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Morning Coffee: Deutsche Bank reveals its appeal as managing directors rush to join. Juniors on £150k salaries worry about work expectations

What it is it about Deutsche Bank? Once the warty toad in the corner, the German bank has since grown some lustrous locks and is attracting all sorts of senior people. 11 months ago, Fabrizio Campelli, head of the corporate and investment bank, said 50 senior bankers had been hired since the start of 2023. Today, Campelli puts that number at 75 managing directors and directors and 125 bankers in total. All have arrived in the last 18 months.

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Deutsche Bank's allure might have something to do with the 54% increase in its combined M&A and equity and debt capital markets revenues in the first quarter of 2024, but Campelli says it's more than that. "The brand" of DB is more appealing than it was, he tells the FT: “They want to come here now. They’ve seen the stock double in the last five years,” he declares of the bankers flocking from far and wide. 

When your bonus is paid partly in deferred stock, a doubling stock price matters. But Deutsche Bank's appeal is more fulsome than straight compensation: it's always offered higher-than-market salaries, particularly in the US, and it's got a reputation for paying generous guaranteed bonuses. Now it's got a growth story too. 

Along with the addition of 300 people from Numis last year, Campelli hopes his 125 new bankers will drive revenues. "Revenue generating" bankers in corporate finance have increased in number by 25%, he tells the FT. He expects them to generate a 25% increase in revenues long term compared to pre-2023 norms. 

Deutsche isn't the only bank pursuing this strategy. Lazard is busy with something similar. It works, so long as the revenues keep on coming. However, there are intimations at Deutsche Bank that the fixed income sales and trading business, which accounts for 83% of revenues in the investment bank, is having a bad year. If this continues, there will be another difficult bonus round in 2025. Campelli himself got a big pay rise for last year, but average bonuses for material risk-takers at DB were at their lowest since 2020 for 2023, and there were complaints that the new hires had depleted the bonus pool for everyone else. If fixed income revenues dwindle, expect a repeat when bonuses are announced next March and DB is more bald than it seems.

Separately, junior lawyers in London are discovering that a large salary in your late 20s is a double edged sword.

The Financial Times reports that UK “magic circle” firms like Freshfields Bruckhaus Deringer, Linklaters, Clifford Chance and A&O Shearman has recently increased their salaries by 20% to £150k for newly qualified lawyers and that US law firms have increased newly qualified salaries to £180k. 

In return for this generosity, juniors are expected to work a minimum of 1,900 hours at US firms and 1,700 hours at magic circle UK firms. This sounds like a relatively tame 40-hour a week spread over 48 weeks of the year, but these are simply the hours that can be charged to clients and don't include preparatory work. Having received their pay rises, the FT says juniors are concerned that they will have to work even longer than before. “It concerns me that to make that work financially [constantly increasing NQ pay] these people are going to have to work extraordinarily hard. And what does that mean in terms of what you’re doing to their lives? What does that mean in terms of the quality of their work?,” says one in-house lawyer. 

Young bankers, who themselves received large salary increases a few years ago, might agree. 

Meanwhile...

 UK regulators ordered Barclays to review its leveraged finance business. (Bloomberg) 

 Sid Chaturverdi, who worked for Millennium's Dubai office, joined Morgan Stanley in May. (Financial News) 

TD Securities hired Chris Turner from Barclays as head of financial sponsors. (Bloomberg) 

Caesar Maasry, a 19-year veteran of Goldman Sachs, is joining Lunate Capital in Abu Dhabi. (Bloomberg) 

Stuart Oakley, who recently moved to Dubai to lead Eisler's expansion in the Gulf has been allowed to trade with new risk limits after making a loss in the low single digits. (Bloomberg) 

How to make generational wealth as a crypto trader. Prepare to lose seven figures and adopt the attitude of “This is your last chance to get rich before the fall of western civilization.” (Bloomberg) 

The integration of AI is also creating new roles and career paths. Take algorithmic trader and AI financial analyst, in which machine learning could be used to pore over financial data, predict market trends, and automate processes. (FT) 

“Big revenue producers are horrible managers. It is a real problem. Empathy, listening skills, lot of those folks don’t have it.” (FT)

The people who fight at dinner parties. (Paris Review) 

Why not bring parents to interviews? (Guardian) 

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AUTHORSarah Butcher Global Editor
  • An
    AnonMe
    17 June 2024

    Stock price doubled to a whopping 15.00 a share.

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