Morning Coffee: The private equity guy too scared to buy a bigger apartment. Bankers deeply invigorated by the ARM IPO
Complaining that you don't have enough money to live on has become a trope if you're a junior banker. An entire thread on Wall Street Oasis was devoted to the issue earlier this month, with one London analyst complaining that his £70k salary left him with £4k a month after tax, and that this wasn't enough to rent a decent apartment.
When you're a 23-year-old starting out in banking, such things are to be expected, and the solution is usually to rent with other people instead of on your own. But when you've worked in financial services for 15 years, your living accommodation is usually more deluxe.
Not always. Financial News spoke to ex-Lehman Brothers analyst Dan Gus, who has himself being speaking to all the other ex-Lehman analysts he can find, and Gus says ex-Lehman juniors are still scarred years later.
One of them - Gus didn't say which - now works in private equity, where he is pretty senior. However, he's been so unable to shake off the notion that he might lose everything, that Gus says he still lives in a one-bedroom apartment with his wife and child. His apprehension is seemingly engendered by the Lehman analyst experience: one moment juniors had been selected for an elite analyst program; the next they were dumped onto one of the most "brutal" job markets for years.
The story of the apprehensive ex-Lehman analyst coincides with a new book looking at how high earners feel about inequality. The answer seems to be that rather than worrying about people below them, most are concerned that their own incomes are inadequate for what's coming next.
"I worry about my kids," said one senior woman in banking. "I don’t know what they’re going to do because of all the jobs – and I say this from a financial services background – a lot of the entry-level jobs have been moved offshore. The job where I started [at an accountancy firm] is now done in India, and has been done in India for some years … So it’s harder to break into those industries."
And if they're not worrying about the future, some very high earners say they're entirely absorbed by the present. A banker in his 50s told the book's authors he has nothing left from what he earns. "Everything I earn goes at the end of the month: on school fees, holidays, and so on," he reflected. "I am at the top of the income percentiles – though I also know I’m miles away from the very rich....I never feel cash-rich."
It's a reminder that money doesn't buy happiness. Sometimes it just buys a more expensive lifestyle, unattainable aspirations for your children, and crippling apprehension that it might all go away.
Separately, equity capital markets bankers who were gripped with crippling apprehension about their futures at the start of the year, are now going around saying things like, "The IPO market is in the final phase of the recovery," "The pipeline is the strongest it's ever been," and, "We have collectively earned $105m in fees for a single deal."
This all follows yesterday's Arm IPO, which went pretty well, raised $5.5bn for Softbank and was the biggest US listing for two years. "You could see an acceleration of transactions waiting for next year to move into the fourth quarter,” said Jim Cooney, head of Americas equity capital markets at Bank of America. It's probably not a good idea to buy a bigger apartment quite yet.
Meanwhile....
Four employees of Goldman Sachs were fired, including Hari Moorthy, a partner at Goldman and global head of transaction banking, as a result of serious violations of the firm's communications policies. (Financial Times)
Deutsche Bank won't have to pay an ECB surcharge for its leverage finance business after all. (Bloomberg)
Sterling Auty, a former equity research analyst at JPMorgan is becoming a TMT banker at Barclays. (Bloomberg)
Nomura hired David Steckl, Sandeep Bidani, and Chakradhar Singh into senior sales roles within its markets division in New York as part of a fresh focus on clients within the insurance sector. (Financial News)
WallEye has been hiring energy traders and plans to open an office in Dubai (for which it's already hired two people). (Bloomberg)
The founders of failed cryptocurrency hedge fund Three Arrows Capital have been banned by the Singapore regulator from taking part in the management, acting as a director or becoming a substantial shareholder of any regulated capital market services company there for nine years. (Straits Times)
How I worked 50 hours a week and earned $800k at Meta. (JoinTaro)
Everyone's getting pay cuts in Shanghai. A Shanghai-based consultant at a multinational firm said his daily meal allowance was slashed by nearly 80% to $27. (Bloomberg)
Soon you will be able to control Excel with your brain. (New Scientist)
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