Morning Coffee: The 600 humble traders who shared $20bn last year. Nobody wants to be a consultant any more
One way to make money in the banking industry is to project an image of success in order to attract people who want to do business with winners. That’s why you might want to put your name on the jerseys of leading sports teams and big buildings, give yourself nicknames like “The Millionaire Factory” and encourage your top employees to be larger-than-life social figures with mansions, yachts and glamorous lifestyles.
But another way to go about things is to project absolutely no public image at all, in order to attract clients who want to do business with people who can keep their mouth shut. The Financial Times says that’s the path travelled by Vitol, the oil and commodities trading company. And it’s worked pretty well; other financial firms might boast about the number of millionaires they’ve created, but Vitol has distributed over $20 billion to its 600 top employee-shareholders in the last three years. According to the partnership structure, nobody’s allowed to own more than 5% of the company, so it’s not quite a “billionaire factory” yet. But with $6m of profit per head, and no external investors to share it with, a lot of people must be getting very rich indeed.
Vitol doesn’t encourage them to show it off, though. According to former employees, it’s a “collegiate” atmosphere internally, with few conflicts between its traders. There's a "surprising about of humility" and “no one was flashy, no one was talking about how much money they made”. It’s a secretive company, even by the standards of Trafigura and Glencore.
This isn’t just a matter of style, though. Commodities trading is a volatile and risky business, in which the secret of both profitability and survival is liquidity management. You need to make sure that when something like the Russian invasion of Ukraine happens, you ideally have the spare cash to take advantage of opportunities, but definitely aren’t being caught out by margin calls.
That has two implications. First, that commodities traders need to be even more careful than other kinds of trader to not give away their holdings and positions. And that has implications for how flashy they can be. If you have a reputation for being out at the most expensive nightclub in town every evening, then if you don’t show up on the day of a big market move, people are going to guess you were on the wrong side of it.
And second, that a collegiate structure in which everyone works together is a business strategy rather than just a nice atmosphere. Vitol manages its cash centrally, raising debt at the corporate level rather than financing individual positions. That means it’s much less vulnerable to margin calls, but it requires the traders to work together, rather than squabbling over who gets the biggest risk limits.
As the financial results show, it’s nice work if you can get it. This model doesn’t work in every industry and doesn’t suit every personality. But as Harry Truman said, it’s amazing what you can achieve if you’re not bothered about getting the publicity.
Elsewhere, as every reader of social media updates knows, consultants at Big Four firms never have bad career news. It’s always either good news, or “exciting new opportunities”. And the new opportunities have been really exciting this year. Analyst James Ransome, there has been an “exodus” of talent from the top consultancies, heading to opportunities in industry and smaller boutiques.
People move jobs for all sorts of reasons, and it’s possible that many of the executives in question really are enthusiastic about better promotion prospects, less bureaucratic structures and the potential to specialize in AI. But it’s hard not to notice that the consultancy industry is going through a relatively tough time at the moment, with revenues squeezed and an overhang of personnel from more optimistic hiring cycles.
According to Ransome, “really impressive individuals” have been going to midsize firms, in a way that they wouldn’t have done a few years ago. But, of course, the definition of a cyclical downturn is exactly that it’s the conditions in which really impressive people become difficult to afford. For the sake of the industry, let’s hope that there are fewer “exciting announcements” in 2026.
Meanwhile …
Alejandro Przygoda, the former global head of FIG at Credit Suisse who joined Jefferies to be their co-head of investment banking in 2021, is leaving to start his own boutique. Przygoda & Co, or “PRZ” for short, will have four employees to begin with, including Christian Reber, who recently left the insurance team at Boston Consulting Group. (Bloomberg)
At some point, you have to suspect that the incredibly high internship salaries offered by quant trading firms are as much about bragging rights as attracting top talent. The 12-14 week “AI Research Internship” at XTX will be paying $35,000 a month, breaking the previous record of $21,000 set by Jane Street. (FT Alphaville)
In a slight preview of the coming investor day, Christian Sewing has said that the investment bank will continue to be central to Deutsche Bank’s strategy, and that he plans particularly to hire senior bankers to focus on German corporate clients. (Bloomberg)
Jot down some notes about your own thinking before asking ChatGPT, and from time to time take a complete “AI Fast”. These are some of the strategies recommended by psychologists to help you stop your natural brain from atrophying through overuse of artificial intelligence. (WSJ)
Citi has a new co-head of Asian investment banking coverage – guess where he came from? No, it wasn’t a trick question, Kaustubh Kulkarni was most recently the head of India and vice-chair of APAC at JPMorgan. (Reuters)
Peter Tuchman is a NYSE floor trader with unruly white hair and an expressive face, who the photographers always seem to gravitate towards when they want to illustrate stock exchange drama. He may even have invented the iconic “sitting in front of screen full of red numbers, holding head in hands” pose. (WSJ)
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