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Morning Coffee: The ethos of the most charming and intimidating man in banking. When ex-banking interns offer careers advice

If you're looking for a role model in banking, the Economist may have found you one. Its profile of Credit Suisse chief executive Tidjane Thiam sums him up perfectly in a phrase: “Charming in person and intimidating and forceful by reputation.”  The only thing wrong with it is that as several currently and former employees can testify, he’s perfectly capable of being intimidating and forceful in person too.  The charm is mainly focused on clients, and people who bring solutions, but (as Iqbal Khan found out), TT can switch to the other mode pretty quickly if he things the situation warrants it.

Charm alone, though, doesn’t get you a profile in the Economist, let alone one that’s almost entirely admiring and snark-free.  It’s a tribute to the arduous and largely successful job of turning Credit Suisse around and becoming one of the few non-U.S. members of the club of investment banks capable of generating something close to a double digit return on equity.

So what’s his secret? Precisely the blend of those two qualities. Thiam's ethos is summed up in the quote, “Cost cuts have to be binary”, and arguably there’s more understanding of the industry summed up in those five words than in a dozen average CEO letters.  When you’re reducing costs and getting out of business lines, get out of them, so that you can free up the office space, cancel the data feeds and not worry about the surprisingly expensive task of maintaining a skeleton crew.  It seems obvious, but it escaped Mr Thiam’s predecessors, and banks like Deutsche have taken an age to learn it. Trying to maintain a third-tier franchise simply to shore up the illusion of universal coverage leaves you with second tier costs and fourth tier revenues.

On the other hand, force and intimidation can’t deliver the goods in a people business any more than charm alone. The other revealing sentence in the Economist profile is that “instead of elegant simplicity he opted for an unusual, complex and asymmetrical structure for the firm”.  This is an allusion to the fact that Credit Suisse’s reporting structure (two geographic divisions for Asia and Switzerland, plus functional ones for sales & trading, capital markets & advisory and wealth management) makes no sense. 

Or at least, it makes no sense until you remember that Swiss banking is a political graveyard which has swallowed up dozens of non-Swiss managers, while Asia is a market where private bankers have very personal franchises and tend to get cross and leave if you make them report to someone they don’t have confidence in.  So in fact, although it cross-cuts all sorts of lines and makes the accounts difficult to read, this divisional structure avoids recreating some of the key tensions which could undermine the whole project.  A McKinsey veteran himself, Thiam is one of the few CEOs in the industry who has had the willpower to reject the lure of a clean and logical org chart and think about the human and emotional realities beneath. 

In many ways, it’s a classic “iron fist in the velvet glove” management style and it tends to breed respect rather than love on the part of employees.  But it’s hard to argue with results, and Mr Thiam’s success seems to be based on a sound operating philosophy.

Changing subjects, would you read a profile of someone described as “Former business development executive at a regional insurance company, now running a fintech providing services to regional insurance companies!”.  Probably not.

This is presumably why such people prefer to refer to themselves as “millennial finance analyst at a huge investment bank at NYC” as a more attractive backstory.  But what if the period as a 'millennial finance analyst was simply an internship,' even if the investment bank was JPMorgan?

There’s no need to name names or ridicule the startup founder (well, not too much) – starting a business and generating $2m in annualised revenue is impressive in its own regard.  But even in our post-2008 world in which bankers are looked down on by tech startup founders, everyone still wants to claim the cachet of having tipped their toe in the bulge bracket. Next, we will have careers advice people who've done a spring week or taster day. 

Meanwhile ...

There’s only one thing worse than being stuck in an interview room with a manager with no interview training who tries to compensate by blustering and pumping up his own self-importance. And that’s being the manager in question, completely unprepared and faced with an intimidatingly bright young candidate. Apparently the tech industry handles these things every bit as badly as finance (Wired)

The titanium Apple Card is vulnerable to scratches and can’t be stored in a leather wallet for fear of permanent discoloration.  Goldman must have thought that leaving the design to their partners was such an obvious idea ... (The Verge)

Significant job cuts coming at BNP Paribas Securities Services in Paris, according to Le Monde (Reuters)

Banks in London are under pressure to move jobs to the EU post Brexit – according to regulators, many Paris or Frankfurt units are significantly understaffed for the risks being transferred.  But are the regulators undermining the European market by being so heavy handed? (Bloomberg)

Bizarre allegations that a lawyer traded confidential documents about one party his firm was suing for a sex tape of a completely different party.  (Since lawyers are involved, and apparently pretty aggressive ones, we’d better make it clear the allegation is denied!) (FT)

The “proactivity paradox” – bosses say they want employees to be proactive, but actually they only want employees to proactively do exactly what the boss wanted without telling them. (Harvard Business Review)

And sales and trading executives are sceptical that a cut in the trading day will really have an effect on work life balance or gender equity (Financial News)

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AUTHORDaniel Davies Insider Comment

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