Morning Coffee: The new junior banking jobs are different to the old ones. Credit Suisse would have gone bankrupt
Despite constancy in complaints about working hours, junior banking jobs have changed a lot in the past two decades. Floors of people devoted to middle of the night formatting in London and New York have disappeared. Pitch books have been shortened and standardized and elements of the process have been offshored to teams in India instead.
It seems we could now be on the cusp of another change, with this one precipitated by... AI. Vacslav Glukhov, a former AI research director and head of EMEA quant research for e-trading at JPMorgan, predicted last week that generative AI will be building pitch books in the future. Financial News suggests it's already happening.
Mid-market investment bank Alantra has reportedly assembled a team of 50 people in a 'digital advisory practice' that uses AI to automate manual tasks undertaken by junior bankers and that helps senior bankers to map relationships and source deals. The team includes data scientists, deal makers, and product specialists and it aspires to hire another 10 people this year. Alantra would predictably quite like to plug Chat GPT into its system soon.
Generative AI's domain is unlikely to be limited to junior banking jobs. Two years ago, Professor Thomas Åstebro at HEC, said private equity firms were already using AI to map and review hundreds of thousands of target companies and that AI was already doing so far better than the juniors the PE firms hired to do the same thing.
As generative AI eats everything, the implication is that fewer juniors will be needed across the industry, that those who are needed will need to be highly proficient in interfacing with the new tools (Aka writing prompts), and that senior bankers will mostly be employed for their charisma and to lend a human face to the entire edifice.
Separately, if Credit Suisse hadn't been rescued by UBS it would probably have gone bankrupt the next trading day and triggered a global financial crisis. So says Martin Schlegel, president of the Swiss National Bank, adding that new UBS “has no state guarantee." In the circumstances, Credit Suisse bankers might be lucky to receive any bonus at all.
By 2020, the nominal value of derivatives held by Credit Suisse alone was already 25 times larger than the GDP of its home country of Switzerland. (TheLondonEconomic)
Julius Baer wants to hire Credit Suisse staff. “We have hiring opportunities in Latin America, we have hiring opportunities in Asia — and also in HK, now it is back online — and by the way we also have hiring opportunities in Europe and in Switzerland." (Financial Times)
Sumitomo Mitsui Financial Group wants to hire some new people in the US. “We would like to do more in fixed income, currency and derivatives.” (Bloomberg)
Things aren't picking up in London. Numis Corp., Peel Hunt Ltd. and WH Ireland Group Plc all made statements on Monday saying that capital market transactions remained sluggish. (Bloomberg)
China is cracking down on bankers. 'People' at the Commission and the Central Commission for Discipline Inspection say that banking staff, especially senior executives, must comply with laws and regulations and strengthen self-discipline. (Bloomberg)
JPMorgan thinks quantum deep hedging will become a thing. (Risk)
Goldman Sachs, JPMorganChase, Societe Generale, and HSBC all invested in tokenisation but blockchain-based bonds aren't happening as expected. (DlNews)
Jefferies' chart on what happens after a financial crisis. (Jefferies)
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