Morning Coffee: Nepotism in the junior ranks, meet the mother of quants

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Last year, during an ‘Introduction to the City’ session attended, strangely enough, largely by upper class English students who had only a vague interest in finance, the keynote speaker – a hedge fund manager – spoke of how he couldn’t even get his daughter an internship at a large investment bank.

“Apparently, this is not the thing to do these days,” he said slightly disparagingly, despite being a client of said investment bank.

Getting an internship through family connections might seem relatively small fry, but internships are intensely competitive, have high barriers to entry and pay up to $7k a month – or $85k on a pro rata annual basis. It’s also the fastest route into a full-time job.

So, news that Bank of New York Mellon has been ordered by U.S regulators to pay $14.8m for violating foreign-bribery laws by handing internships to relatives of officials at a huge Middle Eastern sovereign wealth fund – which just happened to be a big client – must have set the pulses racing of any senior banker who’s ever given someone a ‘leg up’ into an internship.

This isn’t the first time this has happened – last year the SEC was investigating claims that Goldman Sachs had offered internships to relatives of Libya’s sovereign wealth fund in order to win business. Other firms have offered internships to the highest bidder – for charity, of course.

Any intern hoping to get into an investment bank must have minimum academic requirements and needs to get through tough numerical and psychometric tests to get past HR, even if someone within the organisation has ensured they don’t end up in the ‘no’ pile.

Even this can be circumvented. As one former investment banking intern blogged this week, she was asked to take the test on behalf of a client’s son in order to assist him breaking through the internships recruitment barriers. She refused.

Despite all the rigid HR practices, financial services retains a reputation for nepotism. This doesn’t help.

Separately, Business Insider has profiled the professor largely responsible for a generation of French quants in investment banking. Forgetting Fabulous Fab for a moment, Nicole El Karoui is the mathematical genius who’s been teaching French quants how to create and price derivatives since the 1980s.

The fact that her course in Master of Advanced Studies programme Probability & Finance at Ecole Polytechnique in Paris started funnelling quants into investment banks in the 80s and 90s inspired other universities in France to do the same.


Rothschild has laid off its entire bond trading team in London, which equates to nine people (Wall Street Journal)

John Silvetz, a senior portfolio manager at BlueCrest Capital Management in New York, has left. (Bloomberg)

Bank of America has upped pay for its directors so that they will earn at least $280k. The bank insists this is the first pay rise for six years. (Wall Street Journal)

The blockchain is coming to disrupt banking. Operations professionals might want to be worried. “With blockchain you can theoretically settle a securities transaction in seconds instead of days and bring far more transparency to cross-border payments,” says Oliver Bussman, CIO at UBS. (Financial News)

The battle for talent in US healthcare investment banking continues. Charlie Newton, has moved across from Credit Suisse to Bank of America to co-head its healthcare team. (Wall Street Journal)

BAML has also brought in James Sadler as head of debt capital markets for the MENA region (Financial News)

Eric Shenker is the new head of U.S. equity trading at Mizhuo Securities. (Wall Street Journal)

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