Keen eyes might have seen this Bloomberg story coming. On the face of it, that’s not bad news – a potential 15% increase in Deutsche Bank’s bonus pool, taking it to its highest level in four years. Given the expected fourth-quarter loss, the share price reactions seen by high-earning U.S. banks, and the mixed start to the business year, many Deutsche bankers allow themselves a sigh of relief.
But there are always demons in the details. In an environment where the CEO has publicly committed to paying for performance and behaving in a “competitive” manner, but where there is a need to show progress towards a RoE target, exercise caution towards supervisors and to keep something in reserve in case the good times do not last, it is very likely that there will be a considerable differentiation in payments.
Therefore, while the top performers in Deutsche Bank’s capital markets and advisory teams are likely to be well compensated, others may not be. Deutsche has good reason to pay its M&A bankers and corporate financiers handsomely: It probably needs to signal that it’s hiring and continuing to grow its franchise. Even average performers in these fields should be satisfied, simply because if Deutsche doesn’t try hard enough to keep them there, there are still plenty of competitors to turn to. Elsewhere, however, the news might be a bit more mixed.
It’s “mixed” rather than “bad” – the overall pool is up, after all, if Bloomberg’s story is accurate. So sales and trading might not be too disappointed, especially if they keep in mind that they were looked after pretty well last year. The real cost savings will apparently come from “certain back-office units” where “substantial reductions” are possible, according to “people familiar with the matter who asked not to be named”.
Which back office units? To even ask the question is to realize that the old front/back/middle-office distinctions are no longer as meaningful as they once were. The company seems unlikely to take many personnel risks with its Google Cloud joint venture, for example, and the developers of the Autobahn trading platform may even be better placed than their colleagues in sales and trading. front-office. But jobs with a simpler COO and administrative nature might receive bad news; even risk and compliance staff are not as high a priority as in previous years.
The person bonus is an objective assessment like a review score, showing the quality of work they’ve done in the last year – it’s a measure of how likely management thinks you are leaving, combined with how much revenue they think they would lose if you did. What circulates comes back, and areas that are currently cold will one day be warm; if you are in the less fortunate ranks this year, you can rest assured that your time may still come next year.
Elsewhere, the story Wade Pryor tells about his decision to leave Goldman Sachs after eight months on the analyst program is the most jaw-dropping we’ve seen in all of 2022. He began to reevaluate his priorities after have received an offer. that few bankers will have to consider.
This offer came from a ’50 year old’ man on Grindr, who messaged to say ‘I’m looking for a boyfriend to spoil on a weekly allowance…Let me know if you’re interested xx’. And that weekly allowance was apparently “far more than triple my current salary”.
The timeline of his story jumps around a bit, so it’s not clear whether it’s the full-time graduate’s salary or the summer internship stipend, but either way, “well over the triple” certainly seems to imply at least $250,000 per year. And working conditions were probably better – at the time Wade was attached to the Consumer Retail Healthcare investment banking team in London, but stuck in his parents’ home in the US due to COVID, working the two sets of hours.
In the end, he decided that Goldman Sachs and “Ken” (presumably an alias) weren’t for him, and now he’s a trainee architect in Milan. Interestingly, however, his decision-making process raised a number of general objections to becoming a sex worker, including fear of stigma and harassment, and the fact that “given the privilege of my family, nor can I justify taking up space in an industry that those with fewer resources often rely on.” His reasons for not continuing in banking were simply that he didn’t like it.
During this time …
Citi deferred its bonuses further. Some physicians have received stock payments that are deferred for up to five years. (Financial News)
Citi is spending £100million to revamp its Canary Wharf tower and will require the relocation of 9,000 staff during this time. It is unclear whether they can all work from home. (FinancialTimes)
Bank of America allocates $1 billion in stock units for its “Sharing Success” program. They primarily target the lowest paid network employees, but the program threshold is $500,000 in salary, so a select number of mid-level investment bankers will receive a small but significant giveaway. (Bloomberg)
Lloyd Blankfein says that “crypto is happening… It’s lost a lot of value, but to a point where billions of dollars of value are contributing to it and the whole ecosystem is growing around it.” Given his retirement hobby of trading personal wealth, we hope he hasn’t put his money where he’s talking this week (CNBC)
Strip clubs, ransacked hotel rooms, spending thousands of dollars on food and drink – if Swiss prosecutors are to be believed, the best way to enjoy a Wolf of Wall Street lifestyle is to be CEO of a savings bank. (Bloomberg)
If Banks wants to enter the Metaverse, there will be serious competition for talent – Roblox is hiring 258 developers to create VR kids games. (Business Insider)
Regardless of the eventual outcome of the dispute, it must be awfully satisfying to tell a customer that “we have had a thorough review of the sales and compliance processes on this business, and have concluded that your losses are your fault” . (Bloomberg)
If someone makes you extravagant offers of gifts and allowances on a dating site this year (see above, it could happen), maybe check the source of their funds. Former UBS Wirehouse broker German Nino of Miami is currently accused of stealing $5.8 million and spending it on ‘lavish gifts for multiple girlfriends’ (MarketWatch)
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