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Morning Coffee: The ex-Morgan Stanley banker still battling for his bonus. HSBC & Santander are the work-from-home heroes

Even though it doesn’t seem to have slowed them down in the rush to Paris, global banks – particularly American ones – have always been scared of French labour law. As well as being tricky and expensive, it’s a constant reminder that there are other ways of doing things than the Anglosphere norm.  And so the case of ex-Morgan Stanley banker Bernard Mourad is worth paying a lot of attention to.

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For people new to this saga, it began in 2015, at the end of a period during which Morgan Stanley’s Paris office had done huge business (more than $100m) with its top client, Patrick Drahi of the corporate empire that’s currently called Altice.  Bernard Mourad was the lead banker on this account, and in February of that year, he left to join the Drahi organisation.  Leaving behind approximately $1.5m of deferred compensation.

Or did he? Morgan Stanley decided to take a slightly harder line than they might have – often someone who goes over to a major client rather than a competitor gets treated as a “good leaver” just to keep things sweet.  Mourad considered this unfair, and hired a lawyer who pointed out that under French law, deferred compensation is money you’ve earned and it’s yours, unless you’ve specifically agreed to a retention-based award.  In 2019, an industrial court ruled that this was the case, and awarded him the money. Morgan Stanley immediately appealed, and this week the court of appeal reversed the decision.

Now it’s going to the highest court – the “court of cassation” – and this seems appropriate as there is a fundamental principle at stake.  There are two competing ideas of fairness; on the one hand, if you earned the bonus you ought to get it, but on the other hand why should a company have to pay incentives to someone when the company doesn’t get the benefit? And it’s a particularly sensitive clash of cultural assumptions, too, because the big US banks have started lobbying really aggressively to get bankers and traders effectively removed from the French legislation on severance payments.

Writing on social media, Mourad is pretty clear – he’s fighting this case not for the money ($1.5m is a lot, but it’s not really an amount that someone with such a rainmaker career couldn’t say goodbye to) and not for the fun (he’s pretty open that his health situation isn’t great), but for the principle, and for the good of all French bankers.  It might not necessarily be the most reasonable course of action: as the proverb says, nobody ever leaves an employment court feeling like a winner.  But on the other hand, another proverb says that you never meet reasonable people at the tops of high mountains, and it’s hard not to admire someone who is up to the challenge of taking on the big banks.

Elsewhere, it might seem that the battle of remote working is over, and front office bankers lost.  But there are still some holdouts!  In response to a question about the sunsetting of some pandemic-era FINRA rues, Michael Roberts, HSBC’s CEO for the Americas said “We will adjust to the Finra rules, we will make sure whoever needs to be here five days a week will be here five days a week, but I don’t want to decree people coming back”.

It's important to read between the lines, and to be fair, “I want them to come back because they want to come back and they feel productive and they feel good about it” could be interpreted either as a genuine commitment to hybrid working, or a coded passive-aggressive warning that he doesn’t want to hear any whining about it.  But taking him at his word, it’s a refreshing break from the norm, and since HSBC already has 80% occupancy perhaps they don’t feel the need to press too hard for the last day.  Since Santander’s UK CEO has also said that he works several days from home himself and wouldn’t have taken the job if he wasn’t allowed to, perhaps this is the start of a trend of regional offices of global banks being a little more flexible.

Meanwhile …

It is sometimes better to be lucky than good.  Lots of people had assumed that Goldman Sachs managed to come out relatively unscathed from the Archegos crisis because of quicker reactions, more cautious risk management or sharper elbows.  In fact, an operations person made a fat-finger error and sent them $470m of cash instead of withdrawing that amount from their prime brokerage account. Goldman can claim the win to an extent, though; on a phone call shortly afterward they said they would return the money, but apparently didn’t take long to decide they’d rather not. (Bloomberg)

Industry is back on TV! And what could make it even more ridiculous and sexy?  If you guessed “the guy from Game of Thrones playing a green tech CEO called Sir Henry Muck” well done.  The new series starts in August. (Vogue)

A moment in the history of Goldman Sachs (and a not wholly insignificant one in the history of Saudi Arabia) as they become the first Wall Street bank to get a licence to set up a regional head office in Riyadh. (Bloomberg)

There’s a terrible saying in politics that “there is nothing quite so ex- as an ex-MP”. In the UK, lots of people who suspect that they might not be in Parliament after July are putting out feelers and LinkedIn requests to see what jobs there might still be in finance. (Financial News)

Can there be a worse nightmare for people who fly a lot?  An inside account of the Singapore Airlines flight that hit really bad turbulence.  Read it and you’ll never undo your seatbelt again. (WSJ)

When James Gorman stepped down as Morgan Stanley CEO last year, he agreed to stay on as chairman for a year, just in case.  Now, as planned, Ted Pick has got the final vote of confidence; Gorman is leaving the post entirely and Pick will most likely be made chairman as well as CEO. (Bloomberg)

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AUTHORDaniel Davies Insider Comment

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