It hasn't just been a good year to be an investment banker. It's been the kind of year that will resonate across the ages as a beacon of fees brought about by a wash of cheap financing and pandemic re-ordering. It's also been a year of inordinately hard work, pay inflation, and heavy hiring.
Coalition Greenwich says banks have added 300 investment bankers in 2021, pushing numbers to a total of 19,600 - their highest since 2012. Banks' top line employment figures hint at the extent of overall hiring. Goldman Sachs added 2,500 people across the firm between January and September; JPMorgan added 4,514 across its corporate and investment bank. Credit Suisse - which has lost well over 40 senior investment bankers this year in the wake of the Archegos scandal says it's hired 1,200 new people across the bank and hired or promoted 45 senior dealmakers in particular. Add to this all the junior banker hiring to offset complaints about working hours, and it's the perfect storm.
Some people are wondering whether it can last. Phillippa O’Connor, a reward and employment PwC partner at PWC told Financial News senior bankers are very concerned about the best way to play the current hiring market: "The question is whether they make the bet and pay over the odds for talent in the hope the boom will continue, or just step back a little."
When they reported third quarter results, most banks were optimistic that 2022 will be an equally good dealmaking year. Cash raised at the start of the pandemic is being deployed, said Sharon Yeshaya, CFO of Morgan Stanley, and the "pie is changing" as industries recalibrate. Financial sponsors (private equity firms) and corporates are engaged in a reorg; banks are the middlemen.
Bankers, however, are expecting to get paid more than ever for their troubles. While the pandemic has inspired some people to reflect on their working lives, it's also inspired people working 90-hour weeks to demand exceptional compensation for their sacrifice. "People are getting crushed right now,” the global head of investment banking at a US bank told Financial News. “They expect to be paid.”
People expect to be paid in their current jobs, but they want to be paid even more for moving. Senior bankers are reportedly demanding a 30% to 50% pay uplift to change jobs. One senior European banker told FN it feels like a bubble: "Everyone’s paying more and more, but you don’t want to be the one left holding the baby when it goes south.”
If you're a banker, the implication is that early 2022 might be a good time to lock-in as much pay as you possibly can for the years to come. Multi-year guaranteed bonuses are still a thing on Wall Street and eight figure packages have been spotted in the wild. In London, it's possible to negotiate a "target" bonus for a new job, based upon the achievement of certain revenue goals. A target bonus may also be worth moving for - but you probably don't want to set the associated goals higher than the peak of 2021.
Separately, you might get paid less working for a bank in Paris, but you will have the advantage of a French employment contract. And that counts for a lot.
André Romain, a 45 year-old Natixis banker, is making the most of his French employment contract despite being based in New York for the past six years. Romain, who was a director in strategic equity transactions and previously the head of the quantitative analysis and systems group for Natixis in North America, is suing the bank for $11m for ruining his finance career.
Bloomberg reports that Romain is able to do this using a French procedure called "prise d'acte." This says that an employer's behaviour is so egregious that an employee is obliged to quit and to subsequently earn compensation for quitting through the courts. It's a bit similar to whistleblowing regulations in the UK, but with more scope. It's also a bit similar to constructive dismissal, but without the £89k ($119k) statutory compensation cap.
In Romain's case, he claims that Natixis ended his contract prematurely as a result of undue risks taken by the bank which subsequently related in a $300m loss. He says, too, that he was sidelined after he made a report to the French stock market regulator and complained about the bank's chief risk officer (who reportedly sold stock before the $300m loss was disclosed). Romain also questioned a €2.4m severance package paid to former Chief Executive Officer Francois Riahi.
It remains to be seen whether Romain's French contract will deliver the compensation he's asking for - the case is currently working its way through the courts. It's nice to know, though, that if you work for a bank in France you can always complain that your job has become impossible and demand eight figures in compensation as a result.
Citi is hiring 100 people to beef up its blockchain and digital assets division. “We believe in the potential of blockchain and digital assets including the benefits of efficiency, instant processing, fractionalization, programmability and transparency." (Bloomberg)
Crypto-payments company MoonPay plans to hire around 200 people. (Bloomberg)
The UK's Financial Conduct Authority (FCA) is looking for external consultants to teach staff about crypto risks. (Decrypt)
Structured equity derivatives revenues are up sevenfold at the top 12 banks this year and are on track to reach a record of about $12bn. (IFRE)
"There are many settings where it’s already a huge disadvantage to show up with a team of all-white men. It’s just going to be a requirement for many clients to see diversity, and we want to be prepared for that.” (Yahoo)
Executive directors and below at JPMorgan can claim $5k compensation to pay quarantine costs when they visit spouses, domestic partners, children, parents and grandparents. (Bloomberg)
Men are back working in the office; women are working from home and they have more housework and childcare to do (alongside their jobs) than ever. (Bloomberg)
If JPM doesn’t withdraw their lawsuit, I will give them a one star review on Yelp,” said Elon Musk. “This is my final warning!” (WSJ)
Facebook has staff retention problems. Only 47% of employees answered favorably about their "intent to stay" at Facebook when questioned in an internal survey. (Business Insider)
56 year-old gregarious ex-rugby player who took a job in fintech has given it up to become a gardener after discovering he was stuck in Zoom meetings. “If my children sat at a screen for 10 to 11 hours a day, I’d lock it in a cupboard...I want to get some time in my life where I stop and think.” (Financial Times)
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