Morning Coffee: 24-year-old bankers with intense hobbies take pay cut. Everyone’s hiring bankers in the desert
There's been some light complaining about life at Citi's Malaga office, where the sun shines bright and 20-somethings who want to work in banking without crazy hours, get to put in 40 hour weeks for around $46 an hour. Some say the pay is lower than suggested. Others suggest it's the sort of job that leads to nothing in particular. But if there are people with misgivings about Malaga, Financial News didn't seem to come across them during its trip to see how things are working out there.
Instead of bleary-eyed 24-year-olds with weight gain and alopecia, Financial News found a group of seemingly well-adjusted young adults standing in front of a rhododendron, which was probably in the garden of their office in a sunny shopping street 10 minutes away from the beach.
The Malaga analysts may earn and work a fraction of the hours, but they share much in common with junior bankers everywhere else. Despite the Spanish heat, someone's wearing a fleecy gilet; men appear to outnumber women; all the men are in the standard outfit of tailored navy trousers and good quality shirts. They've paid for big qualifications to get their jobs: several have studied a masters in finance at IE business school in Madrid (€36k tuition fees); someone's been to INSEAD, where the fees for a Masters in Management this year are €49.5k.
If you've spent that kind of money on your education, why would you limit your earnings to $90k or less in Malaga when you could be earning $180k or so in London? Desperation aside, the answer appears to be hobbies. Many of the 20-somethings encountered by FN at Citi in Malaga have intense extracurriculars which preclude 80-hour working weeks. There's an elite swimmer, a concert pianist and someone who likes to chill and strum the guitar of an evening. "That’s not something you can do in your flat at 4am after a late night working,” he reflects.
They seem happy and the Malaga experiment seems to be going well, with plans to hire another 10 people there this year and up to 60 in the next three. The happy analysts are asked to commit to Malaga for 24 months and it's not entirely clear what happens after that. 20-25% are expected to go to London or elsewhere. The other 75%-80% might have more time for swimming and playing chords.
Separately, if you don't want to take in the sun as a banker in Malaga, you could always go to Saudi Arabia, which seems to be the source of some excited hiring right now.
JPMorgan is recruiting 20 investment bankers in Saudi Arabia and Rothschild is opening an office and hiring there too. At this week's 'Davos in the Desert' event, it's clear why. The Saudi's state sponsored Public Investment Fund is committed to spending $40bn annually in the kingdom as the country embarks on a program of modernization that includes an ambitious privatization program. “The ambition of these guys [Saudi officials] is off the charts,” one finance executive told the FT. “The balance of power is shifting to the Middle East in private markets.” Private equity and credit investors are presumably needed too.
Bain Capital has raised more than $2bn for a technology opportunities fund and wants to expand in Europe. (Bloomberg)
Credit Suisse agreed to pay €238m to settle claims that it broke laws on money laundering by luring wealthy clients to Switzerland. There's no admission of guilt. (Financial Times)
Citi appointed Tom Lynch, who once worked for Goldman Sachs, as its head of prime sales. (The Trade News)
Hedge fund Third Point LLC is opening an office in Tel Aviv. (Ynet News)
There's been infighting at JPMorgan over who gets to manage the fortune of retired baseball star Alex Rodriguez. Gwen Campbell, a financial advisor, brought Rodriguez to the bank, but now the private bank wants him. Jamie Dimon has had to get involved. (Financial Times)
Exhausted junior bankers are starting to feel thankful that they do at least have jobs and senior bankers quite like that. "Job insecurity can do amazing things for the psyche and juniors are appreciating the benefits of working for a stable platform."(Financial News)
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