Morning Coffee: Peculiar goings-on at the top of HSBC. UBS slashes the fun budget
Absence, apparently, makes the heart grow fonder. Six weeks ago, Georges Elhedery was returning from a six month sabbatical spent travelling with his family, and preparing to spend a couple of months working with HSBC CEO Noel Quinn on a couple of projects before returning to his previous job as co-head of global banking and markets.
But yesterday, it was announced that he’s heading for greater things. Not only will he be promoted to Chief Financial Officer, the move has been explicitly positioned as a piece of “succession planning”. Which suggests that (although the official line is that the company aims to have “no less than three and ideally four or five options”) Elhedery is currently in pole position for the top job.
What does it all mean? For Greg Guyett, it might be bittersweet. He is now confirmed as sole holder of the top job in HSBC’s investment bank, but that looks like it might be a ceiling on his ambitions. If Elhedery is seen by the board as requiring experience outside the investment bank before he could take over, then that requirement would probably apply to Guyett too, but he's not getting the tap. Guyett is also 58 years old, only a bit younger than Noel Quinn himself, while Elhedery at 48 is more representative of the next generation. One consolation might be that he’s likely to be staying in London rather than moving to Hong Kong.
For Even Stevenson, the holder of the CFO job until twenty-four hours ago, the message seems to be “so long, and thanks for everything”. All the statements seemed to take pains to say that there was nothing wrong with anything he’d done in his three years; they just needed the job for Georges. Stevenson is apparently going to take some time and consider his options – although he’s unlikely to starve, after this job and his time at RBS, he must be worrying about getting type-cast as a hatchet-man and cost cutter rather than a leader. If the rumours about Christian Meissner at Credit Suisse are true, he might even consider a return to the bank where he made his reputation as co-head of EMEA investment banking and global FIG.
And what does it mean for HSBC? Well, for one thing, it shows that they’ve learned the lesson about succession planning from the chaotic period when they promoted then fired John Flint and then spent six months making up their mind on Noel Quinn’s interim appointment. It also shows that results matter – the reason that Georges Elhedery was allowed to take his sabbatical was apparently that he’d delivered his strategic goals for his trading business units a year early.
The key lesson for employees, though, is never to assume anything. It usually seems like a safe bet to say that when a colleague has ridden off into the sunset on a travelling sabbatical, they’re on their way to retirement, a hedge fund or a boutique hotel resort. But wouldn’t you feel dumb if you took that opportunity to go around saying exactly what you thought of them, only to find out that they returned after all, as your boss?
Elsewhere, if you’ve recently been offered a job at UBS, then congratulations – you’re “critical”. Ralph Hamers has confirmed to investors that the only people coming in to UBS at the moment are either essential rainmakers capable of creating business and saving franchises, or warm bodies needed in roles that can’t be left empty for regulatory or operational reasons. Decide for yourself which one applies.
Ominously for employees, the bank is also going to be having a look at “travel and expenses” as well. This is often a leading indicator – as always, look at what management do, not what they say. In any normal conditions, cutting these budgets is the ultimate false economy – there is no restaurant in the world which is so expensive as to leave the RoI on client entertainment negative, and a single lousy presentation made by a banker who’s exhausted by flying transatlantic in economy can lose more money than you save on several dozen upgrades. The only conditions when the travel and entertainment budget begins to look like a quick and easy source of cost cuts are near the beginning of a long revenue winter.
Meanwhile …
Similar views seem to be expressed at “Davos in the Desert”, where David Solomon and Jamie Dimon have been talking about economic conditions tightening. The only thing everyone is optimistic about is, apparently, the outlook for their hosts in Saudi Arabia. (Bloomberg)
There must be nothing worse than spending twelve hours a day covering an industry that you aren’t really interested in. Jamie Baker of JPMorgan has been lucky enough to avoid this fate – having been aeroplane crazy since the age of eight and interested in the airline business as a teenager, he’s now in his second decade as an airlines analyst, and has just been put in the Institutional Investor Hall Of Fame. (Institutional Investor)
Anca Lacatus’ case against Barclays – one of the landmark decisions of the “banter era” in London employment tribunals – is going back to court as she has increased her claim for damages and Barclays calls this a “gratuitous inflation” (Reuters)
Despite the moves made in the UK, Ireland has no plans to lift its cap on banker pay, and so can expect to be a continued exporter of talented executives like Francesca McDonagh. (RTÉ)
Compensation at boutiques can be more volatile than at bigger banks, but this volatility isn’t always correlated with the business cycle. PJT Partners have raised average pay by 12% according to their Q3 results, as their revenues have continued to grow. (Financial News)
From a village in China to a McDonald’s in Vancouver, to a $30bn fortune, a base in Dubai and participation in Elon Musk’s deals. A profile of Binance’s Changpeng Zhao. (Business Insider)
A banker has been awarded compensation after bosses didn’t take her emotional support cakes (actually, the hobby she’d taken up to cope with PTSD) seriously and told her to stop posting pictures of them on social media. (Metro)
Photo by Gavin Allanwood on Unsplash
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