Morning Coffee: Bank CEO breaks ranks, admits employees dislike the office. JPMorgan markets revenues up
What is it with the offices at Credit Suisse? Do they not have sufficient free food? Are they lacking wellness zones? Don't they have the sort of infusion of natural light that makes Goldman Sachs' new London office such a draw? No one knows, but for some reason employees aren't all that enthusiastic about working within them.
It's Davos season, which means it's also the season for journalists to corral bank CEOs on the fringes of the event in the Swiss mountains. In one such encounter, Thomas Gottstein, the somewhat embattled Credit Suisse CEO confessed that Credit Suisse's offices aren't the people magnet they're supposed to be and that he's resigned to that. Credit Suisse would like 60% of its people back in the office, said Gottstein. In fact, 37% of people seem to be there, and that's just the way it is.
The main problem seems to be that Credit Suisse people are treating the office as a midweek social and steadfastly staying away at other times. “It is funny if you look at the weekly statistics, Mondays and Fridays are pretty low, and then Tuesday, Wednesday, Thursday they are in the office. And I think that’s here to stay," Gottstein informed a lurking journalist.
Even this may be an exaggeration, though. That 37% figure implies that while Credit Suisse would quite like all its employees in the office three days a week, only around 60% of them are turning up even on midweek days. A lot of people are simply staying away irrespective of the day.
This is interesting in light of the apparent enthusiasm for coming into the office elsewhere. David Solomon at Goldman Sachs is adamant that people really want to be there, and GS is achieving occupancy rates of between 50% and 60%. At Citadel, Ken Griffin has his people back in the office full time. Griffin says working from home was just a passing affectation that's been easily displaced by the pleasures of hanging out with colleagues and separating personal from private lives. Even so, Citadel has lost "a handful of people over the course of this journey," Griffin admitted.
With most Credit Suisse staff still at home, the real implication of Gottstein's comments is that the similar enforced-demand-that-employees-return-to-the-office hasn't yet been embarked upon at the Swiss bank. Instead of being a vote against the bank's facilities or freebies, Credit Suisse employees' preference for working from home is therefore more a reflection of the bank's unwillingness to upset people who genuinely like their new lifestyles. After paying a comparatively miserable set of bonuses for 2021 and imposing an unpopular clawback rule that doesn't seem to be working anyway, Gottstein isn't really in a position to make big unpopular demands and to then claim that compliance is an expression of employees' inner needs. This is the real lesson of his comments at Davos, and it's something that CEOs elsewhere should apprehend when they claim that employees are back in the office of their own volition.
Separately, speaking at yesterday's investor day, JPMorgan's big-brained Daniel Pinto was upbeat about the bank's sales and trading business during the second quarter. Markets revenues will probably be up 15% to 20% in the second quarter of 2022 versus the same period of last year, said Pinto. Some of those extra revenues will presumably go towards subsidizing JPMorgan's new UK retail bank, which the Financial Times has noted is due to lose $450m this year and similar amounts in the "next few years."
Meanwhile...
Thomas Gottstein says the Credit Suisse board isn’t trying to get rid of him: "I have a clear mandate. My mandate, and the rest of the executive board, is number one: execute the strategy, number two: strengthen the risk management; and number three: be here for our clients." (Bloomberg)
Credit Suisse chairman Axel Lehmann says it’s news to him that the board wants to dispense with Gottstein. “They didn’t speak to me and I know that has not taken place, so it is wrong. (CNBC)
Joanne Hannaford says she’s “graduated” from Goldman Sachs and is now all excited about her big new job as chief technology officer at Credit Suisse. It’s “the biggest transformation job anywhere in financial services – certainly in Europe,” and, “an obvious career progression for me….You’ve got a moment in time when you have the appetite to really take this huge leap.” (The Banker)
Further bursting of the fintech bubble as Klarna cuts 10% of jobs. “While crucial to stay calm in stormy weather, it’s also crucial not to turn a blind eye to reality. What we are seeing now in the world is not temporary or shortlived, and hence we need to act . . .” (Financial Times)
Capital Group, a portfolio manager which is a big holder of bank stocks was single handedly responsible for eroding the value of deferred stock bonuses when it sold €8bn of bank shares after War in Ukraine broke out. (Financial Times)
Crypto bros are out in force at Davos. Tether, one of the world's largest stablecoins, was seen offering passers-by free slices to celebrate Bitcoin Pizza Day on May 22nd. (Reuters)
JPMorgan created a token that represents a digital version of a Treasury which borrowers can exchange it cash. The token is on a blockchain that replicates the repo market by allowing banks to lend U.S. government bonds for a few hours while keeping the bonds on their balance sheets. (Financial Times)
JPMorgan hired Arezu Moghadam from Point72 to run data science for its asset management arm. (Business Insider)
Volumes of bespoke collateralised synthetic obligations are on track to quadruple this year to about US$40bn. "It's important to use liquid CDS in these baskets so both us and clients can hedge out the underlyings if needs be. That’s one of the advantages of this product." (IFRE)
Newly qualified UK-based lawyers at Clifford Chance are now being paid £125k. Newly qualified lawyers at Akin Gump Strauss Hauer & Feld in London now earn about £164k. (Financial Times)
Smart dressing is making a comeback. People are buying six times more blazers than before the pandemic. (Bloomberg)
UBS is giving its junior bankers Memorial Day off. Managers will require special permission to staff them on deals. (Litquidity)
The Goldman Sachs banker who was shot on the subway was only there because of the Uber price surge in the weekend heat. (Daily Mail)
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