Morning Coffee: Banking is a shrinking industry with rising pay. The sorry lifestyle of the senior European banker
The securities industry is a good place to work, but only if you can get a job and keep hold of it during rounds of incessant cuts. If you fulfill these two criteria, you will be rewarded far more handsomely than in most other professions.
The latest report on the state of employment in the New York securities industry reflects this tension. The number of jobs in the New York Securities industry has shrunk in 13 of the past 30 years, but since 2009 at least, total compensation (salary plus bonus) has been on an upwards trend. Last year, average total compensation in the New York State securities industry was $423,570, nearly five times higher than the average in the rest of the state's private sector. In Manhattan alone, the average was $442,550. In Suffolk Country, Long Island, where 2,800 predominantly hedge fund industry employees are to be found, the average salary was an even more febrile $917,860.
Pay is high, and pay is rising. The average was up nearly 8% last year. But higher pay has been combined with higher layoffs. New York's securities industry lost 3,600 jobs last year and is expected to lose another 4,900 jobs this year, irrespective of banks' excellent results. This is partly because New York jobs are migrating to cheaper alternative locations (Texas, Illinois, Florida, North Carolina), but it's also because employment in the securities industry is falling across America.
"The industry has a history of operating with a lean work force, and of aggressively cutting overhead in periods of distress while being disciplined in its hiring during periods of expansion," observes the comptroller's report. "Reasons for the accelerated hiring decline in 2021 may be attributed to a combination of improved efficiencies (i.e., technology adoption) and relocation."
What's happening in New York State will almost certainly be repeated in other high cost financial cities like London and Hong Kong. If you're working in securities, well done. If you want to keep on doing it, watch out.
Separately, Financial News has been chatting to the ever-ebullient Nacho Gutierrez-Orrantia, who now runs Citi's banking, capital markets and advisory business in EMEA and who wants to let it be known that he's coming after JPMorgan's top spot in advisory and fully intends to occupy the lead position by 2025.
There are some bold and bullish statements ("I took this job because I think we can win”), but there are also a few hints that the lifestyle of senior bankers like Nacho might be just as demanding as that of any junior who hasn't washed for three days and is juggling multiple live deals. Before the pandemic, he used to take 230 flights a year, which was surely good for neither himself nor the amount of carbon in the atmosphere. Nowadays, he's split between Madrid and London (but is relocating to London) and flies regularly between all Citi's enlarged post-Brexit offices in Europe. There are signs that Nacho expects his senior staff to fly about with equal enthusiasm. Winning deals is about revenues, capital, and,"the number of client meetings bankers are having,” he said.
A former Deutsche Bank employee who raised concerns about the manipulation of Libor has been awarded $200m for whistleblowing by the Commodity Futures Trading Commission. (Financial Times)
The European Central Bank is getting strict on jobs moving to Europe. It's observed that some banks have moved more staff than others, and is no longer to willing to tolerate the pandemic as an excuse. Smaller banks are saying they might have to stop serving European clients entire. (Financial Times)
Barclays appears to have accrued lower bonuses, but Jes Staley says not to worry. “I think you’ll see variable compensation higher this year, given that they’ve generated record profits.” (Bloomberg)
Barclays' CEO Jes Staley said the bank is planning, "structural cost actions before the end of the year." He may be referring to branch closures. (Financial Times)
Eugene Pitts, an executive director at JPMorgan in New York, says the bank wants to have fewer video conferences and more short-form video messaging and learning. (AVInteractive)
The pass rate for the CFA II exam fell to 29%, its lowest level ever. "Unfortunately, we are still seeing fewer candidates pass their CFA exams due to the impact of the global pandemic on candidate study timelines." (Bloomberg)
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