Morning Coffee: Another British bank is making staff reapply for their jobs. Deutsche Bank’s “vampire hunter” finally runs out of energy
As many sports fans know, it’s a sad fact that sometimes, the players who got you to where you are, may not necessarily be the team that you need to get where you want to go. This can also be true in banking. Particularly when you install new technology systems, you often find that the upgrade has had the effect of making a lot of your current employees’ skills obsolete.
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The latest bank to carry out a “thanks but so long” exercise is Lloyds Banking Group (although Standard Chartered and HSBC have both done something similar recently – it seems to be a British fashion). Lloyds Banking Group has informed thousands of workers that the skills test they took last year will be used to see if they can be matched to vacancies elsewhere in the group, which they will then need to apply for. If they don’t succeed in getting the jobs, or if the exercise suggests that they needn’t bother applying, they’ll be let go.
This approach might be an efficient, if slightly brutal, way to realize cost savings. As Lloyds Banking Group wisely says, “Making changes means not only creating new roles and upskilling colleagues but also saying goodbye to talented people who have been part of the group’s success in the past.”
It's an approach that also comes with some fairly serious risks. Most obviously, it’s a known issue in investment banking that if you try to cut 100 people, you will usually find that another 50 will leave, and that these extra leavers will usually be the very ones you most wanted to keep. When people are worried about their job security, they start considering the alternatives, and the best bankers and techies generally have the most attractive options. Plenty of bankers who would never have bothered taking a recruiter’s call in normal circumstances will suddenly become alert to their market value when they’re forced to take action.
There are also consequences for morale, because presentation matters and making people re-apply for their jobs is a very unpopular thing to do. This might not be a particularly logical reaction from the employees – from a rational point of view, it’s clearly better than just being fired and having to apply for a totally different job somewhere else.
Elsewhere, Mark Fedorcik is leaving Deutsche Bank. Having joined the graduate scheme in 1995 and been through all the highs and lows of the last thirty years at DB, Fedorcik has now decided to retire from the industry. He will be replaced as co-head of investment banking and head of global origination and M&A by Alison Harding-Jones, who was hired from Citi this time last year in what now looks like it might have been a bit of succession planning.
As you’d expect from someone who stayed thirty years at Deutsche Bank, Fedorcik was famous for his relentlessly positive attitude and intolerance of “low energy vampires”, “complainers and blamers” and in general, anyone who sees themselves as a passenger on the “ride of their life” rather than the “driver of the bus”. So his retirement, at a relatively young age (51) might not be the very last word. In his goodbye memo, he refers to “a new challenge in the corporate sector”, and senior bankers have a habit of returning from those. Unless, of course he has finally, succumbed to the energy vampires and just fancies a normal job for a while.
Meanwhile …
Jane Fraser has been awarded a pretty big bonus for 2024, raising her pay by a third to $34.5m. The optics of this sort of thing can often be difficult – although the compensation committee reports says that it reflects “[their] belief that Ms. Fraser’s strategic and other priorities are sound”, it’s a lot of money to be delivered as a down-payment on a restructuring that’s by no means complete, and while a lot of other Citibankers were heavily disappointed in this year’s compensation round. So it’s worth remembering that the vast majority of this headline figure is deferred, performance-related and paid in stock rather than cash. (Bloomberg)
Do you fancy a ketamine-fuelled “psychedelic slumber party” with a load of San Francisco venture capitalists? What do you mean, “no”? You’ll never be a successful tech executive with that kind of attitude. (WIRED)
It appears that M&A bankers may have overdone it with their surge of optimism; global deals are down 17% year to date. It seems to have been a slightly self-defeating prophecy, as everyone got so optimistic that prices have been driven up to levels where acquirers can’t make the numbers work. (Bloomberg)
A London banker has utterly dominated the sport of Eton Fives for the last twenty years, and now faces the challenge of his life against a doctor. (WSJ)
The Paris hiring frenzy is officially over – JPMorgan has cut nine front office employees for “economic reasons”, including some traders who had relocated from London after Brexit. (Bloomberg)
Paying someone to write equity research on your company feels a bit like sending yourself a Valentine’s card, but more and more companies are doing it. (FT)
Local jokers claim that every Norwegian has two jobs – their own, and reviewing the investments of the sovereign wealth fund. And it turns out that 81 of them (including an electrician and a couple of environmental campaigners) have actually applied to replace Nicolai Tangen, who has said he’ll seek a second term. The talent pool is slightly skewed; eighty men and one woman. (Bloomberg)
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