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It’s no secret that banks are in battle with large technology firms for talent, but both Goldman Sachs and HSBC have just managed to poach senior technologists who have worked for Facebook and AOL for some of their most important business areas.

Michael Cerda, previously head of media products at Facebook who has been working as chief experience officer at Live Nation for the past 11 months, has just joined Goldman Sachs’ New York office as a managing director and head of product for its Marcus retail operation. Meanwhile, HSBC has a new chief technology officer for its digital bank in Phil Cheetham, who joined its London operations earlier this month after two and half years as VP of engineering at AOL in San Francisco.

Marcus is Goldman Sachs’ online retail lending platform launched in October last year and is likely to be an increasingly important division for the bank. Goldman ventured into a technology-focused retail bank at a time when traditional lenders are being bombarded by competition from small fintech start-ups. But Marty Chavez, Goldman Sachs’ chief information officer turned CFO, has said that Marcus is a ‘fintech start-up’ that will embrace open source technology, APIs and cloud computing.

Marcus – which has around 200 employees – is expected to generate returns in the “high teens” according to Harit Talwar, head of Marcus speaking at a conference in November. Cerda’s appointment is the second senior technology appointment at Marcus this month. It has also promoted Boe Hartman to head of consumer and commercial banking technology and chief information officer of GS Bank USA.

Goldman is hiring for a few positions related to Marcus in New York – notably a VP of product, senior product manager and product manager as well as quantitative research strats and user experience designers. Not all of these are not typical Goldman Sachs recruits, so it’s likely that it will also have to look outside banking for some of the roles. Its customer service team, based out of Salt Lake City, is also growing.

Meanwhile, Cheetham’s role at HSBC is his first in the financial sector. He has worked in various senior roles at AOL for past five years including head of technology for the UK and head of advertising solutions for Europe and was group CTO at Sentaca Communications before this.

HSBC is in the midst of transforming its retail bank into a fully digital platform, but it’s been not been quick in doing so. Darryl West, its chief information officer admitted that the bank has been slow to adapt new technology, but suggested this was changing: “We’re going to restructure the cost base of the bank by digitising everything. We are on a mission to take every customer interaction and every process of the bank and digitise the whole thing,” he said in September.

HSBC has been building out its digital team and, we understand, a lot of the new hires have come from outside of banking. Part of the complication for HSBC is that it’s trying to ensure that all of its new products are rolled out globally, and this makes the sign off process for new products an much slower process than UK-focused banks like Barclays or Royal Bank of Scotland.

HSBC’s team is big. It has around 8,000 people working across eight locations – largely London, Pune and Hong Kong – in its HSBC Digital Solutions division launched in July last year. Right now, the biggest role it’s hiring for is a global head of infrastructure for its retail banking and wealth management divisions.

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If you’re already feeling pessimistic about the City of London’s future after Brexit, you might be feeling even more so following the Financial Times’ sighting of the EU’s “staff working document” on equivalence rules.

Equivalence is the current last hope for banks in London that want to access EU markets after April 1919. Existing passporting arrangements are out of the question if Britain leaves the European single market, and ‘workarounds’ like reverse solicitation (claiming that banks in London were approached by clients in the EU rather vice versa) or ‘dual hatting‘ (booking trades in the EU and executing trades in London) have been rejected by banks and regulators respectively, Equivalence is all that remains.

Loosely, equivalence means banks in the UK will be able to operate in the EU if relevant financial regulations in the two jurisdictions are deemed the same by the EU. Unfortunately, it can be withdrawn within 30 days and is open to manipulation for political purposes.

What banks and the British government really want, therefore, is ‘enhanced equivalence’ or ‘equivalence plus.’ Here, in the words of Alex Wilmot-Sitwell, president of Bank of America in EMEA, equivalence would go, “hand-in-hand with a shared regulatory response…a harmonized approach to regulation…” and would be “thought through on a long term basis.” In other words, the EU wouldn’t have the final word on equivalence and it wouldn’t be removable at short notice.

Unfortunately, it’s this superior equivalence that the staff working document spotted by the FT seems to categorically reject: the Financial Times says the document expresses Brussels’ determination to perform “continuous follow-up monitoring” itself to make sure equivalence still holds and that it wants to withdraw equivalence at any time if “contrary developments” are identified. Doom.

Brexit watchers aren’t as perturbed as might be expected though. Most seem to see enhanced equivalence as a British fantasy. “Enhanced equivalence would be likely to require changed legislation and that takes a lot of time,” says Peter Snowdon, a partner in the regulatory division of law firm Norton Rose. “I don’t honesty know how we could get there in the time frame available.”

“Enhanced equivalence is a long term aspiration,” says William Wright at think tank New Financial. “The notion is that regulators and supervisors across Europe come up with a broader model involving enhanced regulatory cooperation across Europe, even though the UK is no longer part of the EU. It makes a lot of sense for the UK on paper, but it’s entirely theoretical.” Wright points out that the EU’s working document appears merely to be referring to the current equivalence model: enhanced equivalence isn’t even on the table.

Where does this leave London financial services jobs? In exactly the same position as before, is the answer. Banks in London are still making Brexit contingency plans and hiring in London is still subject to an, “unprecedented level of scrutiny,” in the words of recruitment firm Morgan McKinley.

Even so, Wright points out that only 20% of London banking jobs will be directly impacted by the end of passporting, suggesting the City will mostly carry on as previously post-Brexit. Snowdon is more fatalistic: “Our experience would suggest that a higher proportion than 20% of UK jobs are dependent upon passporting. But this may simply be because the firms seeking advice from us are the ones which have business models that rely on cross border activity,” he says. “Even so, I suspect the figure could be higher because of the secondary business that flows from that 20%.”

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Looking for a job in private equity? Good luck: for every available role, just 10% of the on average 300 applications make the shortlist. And you have to make an impression with your resume quickly – private equity recruiters say that firms spend just 10 seconds reviewing each CV.

“A CV will get you an interview, it won’t get you a job”,” says Gail McManus, managing director of Private Equity Recruitment. “It needs to be brief, it needs to be data-focused, but it needs to contain all the information to allow you to stand out from the competition.”

So, what makes the perfect resume for impressing private equity recruiters?

Here’s a step-by-step guide.

1. A private equity resume must be one-page only

A two-page CV is the norm elsewhere in financial services, but in private equity it’s necessary to present all the information on a single page, says McManus.

“Think of your audience – private equity professionals are used to sifting through huge financial reports for the nugget of information to make an investment decision” she says. “They want to be able to scan through the CV and see hard information to put you into the yes or no pile. Edit incredibly selectively and when you think you’ve got it right, cut another 50%.”

However, if you’re not coming from investment banking, you can be a little more expansionary, says Edmund Thomson Jones, a private equity recruiter at Kea Consultants. “If you’re moving from strategy consultant where your private equity exposure may be a little less deal-oriented, it’s acceptable to stretch over one page in order to outline your experience. Even here, keep it concise and detail-focused.”

2. No postal address and no personal statement

Personal statements are a waste of space, says McManus. If you must include one, don’t waffle about your characteristics; just include pertinent facts and make it no more than three bullet points. When it comes to contact information, just put an email address and phone number. “Private equity professionals can be snobbish about postcodes. Including an address is just likely to elicit some prejudices,” she says.

3. Make a big deal of your impeccable academics, and highlight top universities

Investment banks will glean out anyone who doesn’t have a 2.1 degree, usually from a top university. Private equity firms are less concerned about impeccable marks, but do place a lot of emphasis on Oxbridge and Ivy League universities.

That said, to become one of the hallowed 10% of successful applicants, having a big name and top marks is worth shouting about, says Victoria McLean, managing director of City CV.

“If you’ve been to a top university, are a straight-A student and have secured scholarships, it all makes a big difference,” she says. “You need to ensure your quality shines through – if you have scholarships, were top-of-class and such then highlight it. If you have been to Harvard or have a 1^st from Oxford then mention it in your introductory profile, unless it was a long time ago.”

4. Remain modest

Private equity firms are focus a lot on candidates who ‘fit’ into the organisation. Blackstone, for instance, subjects new recruits to 12 interviews, so they meet most people on the team.

Despite the focus on hiring elite candidates, Thomson Jones says it’s wise to let the facts speak for themselves: “Use objective, evidence-based language and let your achievements shine through. Don’t dress them up in self-promotional language – private equity is a modest industry and it can rub people up the wrong way.”

5. Use bullet points to highlight your experience, but not too many

Your relevant experience should include a list of achievements within your current role, with a focus on transactions. “If you’ve done deals, highlight your specific involvement on them – this could be within private equity, but also if you’ve been involved with projects as a consultant or have been in banking for a couple of years and worked on some large M&A deals. It all needs to be quantified and, again, brevity is everything,” says McManus.

“Ideally a maximum of six bullet points for any role – any more than that and it just becomes a list,” says McLean. “The bullets should highlight key achievements and transactions and draw the reader’s eye to this. Too many and they lose their impact.”

6. The deal list red herring

Because of the need for brevity on your CV, it’s tempting to list every deal you’ve ever been involved in within the supplementary deal list. The key is also to be selective here; only highlight the deals where you have had very specific involvement rather than every transaction you’ve touched.

“The deal list can be a point of conversation for the interviewer,” says Thomson Jones. “Every detail will be picked apart. If you’ve not had a huge amount of involvement, there can be some awkward conversations.”

7. Provide three examples of being a ‘winner’

Demonstrating your superiority over fellow human beings in a blatant manner may seem like something out of an Ayn Rand novel, but private equity firms want to see evidence that they’re hiring the best. This means, scattered throughout your CV, there must be (at least) three examples of how you have exhibited dominance over your peers.

“Private equity is highly competitive and they want to employ winners,” says McManus. “You could have been top of your analyst class or university, been a top-ranked musician or, more likely, practised sport at an elite level. A rule of thumb is at least three examples of this.”

“It pays to stand out from the crowd,” says Thomson Jones. “We’ve had yoga teachers and champion horse-back riders, both of whom attracted the attention of recruiters.”

8. Demonstrate evidence of being able to pass the ‘beer test’

As a private equity professional you will spend many hours on a plane travelling with colleagues, so they want to know that you have a personality they can get along with. Interviews will probe into whether candidates have the personality to pass the ‘beer’ or ‘plane’ test – namely whether they can hold a conversation for an extended period of time. However, show evidence of your personality on your CV.

“Once your grad days are behind you, the focus on your CV is normally on your professional achievements and knowledge, not on extra-curricular activities,” says McLean. “However, it can be valuable on a PE CV to demonstrate an active, interesting life (and that you have a life) outside of work – plus it shows some spark.”

9. Ensure any gaps are explained

Any period of unemployment must be accounted for, says McManus. If you attempt the fudge the dates – by, say, including the year but not the month – the private equity recruiter will make their own assumptions. “PE guys will try to work out what you’re not telling them and will assume the worst if you’re not accurate with your dates,” she says. “It may be that you left your job in December 2013 and started a new one in January, but if you don’t state this, they’ll assume you were unemployed for 12 months. Be honest, and explain any gaps in your experience.”

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One of the most senior and popular managing directors in Barclays’ U.S. equities business is quitting. Johnny Wu had worked for Barclays for 12 years and is now off in search of, “new challenges that lie ahead.”

Wu announced his exit via a post on LinkedIn, which has attracted 400+ likes. An equity derivatives salesman by trade, he joined Barclays in NYC from Bear Stearns in 2005 as an equity structured products assistant director as the British bank built out its U.S. equity linked instruments team. He became an MD in 2009 and was promoted to equities and funds structured sales for the Americas in 2014.

It’s not clear what Wu’s off to do next, but he’s won’t be the only equity derivatives professional out of the market. As we reported last week, both HSBC and Morgan Stanley have been letting go of equity derivatives index traders after a difficult start to the year.

Wu’s exit appears to have been entirely voluntary and was likely negotiated with Barclays, whose bonuses have yet to hit employees’ bank accounts. In a blog post after his exit, Wu stressed the need to be likeable when you work in finance: “…say hello first in the hallways or help people even if there is no immediate benefit for you.” If you care about clients’ as individuals, they’ll remember you later, said Wu, whilst also extolling the virtues of knowing your enemy (in his case, Goldman Sachs, followed by J.P. Morgan, followed by hedge fund AQR).

Barclays’ global equities business under-performed the market in 2016 and is expected to be shaken up by Tim Throsby, the former J.P. Morgan equities banker now in charge of Barclays’ investment bank. Throsby is widely expected to hire ex-J.P. Morgan people into Barclays’ roles, although Barclays’ insiders tell us he’s been banned from doing so – possibly as a result of the terms of his exit contract with J.P. Morgan.

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Photo credit: New York by Taylor and Kevin is licensed under CC BY 2.0.

Most people assume that starting a hedge fund is a path to getting rich, and getting scooped up by a big international bank like UBS sounds even better, but it took leaving finance altogether for Ravi Gulivinda to start rolling in dough as the No. 2 at a fast-growing real estate firm.

Gulivindala grew up in New York around the financial services business, because his father was a stockbroker and taught finance at the City University of New York.

“If your father is doing something you don’t want to do that, and in my community you were either a doctor or an engineer, so I studied engineering and computer science,” Gulivindala said. “I worked as an engineer for a few years, but the money wasn’t there, so I decided to go into finance and became a stockbroker.

“Then I decided to launch a long/short equity hedge fund, Sun Capital, with a partner from DLJ [Donaldson, Lufkin & Jenrette, a boutique investment bank], and we were doing great until the tech bubble burst – in those days no one had ever seen anything like this, a black swan,” he said. “We were getting a tremendous amount of calls, we saw more regulation coming in, which meant more work for less money, so we took our business to UBS and had a good run there.”

Gulivindala worked at UBS as a senior relationship manager and portfolio manager for around three and a half years before he and his partner had a falling out. He returned to IT consulting as a stopgap while planning his next move, eventually joining Fisher Investments in Camas, Washington, as a VP of investments and senior relationship manager.

Gulivindala knew that the time had come for him to leave his financial services career behind for good. He became a licensed real estate broker in 2008, specializing in Manhattan.

“Based on my career in finance, I’d say almost 80% of most people’s wealth is created through real estate, unless you sell a business,” Gulivindala said. “The assets were pretty much cut in half in terms of what we managed after the financial crisis, so I came back home to New York, and as luck would have it, within a month, I started working at Nest Seekers.

“Real estate is an asset class like stock and bonds, and New York is the 800-pound gorilla of real estate,” he said. “When you’re in wealth management, raising half a million or $10m, it’s the same client in real estate – 75% of sales is psychology, knowing and understanding how to deal with the high-net-worth and ultra-high-net-worth demographic that also buys real estate.”

Seven-plus years later, Gulivindala is a senior vice president and managing director at Nest Seekers, which currently has about 900 real estate agents worldwide, 700 of those in the U.S. He is responsible for of talent acquisition, training and sales support for the company’s two largest offices.

“We’ve opened new offices, increased spend on technology and marketing, and we’re going after new developments,” he said. “We’re training, coaching, recruiting and retaining on an ongoing basis, and we’re planning to grow the company to a thousand agents by the end of this year.”

Nest Seekers

Ravi Gulivindala of Nest Seekers Follow @danbutchrwrites

Photo courtesy of Nest Seekers
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‘Beware…here come the auditors!’ is a saying often heard echoing through corridors of banks here in Asia and around the globe. Internal audit is often seen as the ‘dark side’, a bunch of people set to ruin your day and make your life hell.

While I’ve met some internal auditors who aptly fit that description, the profession overall has transformed itself and become a real contributor to a bank’s success. And the internal audit industry is also under even more stringent scrutiny by professional bodies and regulators.

I’ve been a regional and global head of audit in both small and large banks in Asia – most recently at CLSA and J.P. Morgan in Hong Kong. Based on this experience, I’d really recommend a short-term stint and/or a career in internal audit, particularly if you’re working in another department and want a different perspective on the banking industry.

A stint in internal audit is like doing a practical MBA. It’s perfect if you’re looking for a different challenge within banking without initially knowing exactly where you want to take your career. And it can also help you fast track your existing career path by broadening your experience.

Internal audit is a key to many doors within a bank. It gives you diverse perspectives on the organisation because you deal with staff and management at all levels.

And these days internal audit is not a tick-the-box function – it’s both strategic and operational. Internal auditors are in a unique position to gain a hands-on, live understanding of the bank and to measure the true health of the business.

For example, in a typical markets-trading audit, the auditor might have a front-to-back insight into deal creation within several areas of the front office, as well as in operations, risk, compliance, and finance. This exposure is magnified and consolidated as you conduct multiple audits.

By contrast, if you’re working in (for example) operations or finance, your core exposure is generally limited to just the operations department.

Banks in Asia need more experts to move into internal audit

Across both the strategic and operational levels of internal audit, there is an increasing need for subject matter experts at banks in Asia.

This is where so-called ‘guest auditors’ (staff from other departments who move into audit either temporarily or permanently) can come into their own.

An effective internal audit department has to be commercial, pragmatic and market focused, with a real appreciation of both substance and form – and it’s here that guest auditors are invaluable. Their expertise is critical when assessing suitability for executive roles across all departments within a bank, for example.

As regulators become more stringent and as risks within the audit industry change, a more holistic and substantive audit methodology is emerging. It requires more detailed subject-matter expertise in the audit process. Auditors are expected to deep dive more than in the past.

For example, in Asian banking there is currently a strong demand for candidates from the front-office, risk, finance, technology and compliance functions from the internal-audit teams that are auditing in those respective areas.

Moreover, given the growing demand for guest auditors in Asia, more banks are relocating candidates from the US and Europe into this region.

For banks in Asia, both short-term and long-terms stints within internal audit for staff from other departments are now a necessity. If you want a career change, you could be well placed to take advantage of this.

Sharad Chawla has worked as a senior professional within the finance industry for more than 25 years. He was global head of audit for CLSA for over six years, and preceding that was APAC head of audit for J.P. Morgan. He is now the MD and founder of G.R.A.C.E Recruitment Group in Singapore.

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With the U.S. economy firing-up thanks to Trump’s spending plans and U.S. trading revenues increasing thanks to anticipated rate rises, European banks can be expected to go for growth in the U.S. in 2017. Not all banks are equally well-placed to achieve it, however.

A new report from Deutsche Bank’s banking analysts suggests every European bank on Wall Street has its problems and that some have more than others. If you’re thinking of going European, this is what you need to be aware of.

1. Barclays’ U.S. business looks low on capital

European banks on Wall Street have capital issues. Last July, international banks in the U.S. were compelled to create new intermediate holding companies (IHCs). These IHCs submitted their capital plans privately to the Federal Reserve last month and will have their results to U.S. stress tests disclosed by mid-2018. Many look ill-prepared.

UBS, Credit Suisse and Barclays are all thought to have shifted capital to their U.S. operations at the end of 2016, but Barclays still looks under-capitalized compared to peers. The British bank’s position will worsen if the bank’s fight with the U.S. department of Justice (over mis-sold mortgage securities before the financial crisis) ends in a substantial fine.

Of course, Barclays could always increase the core equity tier one (CET1) capital ratio at its U.S. holding company by cutting its risk-weighted assets. This might mean curtailing its U.S. trading aspirations though…

Core equity tier one capital ratio in U.S. IHCs, 2016

Capital ratio

Source: Deutsche Bank

2. Credit Suisse and UBS are making a loss in the U.S., despite pouring resources into their U.S. businesses

If Barclays is low on capital in the U.S., it is at least profitable. This is more than can be said for Credit Suisse, whose U.S. operations made a loss last year. Although UBS looks like it’s making a profit on the chart below, Deutsche’s analysts note that this is illusory: UBS’s 2016 profitability in the U.S. was, “based on tax write-backs.”

U.S. IHCs, cost to income ratio, 2016

Cost income ratio Wall St

Source: Deutsche Bank

The U.S. losses at Credit Suisse and UBS look especially unfortunate when you consider that the Swiss banks have invested a high proportion of their group core equity tier one capital in their U.S. businesses. At Credit Suisse, in particular, over 50% of capital is held in the loss-making U.S. IHC. Deutsche is predicting a “right-sizing” of Credit Suisse’s U.S. ambitions as a result. Hard choices are coming for Credit Suisse CEO Tidjane Thiam; jobs that exist at the U.S. bank today could be gone tomorrow…

U.S. IHCs, core equity tier one capital ratio as a % of the group core equity tier one capital ratio

Core equity 1

Source: Deutsche Bank

3. Credit Suisse and HSBC are far from covering their U.S. cost of equity

The return on equity at Credit Suisse and HSBC’s U.S. businesses is miserable. Neither business looks sustainable.

US IHC – Return on Tangible Equity – 2016

cost of equity

4. The best bets look like… Barclays and BNP Paribas

Capital concerns aside, Deutsche’s analysts think the healthiest European banks in the U.S. are therefore Barclays and BNP Paribas. Japanese bank Mitsubishi UFJ also ranks among the strongest international banks on Wall Street. Predictably, Deutsche Bank doesn’t touch upon its own issues in the U.S. market, which were particularly acute when Bernstein took a look last year.

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Photo credit: Looking up Wall Street by Richard Schneider is licensed under CC BY 2.0.

If you don’t make it by your late 20s, you need to make it by your late 30s. If not, your 40s could be harsh indeed. So suggests a piece by the Guardian on the lives of technologists in Silicon Valley which should resonate with the lives of bankers on Wall Street or in London.

The Guardian spoke to various technologists at top name firms (Facebook, Twitter, Apple) who ought to be ‘living the dream’ but patently aren’t. They earn good money, but it’s gobbled up by the cost of living. In Silicon Valley, a bagel and coffee costs $8, a freshly squeezed juice costs $12, a two bedroom apartment costs $3k (bare minimum) a month. The Guardian finds an Apple employee who lives in a garage and uses a compost bucket as a toilet. It also finds a tech worker on $700k who exhausts himself commuting up to 2.5 hours each way and wants to move closer to work, but can’t afford it.

While the horror stories should be enough to dissuade “top talent” from leaving banks on Wall Street for the lure of technology firms in Silicon Valley, they should also be a warning to anyone imagining a six figure salary will buy the good life. The fundamental problem in Silicon Valley is property prices: they’re crazily expensive. The same applies in major financial cities. Yes, you’ll pay more for somewhere to live in Silicon Valley than you will in New York – but not that much more, and you’ll pay more than in New York to live in London.

The high cost of living means Silicon Valley employees need to be earning big money before they start a family. If not, they’ll be squeezed like the Twitter software engineer in his ’40s on $160k a year who says he’s only just making ends meet. With two children, he tells the Guardian he can’t compete for property with the big groups of 20-somethings who are happy to share to accommodation and pay $2k a month for a room. “Families are priced out of the market,” he complains. At this point, you need either to live in tiny accommodation with your family, to commute miles from a cheaper zone, or to accept a lower salary and a proportionately lower cost of living elsewhere. In Silicon Valley terms, this means moving to somewhere like San Diego. In banking terms, think Salt Lake City, Jacksonville, or Birmingham in the UK.

Separately, if you were looking for an M&A career template, Emmanuel Gueroult just provided one. Gueroult’s strategy involved spending two decades at one firm and then leveraging the contacts he made there for roles in future. After 22 years at Morgan Stanley, he went to work with what the Financial Times describes as a, “cadre”, of former Morgan Stanley bankers at Altice, the expansionary French telecoms group. Two years later, he’s quit again, this time to join PJT Partners, the independent advisory firm set up by ex-Morgan Stanley banker Paul Taubman.

Meanwhile:

“Banks’ market-making ability has changed so we are looking to data aggregation and sorting to source liquidity. This would have happened 10 or 20 years ago if big banks had not got into the market in the 1990s and given the buy side the luxury of relying on big pools of liquidity.” (MarketsMedia)

“I think we are going to see more very large-cap M&A,” says Alasdair Warren, head of European corporate and investment banking at Deutsche Bank. “This will partly be driven by relative currency values and people reacting opportunistically to the dislocation in values that has occurred because of Trump and Brexit, but also because people have realised that despite the increase in political turmoil, the world has continued growing.” (Financial Times)

60% of asset management staff find their jobs boring. “Working in education or IT is regarded relatively highly, whereas financial services are generally regarded lowly.” (Financial Times)

How low can Paul Tudor Jones’ fees go? (WSJ)

Goldman Sachs’ new London office to open in time for you know what. (Dealbreaker)

Judge rules Barclays banker cannot keep comfort dog in London flat. (Evening Standard)

You’re a financial failure if you haven’t saved twice your salary by the age of 35. (Yahoo)

There are people in Beijing commuting six hours a day. (BBC)

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Model review jobs are the equivalent of CDO structuring jobs circa 2006. Once, there were hardly any of them. Now, they’re everywhere.

Responsibility for the proliferation of model review or “model validation” jobs can be laid at the door of regulators. When it became apparent (following the financial crisis) that different banks were using different kinds of mathematical models to measure risk exposures, with different results, model validation was born. Regulatory bodies like the Basel Committee began requiring that banks assess the validity of their models and methodologies. Banks now have massive teams of quantitative model validators located within their risk functions, often in offshore locations like Poland, as a result.

While model validators are proliferating, however, model validation can also be seen as a bit of a career cul de sac. Most model validators are quants; they’d rather be working close to the action and supporting traders than sitting in Warsaw and checking models work properly. “Model validation means low pay and difficulty moving into the front office,” says one senior quant, summing it up.

Against this backdrop, the career perambulations of David Bai, a quant turned model validator turned head of risk, are inspiring.

A Princeton PhD, Bai started his career as a quant at Salomon Brothers in 1996. From there, he moved into market risk at Bear Stearns in NYC. Bai skipped out of Bear before it imploded and joined BNP Paribas in NYC, where he started along the model review furrow and rose to become head of rates model review. In 2010, Bai took his expertise to Morgan Stanley where he was variously, head of London model review, head of FX model review, head of rate model review, head of wealth management model review and… head of Comprehensive Capital Analysis and Review (CCAR) model review.

Now, however, Bai works in model review no longer. He’s escaped. He’s head of the entire risk function for an entirely new bank.

Model reviewers everywhere will wonder how this happened. The answer is that Bai is now working for Chinese bank CICC in Hong Kong. He’s given up London and New York City and he’s given up U.S. investment banks to make the move. He clearly thought it was worth it.

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An FX strategist at Brevan Howard, who went into hedge funds after two years as a grammar school physics teacher, has become the latest senior exit.

Teaching is often viewed as a vocation to escape financial services careers, but Oliver Brennan worked at the selective Dr Challoner’s Grammar School in Buckinghamshire for two years before joining Brevan Howard in 2007.

Brennan spent three years at Brevan Howard before leaving for State Street Global Investors in 2011. He spent less than a year there before moving to Tudor Investment Corporation in February 2012, but returned to Brevan Howard by August that year. He left again earlier this month.

Brennan has a Masters degree in Physics from Oxford and went into teaching upon graduation. He does, however, fit the typical recruit of Brevan Howard – highly-quantitative and with a degree from a top university.

Brevan Howard has been losing senior portfolio managers and traders over the past few months. Roberto Hoornweg, the former head of securities distribution at UBS who joined Brevan Howard in 2012, left to join Standard Chartered in December. Paul Ellis, the former yen trading chief at Credit Suisse who joined the hedge fund in 2012, has also left, according to the Financial Conduct Authority.

Brevan Howard appears to be cutting back on its macro-focused employees. In January, Mark Deniston, the former head of sterling rates swaps at Goldman Sachs who joined Brevan Howard in 2013, left in January to head up GBP rates trading at Royal Bank of Scotland.

In November, Brevan offered to buy back shares in its BH Macro Limited fund. 48% of investors took up the offer, allowing the fund to avoid a wind-down. Overall, investors withdrew $7bn in assets during 2016, bringing assets under management to $15.6bn at the end of December.

In the year to March 2016, Brevan Howard cut headcount by 32% on the previous 12 months, but paid its 122 employees an average of £162.2k – up from £132.5k in 2015.

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Everyone knows that it’s difficult to get a trading internship at Goldman Sachs, but when you see 100 students from a single university gathered in a campus presentation where you’re told there are 10 available jobs across the bank, you realise how competitive it is.

Earlier this year I was told that I was successful in securing an internship this summer within Goldman Sachs’ securities team in London. This isn’t a full-time job, but given that the bank attracts 250,000 applications from students every year, I feel like I’ve gone some way towards one.

It’s been tough to get to this point, but this is what you should expect from the Goldman Sachs internship application process and what I believe are the necessary steps to success.

Goldman Sachs doesn’t do psychometric testing, but there’s an online component to the application process, which is really tough. Goldman has started using HireVue, a digital interviewing system overlaid with artificial intelligence, to vet candidates at the first stage.

Practically, this means that you’re faced with questions recorded by HR and you’re required to record your responses back on camera. These are usually competency-based – for example, I had to explain how I’d handle a complaining client, what role I usually take on in a team, give an example of a challenging project and also explain why I want to work in finance.

It’s intimidating for a couple of reasons. Firstly, you’re essentially talking to a blank screen about yourself for a few minutes and you need come across well. It’s also under time pressure – there are five questions, and you have 30 seconds to prepare you answer for each. You then have just three minutes to answer, so have to be concise.

This was the hardest part of the whole process. It takes just 30 minutes to go through this interview, but I spent two days preparing for it. Preparation and practice is absolutely key.

Once you get through the online interview, Goldman Sachs then invites you in. During the course of one day, you have to complete three interviews with people in the division you’re applying to.

Expect to be questioned on your CV in great detail – this is usually the entry point of every interview. There are also competency based interview questions – overcoming a difficult situation, accomplishments most proud of – but there are also divisional specific questions. You have to sell your own trade ideas and explain in great detail why you think these trades could be a winner.

The fact is that your CV won’t even make it through the screening process unless you’re both studying at the right university and have some level of practical experience. I had worked at banks in the U.S, Switzerland and Hong Kong and this helped my application stand out. None of this matters, however, unless you can explain yourself clearly during the interview process.

My number one tip is to find out everything you can about Goldman Sachs before even applying. I read every article I could find, and prepared for every question on Goldman Sachs’ culture, values and the characteristics it looks for. This helped keep me calm and focused and meant I was able to showcase these values during the interview.

In other words, getting an internship in a front office position at Goldman Sachs requires the right blend of experience, attitude and aptitude but you’ll never make it through the interview process unless you’re able to demonstrate this through the interview process. Good luck!

Max Chardwell, a pseudonym, is studying a Masters in Finance degree at a top UK university. He starts at Goldman Sachs this summer

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It’s J.P. Morgan’s 2017 investor day. The bank is outlining to investors why they should be putting their money in J.P. Morgan’s stock. In the process, it’s also doing a good job of explaining why you should want to work there rather than, say, Barclays, or maybe Goldman Sachs.

J.P. Morgan has already put the presentations that will constitute its pitch on its investor site. These include the presentation from Daniel Pinto, head of the corporate and investment bank (CIB). If you’re thinking of working in a markets or investment banking role at J.P.M, it’s Pinto’s presentation that should pique your interest.

Predictably, Pinto says J.P. Morgan is great. This is why…

1. J.P. Morgan has met its cost cutting targets already

While banks like Credit Suisse keep striving for more and better cost cuts in their investment banks (and particularly their markets businesses), J.P. Morgan is done. Last year, it aimed to get its CIB expenses down to $19bn and to achieve a 13% return on equity. In fact, it got its expenses down to $19bn and achieved a return on equity of 16%. Long term, it’s aiming for a 55% overhead ratio; last year it achieved an overhead ratio of 53%. – J.P. Morgan’s corporate and investment can spend more in future.

Of course, J.P. Morgan’s CIB may not spend more actually paying people. As the chart below shows, spending on compensation for people in the front office has fallen by 13% since 2012, while its spending on controls has risen by 22%.

Expense changes

Source: J.P. Morgan

2. J.P. Morgan is top in investment banking, and has been hiring people

J.P. Morgan is the queen of M&A. As the chart from Staley’s presentation below shows, its M&A market share went from 6.4% in 2012 to 8.6% in 2016. Impressive (Goldman Sachs took first place last year according to Dealogic). Following Pinto’s promise to hire “dozens” of senior M&A bankers in 2015, his presentation also proclaims the successful addition of “senior bankers in key geographic regions and industries,” without naming names.

J.P. didn’t do quite so well in debt capital markets (DCM), where its share went from 8.2% to 7.9% over the same period. In equity capital markets (ECM), it went from 7.2% to 7.6%.

JPM M&A

Source: J.P. Morgan

3. J.P. Morgan is the best in fixed income currencies and commodities (FICC) sales and trading

While banks like UBS and Morgan Stanley have curtailed their involvement in fixed income sales and trading, J.P. Morgan (like Goldman Sachs), has been steadfast. Pinto’s bank has been rewarded for this: its market share in fixed income sales and trading went from 8.6% in 2010 to 12.0% last year.

JPMorgan fixed income share

Source: J.P. Morgan

4. J.P. Morgan is nearly the best in equities sales and trading

J.P. Morgan has also greatly improved its standing in equities sales and trading. In 2010 it was fourth. Now Pinto says it’s second (although KBW puts it third, behind Goldman Sachs and Morgan Stanley). J.P. Morgan’s improved standing in equities sales and trading was partly the work of Tim Throsby, who became head of Barclays’ investment bank in January: Throsby helped improve J.P. Morgan’s cash equities business and is expected to attempt something similar at Barclays.

Equities market share

Source: J.P. Morgan

5. J.P. Morgan is pioneering the move to “low touch” trading in cash equities

Sales jobs in markets business nowadays are all about “high touch” and “low touch” approaches. As Oliver Wyman partner Arran Yentob explained last year, high touch sales are those which involve a lot of interaction between human salespeople and clients. Low touch sales are those which are mediated by computers so that human on human interaction is minimal.

As Pinto’s chart below shows, J.P. Morgan’s success in cash equities has a lot to do with its shift to a low touch model. Low touch revenues have increased 31% in two years. High touch revenues are down 13%.

JPMorgan cash equities

Source: J.P. Morgan

6. J.P. Morgan’s trading business is making more money and taking less risk than before

The Holy Grail nowadays is making more out of trading with lower costs, less risk, and fewer risk weighted assets (RWAs). J.P. Morgan is well on the road to all this. As the chart below shows, revenues in its markets business have generally been on an upward trend since 2012 while loss making days have generally diminished. The evolution of RWAs is less clear cut: they’re down 17% on the old “standardized” measure, but up 8% on the new “advanced” measure. At the very least, this implies that J.P. Morgan is willing to keep backing its trading business with increased inventory – even if that inventory is simply amplified by regulation.

Revenue and volatility

Source: J.P. Morgan

7. J.P. Morgan’s trading business is also hugely more profitable than it was two years ago…

Even better, Pinto stresses that J.P. Morgan has increased the profitability of its sales and trading (markets) business by over 40% while keeping costs stable.

Markets revenues JPM

Source: J.P. Morgan

8. Every product in J.P. Morgan’s markets business covers its cost of capital, and revenues on most desks are increasing

As we noted yesterday, some banks (Credit Suisse) in some jurisdictions (the U.S.) don’t seem to be covering their cost of capital.

On a product by product basis, this doesn’t apply at J.P. Morgan. As Pinto’s chart below shows, all J.P. Morgan’s sales and trading businesses generate a fully loaded return on equity (RoE) above their cost of capital. – Even commodities, which didn’t in 2015.

JPMorgan markets ROE

Source: J.P. Morgan

9. J.P. Morgan still has plenty of need of human traders

If you’re a talented trader, you might think J.P. Morgan doesn’t want you what with all its electronic trading and low touch market making (see 5.) Actually, it does. As the chart below shows, electronic trading is growing fast at J.P. Morgan (up nearly 30% in two years) but it’s still a tiny proportion of the total. Moreover, Pinto thinks only another $5bn of J.P. Morgan’s current $21bn in trading revenues are susceptible to future electronification. Human beings are still required.

Electronic trading

Source: J.P. Morgan

10. And Daniel Pinto wants you

Lastly, if you’re a special person you should go to J.P. Morgan because Daniel Pinto wants you. One of his priorities is to, “ensure we continue to attract the best talent in the industry.” Get in touch – especially if you’re a senior M&A banker with a big client list or an equities trader with skills akin to Tim Throsby.

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There is a great deal of activity in recruitment for financial services risk management roles, especially in banking where financial institutions have become more sensitive to risk exposures since the financial crisis. That said, there is plenty of risk management talent out there, so you’ll have to really impress the interviewers if you hope to get an offer.

Here are some tips for preparing for a risk management job interview and putting your best foot forward in front of recruiters, hiring managers and HR executives.

Do your homework before risk management interviews

Basic interview preparation steps that all risk management candidates should take when being considered for a new role include researching the company amd learning as much as possible about the managers you will be speaking with so that you’ll be able to find common ground with them.

“Find out whether you went to the same school, studied the same thing or may have worked at the same firm in the past,” said Anthony Hanna, a principal consultant of risk management and audit at Selby Jennings.

Be prepared to speak intelligently about every detail on your resume, however minor

To prepare for a job interview, risk management professionals need to have a thorough understanding of the job they are interviewing for and are prepared to speak about everything they have listed on their resume.

“I submit candidates to jobs that fit the technical requirements and academic experience to do the job, the interview is more about understanding the fit on the team and firm and the softer skills,” said Emily Slocum, team manager and the head of middle-office recruitment for the Americas at GQR Global Markets.

“They need to make sure they are on time, dressed appropriately and have done research on the firm,” she said. “I always recommend to candidates to go into as much detail as possible around anything that is asked of them and have good questions prepared.”

Don’t recite resume bullet points like a laundry list – emphasize your ability to get the job done

By the time you’re invited in for an in-person interview, the potential employer has seen your resume and concluded that it checks all or most of the boxes on their list. Speaking to them face-to-face is an opportunity to made a connection and inspire confidence in them that you are competent.

“It is important for candidates to discuss their value-add at their current role, and not just focus on the hard experiences or qualifications,” said Kareem Bakr, the head of risk management at Selby Jennings. “Most managers and HRs want to see someone who will think outside of the box and be able to deliver immediate results.”

Practice responding to questions you’re likely to hear

Be prepared for the types of technical questions they may ask you.

“Statistical/mathematical questions are very common during both phone screens and on-site interviews,” Hanna said. “Maximum Likelihood Estimation, p-values, variable selection, Monte-Carlo Simulations, Mean Value Theory and Stochastic Calculus are some specific topics that are helpful to prepare for.”

There are no general questions that interviewers ask during every single risk management interview, since the various areas of risk are so different and need different skill sets, Slocum said.

“But if I was to generalize a theme, it would be gaging both a candidates technical abilities as well as how thorough the candidate understands the bigger picture,” she said. “It is one thing to build risk models or approve transactions but does the candidate really understand what that means for the banks and what the firm’s strategy is?”

The ability for one person to make an impact across different groups and interface with different business lines has become paramount in the market we are in today, Bakr said.

“Interviewers are keen to learn what specific problems a new hire can solve and how they can utilize their skills across a multitude of areas,” he said. “For example, if you are interviewing for a role with in model validation, don’t be surprised if technical model development or regulatory knowledge-based questions arise.”

Common pitfalls to avoid in risk management interviews

There are various common pitfalls that trip up risk candidates during interviews. You should make a point to avoid these.

“When candidates don’t really listen to the question before they jump to answer [it hurts their chances],” Slocum said. “Things like eye contact during an interview also come up a lot.”

The most common pitfall is the candidate’s statistical/mathematical knowledge – or lack thereof.

“Technical inadequacy is the largest reason many quantitative risk candidates are passed on,” Hanna said. “Aside from that, a surprising number of candidates rule themselves out when they explain to managers or HRs that their primary reason for looking has to do with compensation.

“This tells the interviewers that your motivations are purely [based on] money – these candidates are seen as a flight risk because people with this mindset are more likely to leave in a short amount of time, especially if offered an opportunity to move to another firm and make more,” he said.

Provide specific examples

Rather than speak in bland generalities or clichés, be specific.

“People [make a good impression in interviews] who have very specific examples of things they have done that correlate with the job opening so the hiring manager can really get a good idea of what they could bring to the table,” Slocum said. “[Hiring managers like] candidates who think strategically about their own career and have made good career moves in the past.

“Candidates who can explain not just that they can do the job but why they want to and what will be motivating to them in that role [tend to get hired].”
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Next time someone tells you about the crazy hours you’ll work as an analyst in an investment bank, don’t listen. Same, don’t listen when they tell you how junior banking jobs are for mindless academic geniuses, or how you’ll soon be replaced by a machine. I’ve been there and it’s not true.

I spent five years as an analyst and then an associate at Bank of America Merrill Lynch. I was one of the top ranked analysts in my year. After the first eight to ten months, I didn’t work crazy hours – I left at a decent time most days and had most of my weekends off. I engaged my intelligence, and there was no way my role could have been automated out of existence.

I took control of my working hours because I worked smart. I learned to be efficient at understanding what the client and the managing director actually cared about and delivering to that. If I thought the vice president (VP) or associate was asking for work that was unnecessary, I pushed back hard. I also tried to make sure that I was the one drafting the shell (ie. the preliminary pitch book draft) – you have how idea how much random stuff goes into a deck when it’s drafted by someone who isn’t actually going to do the grunt work.

The thing is that you will need to work hard as a junior banker, but contrary to a recent article on this site, success is about more than simply slaving away and following orders. It’s the least talented young bankers who follow orders to the letter and work long hours: the hours compensate for their lack of talent. The best juniors take ownership of the orders and bring something more to the table.

For example, when I was an associate, a client asked us to put together an executive summary for an equity pitch. I spent a day assembling a 15 deck slide with the key ideas and the extracts of data to substantiate them. My VP took a look and decided we needed more pages – that every point needed to be a standalone slide. Unusually, I didn’t push back and made the VP’s amendments over the next week and weekend until the deck became 60 pages long. It wasn’t what the client wanted: he got upset because there were so many concepts flying around. The VP was too insecure to be brief: he wanted ALL the ideas (because you can’t technically be wrong if you bring everything to the table, so when in doubt, put in the hours). And he wasted all our time.

This is also why analyst and associate jobs will never be automated. Banking is a people business. When an MD goes to pitch they are trying to convince a prospective client that they have what it takes to cater to the their needs.The backup material that the analyst works on serves to help the “sell” the MD’s (and the bank’s) capabilities. A computer will always lack the empathy needed to put this together.

Another example – an MD might ask a junior for a share price chart because she wants to talk to a private equity client regarding a potential take-private. A talent-less long-hours analyst will simply execute and put together a share price chart with comments on quarterly performance. A talented analyst will put together a share price chart, realizing that the MD will want to talk to the PE about a take-private because they think the company’s stock is taking a beating and that institutional investors (and activists) are unhappy with management and are potentially open to selling. The work of the talent-less analyst can be automated. But the talented analyst will set up the comments to stress the fact that performance has been lagging vs. peers (and not just the performance in itself); and add a backup analysis on which institutional investors have changed their holdings. The amount of time to do both things is roughly the same (i.e. sifting through quarterly reports and providing meaningless comments on performance takes roughly the same amount of time as taking some comments from brokers on the performance and putting together a standard table on shareholder movements), but the latter analyst will show that they understood the point of the slide and look a lot smarter.

So, don’t complain that your junior IBD job is boring. Stop being so entitled. It’s not up to the bank to make your job interesting. This isn’t university where professors are meant to stimulate you. The bank is in the business of executing deals and generating fees and by accepting the offer and taking home your pay every month you’re signing up to their business model. The job is interesting when you use your brain. The extent to which you do so is up to you.

The most interesting parts of the analyst and associate role aren’t spoon-fed. They’re the fruits of taking initiative and demonstrating that you can add value. When you do this, you might start enjoying your job. Your superiors might even start trusting you with even more value-add tasks (from drafting slides, to taking the lead in presenting the analysis in meetings) in future.

Cedric Lavergne is a pseudonym

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Contact: sbutcher@efinancialcareers.com

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If you want to move to Asia for a banking job, you’d better stay with your current firm. Cost-conscious banks in Singapore and Hong Kong are increasingly reluctant to hire overseas-based candidates from competitors.

When they do relocate people from abroad, they prioritise candidates who already work for them. Here’s how to land an internal transfer into Asia.

1. Be clear about company rules

If you work for a large bank, there are restrictive guidelines governing the application process for internal transfers. Learn them before you do anything else. An HR manager at a European bank in Singapore, who asked not to be named, says her firm only transfers staff under two circumstances: When an existing role is being relocated or offshored; and when filling a permanent vacancy or fixed-term assignment. Speculative candidates need not apply.

2. Approach your manager first

When you have established some Asian expertise and contacts, kick start the transfer by speaking to your home country manager. “We encourage staff to discuss it with their line manager first, but it’s not mandatory,” says the Singapore HR manager. “The manager can’t stop them from applying unless they provide a robust business case against the move and I’ve yet to see this happen.”

3. Stay glued to your careers site

Most banks advertise jobs exclusively to employees for about two weeks. Make sure to monitor your employer’s careers website so you can apply for new vacancies during this window.

4. Stay in the same division

Be realistic about the roles you apply for – internal transfers and career changes typically don’t mix. You are far more likely to move within the same division doing a similar job, says a recruiter at a global bank in Singapore.

5. Understand Asia

You won’t snag a transfer just by being a star in your home country. You must also demonstrate that you understand business issues in Asia, says to Bin Wolfe, managing partner for talent, Asia Pacific, at EY. “Asia is rich in diversity. It’s a mix of mature markets (such as Singapore and Hong Kong), developing markets (such as mainland China), and emerging markets (such as Indonesia and Vietnam). The more you address these distinct differences, the more credible you will be.”

6. Connect with Asian colleagues

Nothing says you understand Asia like working with colleagues in the region. “People like to hire people they know. If the team in Shanghai has never heard of you, it may not be enough that you are already employed by the company; you will just be seen as another resume,” says Christine Raynaud, CEO of Morgan Philips Executive Search.

7. Take a trip

Do as many work trips to Asia as you can. Failing that, go on holiday and meet your colleagues socially. Get to know the managers in your department and the people that make hiring decisions. “Leveraging these experiences to build relationships can be really beneficial when you make an official request to transfer,” says Wolfe.

8. Keep your interview professional, not personal

If you’re lucky enough to get a first interview about an internal job in Asia, don’t harp on about your personal reasons for wanting to move or ask questions about housing, schooling and other personal matters. “The interview should not be about how much you want to learn about business in Hong Kong, or experience the growth of Indonesia, it should be about what you have to offer the company,” says Raynaud. “For example, highlight your familiarity with products and processes, and your head-office relationships.”

9. Don’t mention money

You may be a valued employee, but don’t let this make you over confident. Treat your in-house interview like you would an external one. Don’t mention salary, benefits and relocation expenses too early in the process, says Annie Yap, managing director at Singapore headhunters AYP Group. And unless you’re the CEO, don’t expect an expat package. “When it eventually comes to negotiating compensation, remember that most transferees are now negotiated on local terms.”

10. Cultural questions are critical

Don’t treat cultural awareness and adaptability as fuzzy concepts. Interviewers in Asia will grill you on them at an early stage. “Many organisations have experienced individuals who came here to work but were unable to adapt to Asian culture,” says Wolfe from EY. Demonstrate how you have adapted your working style to fit in with colleagues and clients from different cultural backgrounds.

11. Be open to other Asian locations

Being fixated on a single country in Asia may backfire as your employer wants to use your skills, not pander to your geographical tastes. “Show flexibility in terms of location. It may well be that the company can offer you a job somewhere else in Asia, but not in Singapore. But once you have Asian experience you may be able to move there later,” says the in-house recruiter at the global bank in Singapore.

12. Be open to project roles

A fixed-term role on a new project may not be the secure route into Asia that you’re after. But with permanent openings generally scarce, it may be your only option. Being based in Asia makes it easier to get other jobs there once the project ends.

13. Don’t be lazy

If interviewers in Asia get a whiff that you’re a core-hours-only candidate, you can forget about a transfer. “It’s important to demonstrate a strong work ethic, because Asian workers tend to work longer hours than their counterparts in the West,” says Wolfe.

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Even if you’re at the top, equity research remains a perilous place to be. The latest investment bank to hack away at its research function is CLSA, which has laid off 90 employees as it decided to “pivot” its U.S. equities business to only providing execution and trading services.

85 people remain, but Mike Mayo, one of the best known banking analysts out there, is not one of them. Mayo is known for being frank about the banks he covers, and this often results in some ‘racy’ exchanges with said banks’ CEOs. In particular, Mayo has butted heads with J.P. Morgan, which held its investor day yesterday. As Bloomberg points out, he once asked Jamie Dimon whether clients might shift to a bank with higher capital ratios. When Dimon dismissed it, he said “That’s why I’m richer than you.”

Mayo turned up yesterday to J.P. Morgan’s investor day, less than 24 hours after being laid off by CLSA, he announced himself as “Mike Mayo, free agent analyst” as he posed a question to CFO Marianne Lake. Mayo doesn’t appear to have plans to switch to the buy-side, or accept the warm embrace of an investor relations role as everyone talks up the death of equity research.

“I’m at the top of my game, and I intend to stay in it,” he told the WSJ.

Separately, this time last week PwC partner Brian Cullinan was boasting about its long-held role as auditor of the Oscars votes, talking about how Samuel L.Jackson asked for a photo with him and the briefcase with the results. However, fresh from the scandal of mixing up the envelopes with the winner of best picture – leading to La La Land being announced when the winner was Moonlight – Cullinan has kind of been thrown under the bus by his employer. PwC said it takes “full responsibility” for the mix up…but also made it clear that Cullinan “mistakenly handed the back up envelope for actress in a leading role instead of the envelope for best picture” and that a correction wasn’t “followed through quickly enough by Mr Cullinan or his partner”.

Colleagues told the Telegraph that he “felt very, very terrible and horrible” about the error, which had left him “very upset”.

Meanwhile:

UBS tried to hire blockchain cryptographers by encrypting tweets. 50 people solved it (WSJ)

Two-thirds of the UK’s finance jobs are outside of London. Brexit has put those at risk too (Bloomberg)

“My daughter said to me ‘If this is something you want, mum, then I really want it for you too.” It is very exciting to be back.” (Business Insider)

Asset managers’ bonuses will soon start shrinking (Financial News)

J.P. Morgan is embracing artificial intelligence. Its COIN program has stripped out 350,000 hours of tedious work (Bloomberg)

J.P. Morgan CFO Marianne Lake would welcome less regulation of banks (Financial Times)

J.P. Morgan is hiring commercial bankers (Business Insider)

When UK and US fund managers collide (Financial Times)

The four types of office personality, and why they don’t get on (Business Insider)

People, not organisations, resist change (BBC)

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Most hedge funds are now turning to graduate recruitment programmes to develop junior talent. Citadel, however, is still hiring from investment banks.

Citadel has been building its senior ranks over the past 12 months. Diego Megia, the former head of European rates at RBC Capital Markets who signed up to Barclays in 2013, has just joined Citadel as a senior portfolio manager in its fixed income team. Earlier in February it also hired Virginie Saade as director of government and regulatory policy for Europe from KCG Holdings, while John Macdonald joined Citadel Securities as head of technology in Europe from J.P. Morgan in August.

Citadel has also been hiring lower down the ranks. A number of hedge funds have complained about the dearth of talent coming out of investment banks and have launched their own graduate programmes to combat this. But Citadel, like Bluecrest Capital Management, has continued to poach banks’ juniors.

Jens Wauters, a former analyst within Morgan Stanley’s EMEA Media and Telecom investment banking division, has just joined as an associate on Citadel’s long-short hedge fund with a TMT focus. Yash Agarwal, who worked as an analyst for Moelis & Co’s M&A and restructuring team in New York, has moved to London as an associate on Citadel’s global equities team focused on consumer staples and beverages.

Citadel has also bolstered its quant team with the appointment of Vyomakesh Sridhar, who joined from BlueCrest Capital Management in January.

Citadel’s London headcount fluctuated throughout 2016, but it currently has 94 employees in the UK registered with the Financial Conduct Authority, up from 84 in January last year.

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Photo: Getty Images

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Juniorization is over. So say front office markets recruiters in London: if 2016 was all about finding high-performing vice presidents who could do the work of directors and managing directors, 2017 is all about hiring the best. Precocious 27 year-olds are out. Brilliant 35 year-olds are back.

“Last year’s push towards juniorization was about cutting costs while maintaining breadth,” says Russell Clarke at fixed income-focused Figtree Search. “This year, it’s about finding the headcount that will bring the most value to the franchise.”

In the front office at least, this means banks’ recruitment in 2017 will be about hiring the best. Most banks are still keeping a close lid on costs. – There’s no “outright growth story in a region or sector or asset class and most banks still aren’t rightsized for issues such as Brexit”, says Clarke. When hiring happens, they therefore want to ensure they’re spending wisely: “Everyone’s chasing the number one or two. The top salesperson in a region or sector to make relationships meaningful, the strongest traders who really understand market sentiment and the best e-commerce professionals to be the smartest, most relevant and capable counterparty to trade size with.”

In trading, this is being accentuated by the move to electronic platforms. Although J.P. Morgan’s Daniel Pinto said yesterday that electronic trading flows only accounted for 12% of the bank’s total in 2016, platforms are where the growth is. “You have a lot of flow and noise across the platforms and you need traders who’ve got smart ideas and have perspective,” says Clarke. “You don’t get that by having juniors with their heads focused in a vertical groove.” Similarly, in sales banks need the best people to work with their most demanding and lucrative “high touch” clients. And in research, they need the top ranked researchers whose output clients will actually pay for under new MiFID II requirements in Europe.

In markets at least, 2017 will therefore be the year of the elite. If you’re an experienced professional at the top of your game, you’ll get hired. If not, forget it.

The same doesn’t necessarily apply in investment banking divisions (IBD). Here, headhunters are universally gloomy: there won’t be much hiring at all. M&A got off to a shaky start this year and although banks like J.P. Morgan are talking about hiring top rainmakers, M&A headhunters say there’s not much going on: “Fewer people are resigning post-bonuses. There’s nowhere for them to go and this is creating less movement as a result,” says one, speaking anonymously.

Another IBD headhunter, focused on debt capital markets (DCM) roles, says 2017 is set to be the quietest year for hiring on record in London: “There’s no hiring sign-off on the sell-side. It’s not that people don’t want to move – you have huge bonus disparities between U.S. banks which are up 10% and European banks which are down 10% to 30%, but banks just won’t sign the hires off. – Even at the junior end. It’s cost control year, plus there’s Brexit in the background.”

Hiring hesitancy is also evident in infrastructure roles. Here, David Leithead, chief operations officer at recruitment firm Morgan McKinley, says there’s “unprecedented scrutiny” of potential recruits. Whether because of Brexit or cost savings, or both, banks like Goldman Sachs are looking at shifting “federation” positions to Poland, while others like Citi are looking at shifting them to Dublin. The exception in London may still be compliance, where Chad Lawson at Robert Walters says banks are still looking for junior and mid-ranking regulatory specialists and salaries are likely to rise by 5%+.

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SocGen’s fixed income traders didn’t do badly in 2017. As the chart below shows, they managed to increase revenues more than rivals at most other banks, including at the Americans that dominate the market. In the circumstances, they were expecting to be well paid. Headhunters say they haven’t been.

“SocGen announced their bonuses yesterday and it wasn’t taken well in the London office,” says the head of one fixed income search firm. “The pool was down around 5%, but the cuts seem to have been skewed toward juniors who are complaining they’re down 30% to 40% on last year. The suspicion is that the money has stayed with the top ranks.”

SocGen declined to comment on its bonuses, but another fixed income headhunter confirmed the fallout. “The bonuses at SocGen have been pretty catastrophic,” he says. “We’ve spoken to a few people there who received nothing and we understand they’ve put several people at risk [of redundancy].”

SocGen doesn’t have a reputation as a big payer. In 2015 (the last year for which figures are available), the average “risk taker” working in its investment bank earned €795k (£680k, $837k) compared to €833k at BNP Paribas and over a million dollars at leading U.S. banks. Nonetheless, headhunters say SocGen’s fixed income traders were hopeful of recognition after their good year.

The disappointing bonuses follow SocGen’s commitment to cut a further €220m euros of costs from its investment bank in May 2016. The French bank’s recent investor presentation suggested that around half of these cuts are still to come. Although SocGen has said it intends to maintain its presence in London after Brexit, the suspicion is that the low fixed income bonuses are intended to encourage voluntary exits – saving the bank severance pay. “It’s like they’re trying to shake the tree,” says one headhunter. “But they risk losing some of their best juniors.”

Follow @MadameButcher
Contact: sbutcher@efinancialcareers.com

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Photo credit: Tour Société Générale by Bertrand Duperrin is licensed under CC BY 2.0.

Banks on Wall Street love their juniors. Finra data suggests a full 31% of people working for Goldman Sachs in NYC have less than three years’ experience. That’s a lot of up-and-coming talent. But as juniors rise, more senior staff are often put out to pasture. What can you do if you’re a vice president or managing director who’s fallen foul of the juniorization trend?

First up, how desperate are you? How much cash do you have in the bank? Can you hold out or do you need to jump at whatever comes your way?

“The most important thing, if you have the luxury of time in a scenario when you’ve been let go, is to get to the right firm,” said Anne Crowley, co-founder and managing director of Jay Gaines & Co., a Wall Street recruiter. If you choose wrongly, you’ll may well find yourself in the same situation two years’ on.

Taking time to find the right new firm is fine in theory, but maybe not in practice. “You should figure how much you need to make to pay your bills,” said Roseanne Donohue, an executive recruiter, resume writer and career coach who worked previously at J.P. Morgan, Morgan Stanley and Citigroup.

If you can’t pay the bills, you’re going to need to do something. The temptation will be to jump at anything you’re qualified for. However, this can be a mistake: banks aren’t always be willing to hire over-qualified candidates, says one trader – juniors are often easier to deal with. The real danger, though, is that once you’re in a lower paid job it’s going to be harder to scale-up again. Caroline Ceniza-Levine, career expert and co-founder of SixFigureStart, points out that, “past salary is a strong anchor in future negotiations.” In other words, if you accept a job paying $70k, it’s going to be a lot harder to land another one paying $200k.

The better option, therefore, is to go for contract work while you figure out what to do next. “Ideally, you should take a contract job doing what you like and what you are good at and that is close to what you were doing before,” says Donohue. Continue looking for a “proper job” in the evenings.

At some point, you might need to get real. If your previous role is being phased out (think compliance monitoring jobs being lost to regulatory software, for example), maybe it won’t come back. Maybe you weren’t that interested anyway? Maybe you’d be better off doing something something else entirely? In this case, the worst thing you can do will be to jump at a lower level role similar to the one you just did simply to get back in the market.

May Busch, a former Morgan Stanley MD and founder of May Busch & Associates, a career and leadership coaching firm, said she’s currently coaching a banker who made this mistake – and is struggling to extricate himself from the new role. “If you feel like you’re overqualified and underpaid, then it’s not a good transition to the next step in your career,” Busch says.

You’re better off biding your time as a contractor. And when you do move, make it worthwhile – but be aware that the right new role for you may be very different to the last one. ““You don’t want to be too rigid and stuck on what was your title, what was your comp, what do you think you deserve,” says Gina Schiller at Jay Gaines & Co. “Your world going forward may be very different.”

Follow @danbutchrwrites

Photo credit: lolostock/GettyImages
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