Oh dear. Christian Sewing has been asking for patience from investors, but the stress seems to be straining his own ability to keep cool. On an internal conference call after the Q3 results, he apparently lost his temper with a manager, describing as "bullshit, bullshit" some fairly reasonable complaints that the uncertainty over Deutsche’s future – and the persistent rumours of a merger with Commerzbank – were having a negative effect on employee morale and customer perceptions.
On the call, Sewing described these concerns as an “excuse” for managers not meeting targets, but the damage being done to the Deutsche franchise is quite likely to be real; there are only so many times that a manager can tell his staff that it’s “business as usual” when every newspaper is openly speculating about the merger to come. It’s also noticeable that the question was asked twice on the call, by an investment banker in New York and then (the trigger for the outburst) by a retail manager from Postbank; the effect of the rumours is being felt across the whole business. In recent interviews, Sewing has suggested that the future for Deutsche might lie in a better balance between wholesale and retail and in the domestic German franchise, so it has to be particularly stressful to be faced with the fact that people are worrying in the Bonn retail banking market as much as in the bond market.
The official line from Deutsche is still that they would not so much as consider any M&A while the share price is so depressed, and that their priority is to improve revenues and restructure the investment bank. It’s even probably true that integrating a merger partner in Germany would be difficult to deliver when they haven’t even completed the integration of Postbank itself yet. But the fact is that companies with low share prices don’t always get to choose whether or not their valuation is too low. Deutsche and Commerzbank have a big common shareholder in Cerberus, and that shareholder is providing strategic “advice” to the board.
For the longest time, people have assumed that Deutsche is too much of a national champion to be forced to merge from a position of weakness. But Bloomberg notes that Sewing is on the back foot following last week's miserable set of results and that 'urgent questions about the future are becoming louder.' The current state of the franchise is hardly a source of national pride to the G7 sovereign that shares the bank’s name, and from a national point of view, the Commerzbank merger might be necessary as a defensive measure against a non-German bid. It’s all very well for Christian Sewing to tell people to stop thinking about M&A and just do their job, but if he follows his own advice, he might end up spending less time in the CEO position than John Cryan did. Until then, Sewing's outburst was initially greeted with laughter and applause by his bankers, according to the Financial Times - although the call's moderator did attempt to note that, "no one can quote Christian on that."
Life’s even tougher if you want to get a job in FinTech, apparently. According to Finews, candidates looking for a job at Revolut, the British neo-bank set up by an ex-Morgan Stanley trader who unapologetically demands crazy hours from staff, are being asked to demonstrate that they can sign up 200 new customers for the app, as part of the application process. Since they’re currently aiming to recruit “30 to 50” business development employees, that could mean that they’re turning the human resources department into a customer acquisition tool for as many as 10,000 new customers, at an initial acquisition cost of zero. And it could be even more; according to the company, out of 350 applicants for the post, only one of them flatly turned down the customer acquisition task, while the incumbent “head business developer” claims that he himself managed to recruit 5,000 clients before being hired.
This looks like the sort of thing that turns into a trend; it’s not that unusual for fintech firms to use unpaid internships as part of the recruitment process, so why not unpaid sales too? One has to wonder about the quality and persistence of customer relationships that have been sweated out of the friends and family of desperate job applicants, but every download counts toward the all-important growth numbers. And maybe Revolut does have a point when it says that anybody can claim to be great at influencing people over social media, but employers need somebody who can deliver the goods.
No sign of an end to the blockchain phenomenon in hiring; demand is up 400% and average salaries for blockchain engineers are now up to $175k, versus $135k for software engineers overall, according to Hired (Cointelegraph)
John Hennessy, former President of Stanford University and current chairman of Alphabet, gives a long interview about “the crisis of leadership in Silicon Valley”, suggesting that tech giants need more long-term thinking and to be more careful about the consequences of the “break things” model of development. He notes that Stanford now has a compulsory undergraduate course on ethics for the kinds of students who go on to tech leadership posts. (Wired)
Unsurprisingly given the choppy conditions, October has been a horrible month for trend-following quant funds, with AHL, Cantab, BlueTrend and Aspect all losing money (Bloomberg)
Crispin Odey is apparently (rather than going into politics himself) prepared to finance a campaign by Boris Johnson to become Prime Minister. (Daily Mail)
A profile of Sam Smith, founder of AIM brokers FinnCap, and how she sees it as her duty to stand up for women in finance … (Times)
… and also of Hanneke Smits, CEO of Newton, with advice on presentation and never saying sorry (Times)
A bad few days’ news for financial prosecutors, as the U.S, trial of the British forex traders who used the “Cartel” chatroom for market-rigging ends in acquittal after a single day’s deliberation …(FT)
… and the High Court refuses the Serious Fraud Office’s attempt to reinstate charges against Barclays over the 2008 Qatari capital raising (Financial News)
But the case over the UBS compliance officer alleged to have started an insider trading ring is still ongoing, with allegations of burner phones and meetings in Mayfair nightclubs (FT)
What do you do when your newly promoted boss is just no good? (New York Times)
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