What happens when you go from having a high six figure income in investment banking to earning far, far less (or even nothing at all)?
Amit Goyal, the former head of global FICC structuring at UBS, offers a timely warning to all ex-bankers who can’t keep their spending down. Goyal lost his job at UBS in September 2012, just before the Swiss bank announced its ‘strategic acceleration from a position of strength’ (AKA 10,000 redundancies). Eighteen months later, he is reportedly £300k ($500k) in debt.
Goyal earned a salary of £185k while he was at UBS, plus bonuses. He’d worked across the City of London, at ABN, Barclays and Deutsche Bank, for eleven years before being made redundant from UBS. So, how did he manage to rack up such a high debt in such a short amount of time?
Goyal isn’t the only high earning finance professional to overspend when things get rocky. Robin Clark, the broker at RFP Martin who was shot at Shenfield train station outside London in Essex last month, had debts of £15k and a county court judgement against him. Clark formerly owned three Porsches and rented a £2m house. Similarly, Kweku Adoboli, the ex-UBS trader who earned £360k a year at UBS before he was arrested for rogue trading in 2011, was found to only have £4 in the bank and to owe money to payday loan companies.
Adoboli appears to have been a gambling addict, but overspending can have other causes too. A famous 1987 study suggested that over-spending can in itself become a form of psychological addiction and should be recognized as such. Turney Duff, the ex-hedge fund trader who went from earning $2m a year to losing everything, said he never had enough money during his Wall Street career and couldn’t conceive of living on less than $500k.
Is Goyal a spendaholic? Maybe. On the other hand, the reason for his £300k debt may be more prosaic – he’s locked in a dirty divorce battle with his ex-wife and might be running down his net worth to reduce maintenance payments.
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