Morning Coffee: There are some new and ominous signs at HSBC. The 'complete nutter' on the trading floor
If you're working for HSBC right now, you're probably waiting for the next revelation of the bank's strategic plans when it announces its fourth quarter results on February 23. HSBC declared its intention of making 35,000 job cuts globally in February 2020 and has since set about culling its equities business, cutting rates traders and moving structured product capabilities to Asia. It still has many of the 35,000 cuts to make, and some analysts have been encouraging the bank to think even more ambitiously and to make up to 100,000 cuts instead.
If you work for HSBC's global banking and markets division, it's all rather unsettling. The man to be aware of is James Forese, the former head of Citi's investment bank, who joined HSBC as a non-executive director in May 2020. Forese is said to be in favour of cutting more than 35,000 people and has the ear of CEO Noel Quinn.
With Forese in the background and cuts in process, the prospect of senior management changes in HSBC's London global banking and markets business is ominous. The London GB&M business made a loss of over $1bn in the first half of last year and looks vulnerable. Now, its leaders are migrating or retiring.
Financial News reported yesterday that Philippe Henry, the head of global banking for Europe at HSBC is stepping down after 32 years. HSBC is looking for a replacement but Henry's exit could be destabilizing for the London investment banker ranks. This will especially be the case if HSBC also moves Greg Guyett and Georges Elhedery - the London-based co-heads of the global banking and markets business - to Asia, as Bloomberg said it might earlier this week.
London staff have reason to worry how this will evolve. Asian HSBC bankers and traders do not. HSBC's Asian investment banking business has leadership uncertainties of its own, but it doesn't make a loss, and its traders are even hopeful they'll get higher bonuses this year.
Separately, trading floors have an unusually large share of people willing to indulge in mad behaviour like eating 20 burgers, or licking the blue block from the male urinal. Tom Hayes, the ex-UBS trader recently let out of prison for manipulating LIBOR seems to suggest that he was one of these crazers, although his activities seem tame by comparison.
Hayes told Bloomberg he was a “complete nutter on the trading floor”: he would regularly shout at colleagues and clothed himself in branded polo shirts given to him by brokers. Hayes said this nuttiness was ignored because he was a huge "money-maker." When he left the bank and traded on his own, he made $1.4m in two years, but lost it all in six weeks when he discovered criminal charges were being brought against him.
Hayes isn't sure what he will do next, but he's had a potential offer from a friend who runs a hedge fund in Hong Kong. “I miss being on the trading floor, I miss the camaraderie, I miss the adrenaline,” he told Bloomberg. However, he also worked for a drilling company in prison, and might just hang on there being mild-mannered instead.
Keith Gill said he lost $13m in a single day as Gamestop shares collapsed. He still made a $7.6m gain. (NYPost)
Hedge fund Senvest Asset Management made $700m on Gamestop. (WSJ)
Revolut is moving most of its 200 employees to permanent remote working and is turning its office into a 'lab.' (Finextra)
Standard Chartered is giving up eight floors of one Hong Kong office and renting out three floors of another as it cuts costs and encourages working from home. (Bloomberg)
Deutsche Bank said its trading boom continued in January. (Financial Times)
Maybe Deutsche Bank will increase its trading bonuses by more than 10%. (Bloomberg)
The ECB doesn't want DEutsche Bank to pay big bonuses. “We’re obviously very mindful of the guidance that we’ve got from the ECB to apply moderation in variable compensation." (Bloomberg)
Deutsche Bank chief executive Christian Sewing said bonuses will be in line with competitors'. (Financial News)
Long term job seekers with poor prospects tend to be over-optimistic and to hold out for the possibility of better roles in future. Workers with better prospects do the opposite and accept inadequate jobs too soon. (Vox)
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