Morning Coffee: Bank CEO's advice to 29-year-old bankers fearful for their futures. The charts that say Deutsche Bank should be fine
It's never easy losing a job in financial services, but it's hardest when it's never happened before and you're an innocent with no experience of the abruptness of a departure with a box of belongings. At Credit Suisse, the expectation is that replaceable juniors will most frequently fall beneath UBS's knife this year, and some senior bankers who've been through something similar are prepping them for the psychological fallout.
One of the preppers is Richard Handler, the Jefferies CEO with a strong line in Instagram careers advice. In an open letter to "junior and mid-level people who lost their firm", Handler explains his learnings from the time Drexel Burnham Lambert went under in 1990, when he was 29-years-old.
Drexel's fall was like a death with a profound sense of "sadness and loss," says Handler. But it also taught him all sorts of things that have stayed with him since.
Those things include: humility ("One second you can be on top of the world and the envy of your friends and peers... The next second you can be unemployed in a tough job market and unsure which end is up or down); maturity ("Now you know firsthand how fragile everything in life is. Health is fragile, relationships are fragile, trust is fragile, and companies are fragile"); and priorities ( family and friends).
Like today's Credit Suisse bankers, Handler says he lost his job in a difficult market. He didn't take any time out to consider what to do next, and says it can be easy to decide that "you always hated the job anyway" when it's been snatched away from you. Instead, Handler immediately set about finding a new role, and after landing one at Jefferies, has been there ever since. "Pick yourself up now, pick up others around you, and just get to work putting your career back where you want it to be."
Be kind in down-markets, says Handler. Your former co-workers can become your "critical future clients, business partners, friends, spouses, or even friendly competitors." The people who are "trampling others" on the way to perceived life rafts are not acquitting themselves well. In challenging times, it's best to be kind to everyone, including assistants. "Having your eyes wide open during these very rare but incredibly telling points of time will give you incredible perspective for the rest of your career."
And yet, you can't be too precious about your future in a situation like this. Echoing headhunter Will Tan, who told Bloomberg last week that there won't be enough jobs to accommodate all the new jobseekers, Handler advocates "being flexible enough to seriously consider all next steps and exclude none." When you find a good opportunity, take it, he says. Don't linger. Trust your gut and join for the colleagues you'll be working with. In three decades' time, you too could be CEO there.
Separately, after Friday's traumas involving Deutsche Bank, two particular charts are circulating as proof that DB is not Credit Suisse and should be fine. Shown below, they're taken from a report last week from Autonomous Research and demonstrate that a) Deutsche Bank is profitable and has a comparatively high proportion of insured customer deposits, which Credit Suisse didn't and b) Deutsche Bank now is not like Deutsche Bank during the previous financial crisis.
Stuart Graham, the Autonomous analyst who put the charts together, said there should be no concerns about Deutsche Bank. Others agree. Citigroup Andrew Coombs said last week's sell-off of Deutsche Bank was "irrational."
Naysayers point out that Deutsche Bank isn't in the clear yet, though. The stock slid 13% on Friday and is down 20% so far this month. However, it's still in the mid-range of where it's traded for the past five years. “The risk is if there is a knock on impact from various media headlines on depositors psychologically, regardless of whether the initial reasoning behind this was correct or not,” observed Coombs.
Meanwhile...
Hedge fund Rokos, which takes large leveraged bets on government bonds, has been forced to stump-up a lot of extra collateral. (Financial Times)
Rokos sent clients a letter on Saturday. “We have de-risked following this month’s market price action, and P&L volatility has declined substantially as a result." (Bloomberg)
More than 75% of Swiss voters want UBS/Credit Suisse to be split up. (Financial Times)
UBS head of wealth management Iqbal Khan has been touring Asia telling people he's working on a retention package. (Bloomberg)
Following concerns about banks, money is pouring into US moneymarket funds. Funds run by Goldman Sachs, JPMorgan Chase and Fidelity are the biggest winners. (Financial Times)
Like McKinsey & Co, Accenture is cutting jobs and focusing on non-frontline consulting staff. (WSJ)
Careers advice from Andy Haldane, former chief economist at the Bank of England: Don't bring your whole self to to work to begin with and don't talk loudly in the lifts. - ". No one really likes youthful enthusiasm — especially at full volume in confined spaces" (Financial Times)
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