking poetry which presumably summarise weeks of negotiation and internal wrangling; he’s going to be (deep breath) “Head of Dollar Non-Linear Rates and Inflation Trade and Head of Latam Rates Trading”.  Effectively, this means “head of a lot of products where he has a strong personal franchise, but not a global co-head” – it looks like a slight step down for him in hierarchical terms, although the financial descent may not be as steep.

This looks like a flex for Deutsche Bank – someone who was once jointly responsible for the whole shooting match at a bulge bracket firm is now concentrating his entire firepower on a smaller number of products.  Specifically, it suggests that Deutsche is back, baby, in the competitive world of North American macro products.

It was really not so long ago that Deutsche Bank was a very big name in this space – back in 2011 it was vying with JPMorgan for the then-coveted title of “flow monster”.  But the franchise fell victim to chronic capital shortages. Deutsche had failed to realize that the world had changed and that pre-crisis levels of financial leverage weren’t sustainable anymore.

There followed a lot of painful cutting back (the Latam rates business was actually shut down between 2015 and 2018), and when the time came to rebuild under Christian Sewing, the priority was naturally the domestic franchise in Europe. However, Deutsche has been playing offence for a while now – it’s doubled its US rates trading revenue since 2019. And even after doing so, it’s still only the ninth biggest player overall, according to BCG.

Maybe Deutsche has smelled blood in the water.  The big US banks are claiming that the proposed “Endgame” regulatory changes would create huge capital problems for their own trading operations, leaving them vulnerable to losing market share to overseas players who have spent the last five years redesigning their business model. 

Greenbaum’s hiring today was accompanied by another announcement that Michael Fisher will be joining from Barclays to run a team selling rates products to banks, while Vignesh Rami is relocating from London to New York to run FICC sales to insurance clients.  It seems quite likely that there are going to be a lot more follow-on hires as the franchise builds back.  And market share battles like this are always good for the labour market.

Elsewhere, anyone who doesn’t understand the meaning of “we realized that our decision would not be received positively by everyone and we appreciate your feedback and frank words” has either not spent long enough in banking or isn’t cynical enough.  This phrase, taken from a staff memo by Deutsche Bank CEO Christian Sewing and COO Rebecca Short, translates from euphemism as “stop complaining, it isn’t going to change anything”.

The decision in this case is to raise the compulsory days-in-office from two to three for a large proportion of staff.  Although Deutsche is still one of the more generous banks when it comes to flexible working, it seems that the 2021 policy of “a range of 40 to 60 per cent” of working from home time has settled at the lower end.

This raises a surprising problem.  Deutsche had previously said it would use the move to flexible working to optimise its property “footprint”.  And having done so, some employees, apparently particularly in Germany, are saying that there literally isn’t enough desk space for them now.  It seems that the back to office policy won’t change, so the problem will have to be solved by renting some more real estate, losing some employees, or just asking Deutsche bankers to squeeze up a little closer.

Meanwhile …

PrimaryBid is planning to make 25% of its 160 employees redundant.  This seems to be partly a matter of “fintech winter” continuing, partly the fact that the company has managed to automate some of its processes, but perhaps mainly because it is a UK company with a business model based on equity IPOs. (Bloomberg)

A JPMorgan VP in India turned down a job move to Singapore in order to go to the Gujarat International Tech-Finance City, and is now complaining that some buildings are refusing to allow him to buy a flat because of caste discrimination (Mint)

Partly alt-data, partly analysis and with a strong sense of a marketing gimmick, the equity analysts at Bernstein have decided to carry out an exhaustive analysis of references to cognac and tequila in rap lyrics, in order to possibly get a sense of trends in African-Americans purchases of spirits brands. (FT Alphaville)

Maren Altman was an astrologer, then claimed to be able to predict the trading of crypto-currencies, and now has an OnlyFans.  At some point along the way, she raised $500,000 in a “pre-seed round”, money which investors have presumably said goodbye to. (Protos)

Another piece of banking title poetry; Jeff Currie was the rather prosaic “global head of commodities research” at Goldman Sachs, but having left the firm in August last year he has now shown up at Carlyle Group as “Chief Strategy Officer of Energy Pathways”.  In both roles it seems like what he actually does is forecast oil prices. (FT)

On the day when the equal pay data comes out in Australia and various big banks are named and shamed, a horrible secret of the industry is revealed.  Although this is often suggested as a partial reason for the gender pay gap, lots of male bankers also hate hanging around drinking with clients at the rugby.  (AFR)

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AUTHORDaniel Davies Global Editor
  • st
    stevemc
    1 March 2024

    Funny how Deutsche has 0% raises and given guidance for no increase of pay for staff in US. But other countries in Asia such as Singapore, India and many countries in Europe are going to get mandatory fixed pay increases. Germany by default gets a 2% increase. It's time the US government thinks about its people for an outside bank giving more to its people here when the US is the biggest economic driver.

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