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Morning Coffee: Citi’s ex-Deutsche Bank boss is repeating the firing-hiring formula. When boomers make millions and millennials don't

Investment bank restructuring programs are a bit like flu or graduate school – the best thing you can say about them is that it’s nice when they’ve finished. Bankers at Citi will be able to reflect on this from next week. As we reported here yesterday, the management overhaul stage of Project Bora Bora is done, and according to UK CEO Tiina Lee, the bank is now prepared to start “selectively” hiring in “fast-growing areas”.

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This doesn’t appear to be any kind of 180-degree turn; Lee made it clear that “We’re not going out and hiring lots and lots of people, but we will be strategic about it”.  Reading between the lines, the message she seems to be trying to send is that it’s extremely rare for a bank to be doing no hiring at all; even in the most stringent headcount reduction plans, there will be some franchises that are growing, some businesses that are short-staffed and some vacancies that need to be filled.

Tiina Lee made similar points, in similar language, when she was in a similar position this time last year when she worked for Deutsche Bank.  Unless a bank is in absolute crisis mode, it’s always going to be looking to manage both revenue and costs, which means that “hiring while firing” is always going to happen. 

It's good to know that even in tough times, there are pockets of growth.  People aren’t just helpless victims of larger forces. Even more interestingly, Lee considers there to be potentially fast-growing businesses in the UK, which has really been something of a Cinderella market for quite a while.  At present Citi is mainly looking to attract new clients in its corporate banking business, but according to Lee, “I firmly believe that over the next five to 10 years we are going to look back and say that actually what this government has done, what regulators have done, what the stock exchange has done … will make the UK a far more competitive place to do business”.

Elsewhere, the recently completed bonus season has done nothing to shift Japan’s reputation for comparatively poor pay. Overall pools at global banks active in Tokyo were down by around 10% on last year.

Japanese bankers might reasonably feel a bit hard done by, because in revenue terms, as Jack Brennan from recruiters Hays puts it, “The M&A space is great, real estate space is great, private equity space is great”.  Deal volumes were up 55% on last year, and fixed income trading by a third.  And yet Japanese bankers have been underpaid for years. The overall labour market isn’t particularly tight, and so there's no need to pay people.

Last year, there was one little exception.  As the Bank of Japan brought its policy back to life, there was a sudden scramble for rates and government bond traders.  Top performers in this niche apparently saw total comp double, with some traders taking in $1.5m or even $3m.

This has implications for the generational distribution of bonuses.  Because Japanese rates and government bond markets had been so utterly dead for so long during the ZIRP and QE period, nobody has gone into those careers for decades.  And so the traders who were suddenly getting job offers and big bonuses were, for the most part, probably really quite old.  Which means that, ironically, without anyone intending anything of the sort, the recovery of the Japanese investment banking market has produced a distribution of gains that couldn’t be more traditional in its veneration of elders.

Meanwhile …

Nobody in their right mind would put the whole of their pension savings in Pierre Andurand’s Commodities Discretionary Enhanced hedge fund, but a small allocation pays disproportionate dividends in terms of excitement, along with more than respectable long term returns.  After a 55% loss last year, he’s bouncing back with 20% positive returns year to date – these wild swings leave investors still quite a way from the high-water mark, but they’re certainly getting a run for their money. (Bloomberg)

Copper, the crypto firm chaired by former Chancellor Philip Hammond is meant to be “building the institutional standard for digital assets”.  Unfortunately, at present, this seems to mean “behaving like investment bankers thirty years ago” rather than “behaving like bankers now”. At least they’re respecting food hygiene regulations; the male and female models that their party guests were eating sushi platters off were apparently “wearing thin bodysuits” rather than being totally naked. (FT)

Last year, private credit was one of the few bright spots in an otherwise disappointing recruitment market.  But was it a mirage? Banks might be reluctant to give up market share in corporate lending as they have in so many other areas. (IFRE)

After saying nice things about Donald Trump a couple of months ago, Jamie Dimon has been building bridges with a private lunch at the White House. It’s not recorded what he talked about with Kamala Harris, but he’s been talked about as a potential Treasury Secretary in the past (FT)

“It’s a better start than last year, but it’s not quite the bonanza that people hoped for yet”. Tom Miles of Morgan Stanley sums up the state of the M&A market, where global revenues are up 21% on last year, but it “feels” a bit better because there have been some very big individual deals. (Bloomberg)

Banker to the art world, Drew Watson of Bank of America’s “art finance group” reckons that buying art is easy but selling it a lot more difficult.  (Business Insider)

Have a confidential story, tip, or comment you’d like to share? Contact: sbutcher@efinancialcareers.com in the first instance. Whatsapp/Signal/Telegram also available (Telegram: @SarahButcher)

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AUTHORDaniel Davies Global Editor
  • An
    Anonymous88
    27 March 2024

    Citi hired a few DB folks back in 2018 and 2019 and they are all of the same ilk, couldn't care less about culture of the team, cut-throat to the extent like estate agents. Hopefully Jane Fraser will weed these out as well soon and bring more discipline and accountability.

  • Go
    Good article
    27 March 2024

    yes. Citi's re-org execution was done in a totally distorted way by some lower rank management who fooled his upper and utilized the opportunity to get his own friends in.


  • Ex
    ExDB_JPM
    27 March 2024

    Having worked with Tiina for a number of years at DB, she takes no prisoners and is as blood thirsty as they come.

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