Bad omen for bonuses at Deutsche Bank and Credit Suisse
It’s not all good news for folks at US banks like Goldman Sachs who have collected huge bonuses this year: In the week after Goldman’s earnings announcement, its stock price fell 3 %, with the threat of further falls taking over its payments made in stock. However, employees of European banks who have not yet been paid would surely be very happy with such a small drop in these gargantuan payments.
While all major US banks have now announced their bonuses, not all major European banks have. And in the period of time between the two, things seem to get worse.
As US banks reported results and kicked in bonuses in the shadow of last year’s strong performance, so did European banks, shaken by falling stock markets and the threat of war in Ukraine. And that comes with talk of their investment banking issues in the fourth quarter.
Credit Suisse, which was already expected to pay badly this year, warned this morning that it recorded a fourth-quarter loss at its investment bank as business conditions normalized and recorded a litigation charge of 500 million francs. Meanwhile, CS said its wealth management business in Asia, expected to be a growth engine, does not appear to be performing as well as hoped and has seen a “significant slowdown” in deal activity. Credit Suisse publishes its fourth quarter results on February 10.
Deutsche Bank released its fourth quarter results on Thursday. Unlike Credit Suisse, DB said nothing about a fourth-quarter loss at its investment bank, but analysts expect a fourth-quarter net loss for the bank as a whole following a slowdown in the activity in investment banking in particular, which does not look very promising for bonuses.
Deutsche Bank could pay anyway. – Last year there was reportedly talk of a 20% increase in bonuses for people working in M&A and corporate finance, but sources are already suggesting DB Markets bonuses could drop by a similar amount as the bank attempts to maintain its cost-cutting program.
Nothing is confirmed, but as the clouds gather in 2022, European banks are sure to think hard about the extent of their generosity. It has become clear that European banks are paying less than American ones, but this year the gap could be wider than ever.
Separately, if you thought giving up on your social life and accepting a deterioration in your mental health was worth becoming a better investor, a new study suggests the trade-off isn’t so clear cut.
A study of 6,291 U.S. equity mutual fund managers by Bayes and Cork University Business School found that having a CFA charter is not an indication of persistent outperformance and that, in fact, people with the charter seem to perform worse than those without. not. Better performance indicators are experience and the study of mathematics. courses at elite universities.
The academics said the results may reflect the fact that passing CFA exams has become an indicator of inexperience. The CFA Institute disputed the findings.
During this time…
Dan Schleifman left Credit Suisse and joined Wells Fargo as managing director of mergers and acquisitions a few weeks before the bonuses were due. (Bloomberg)
Ken Griffin’s insight into changing markets is the foundation of Citadel Securities’ success. “What Ken had changed was that the markets were becoming more and more electronic and technology-driven. Then it’s more about technological prowess and research than knowing the people and being part of the club. ” (FinancialTimes)
Bitcoin is down 51% since November. Ethereum is down 54% since November. Dogecoin has lost 82% since May. (FinancialTimes)
A Bank of America adviser who was featured in a viral TikTok video shouting, “You stupid idiot” and “You immigrant loser,” a worker who allegedly served his son a smoothie that hospitalized him with an allergic reaction, was fired. (Bloomberg)
Tesla says JPMorgan executives’ ‘animosity’ toward Elon Musk drives him to demand $162.2 million from a disputed bond contract. JPMorgan says these are simply contractual obligations. (Reuters)
Canadian hedge funds Brookfield Asset Management is expanding in Europe and will be hiring. (FinancialTimes)
Hong Kong’s elite schools are emptying as expats leave. The cost of priority admission to Harrow International School is down 40%. (Bloomberg)
Amazon’s falling stock price is causing problems for its white-collar employees. Their salaries are capped at $160,000 and most of their compensation is in stock that vests over four years, but Amazon shares are down 24% since last July. (Bloomberg)
A problem on The OpenSea NFT market meant a Bored Ape Yacht Club (BAYC) NFT was accidentally sold for $1.7k instead of $200k. “I just lost a monkey guys…. I’m crying…. How did this happen????” (Decrypt)
Former head of Barclays’ FX business, Ivan Ritossa has won a lawsuit against a trader who robbed his French vacation villa and removed a security system he had installed after Ritossa refused to pay his bill. The trader must pay Ritossa £50,000. (Daily Mail)
Ruth Crockett, a risk modeler at HSBC, now manages the store and post office in her village. “I know a lot of people in the village, which I didn’t know before. It really taught me about the economics of a business in the field. (The temperature)
Photo by JC Gellidon on Unsplash
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