If you thought the Asian princelings scandal at J.P. Morgan was all about Asia, you were wrong. Highly placed Chinese government officials and clients don't want their children to work in Shanghai. They want them to work in New York, of course! They're not going to give J.P. Morgan their business unless the bank can furnish their offspring with a desk in its global head office.
Over a seven year period, between 2006 and 2013, J.P. Morgan hired around 200 children of APAC clients, prospective clients and foreign government officials according to an inquiry by the U.S. Securities and Exchange Commission. Although these so-called 'referral hires' were manifestly less smart than J.P. Morgan's standard graduate recruits and had circumvented the normal recruitment procedures, several of them were transferred to J.P Morgan's U.S. office.
The SEC details how problematic this was for J.P. Morgan's U.S. bankers. At one point, they were sent an IBD analyst from APAC with a "napping habit." On another, they were sent a Chinese junior for a quantitative position who lacked the requisite quantitative skills according to a J.P.M recruiter in New York, but who was hired anyhow following the intervention of APAC business head. The worst case was their infliction with what the bankers themselves described as an, "immature, irresponsible, and unreliable" son of a client, who couldn't be trusted around (other) clients and who sent a sexist email to a colleague accidentally copying in HR, but who stayed at the bank for another 10 months regardless. One senior banker in NY refused to have anything to do with him.
J.P. Morgan had good reason to open its doors to foolish 20-somethings. As one senior APAC banker pointed out, the relationship between the sons and daughters programme [nepotism] and the banks' revenues was, "almost linear relationship." Over the six year's J.P's programme for hiring well-connected 20 somethings irrespective of ability was running, it generated over $100m in fees (which it tracked on spreadsheets). Now, though, J.P. Morgan has been obliged to pay a $212m fine for its nefarious goings-on. Suddenly, hiring well connected dimwits looks less worthwhile.
Separately, the British government's latest plan to thwart Brexit seems to have come unstuck. Expectations had been growing that the UK would strike some kind of bilateral deal or "pay for play" arrangement with the EU over the City of London. Germany's finance minister seems to have different ideas. Irrespective of whether the UK has access to EU markets, Wolfgang Schäuble told the Financial Times that Britain will have to continue paying into the EU budget long after it leaves. The UK needs to be prepared for its financial services industry to move to Frankfurt, Schäuble added.
Five Chinese banks have now opened in Paris. (eFinancialCareers.fr)
European bank stocks fell yesterday, so maybe the Trump rally is over already. (Financial Times)
Steve Windsor, co-head of Europe, Middle East and Africa investment-grade DCM and risk solutions, has retired from Goldman Sachs shortly before bonus time. (Financial News)
What it's like to work 12 hours and earn £64. (Guardian)
Citi had a good third quarter too in fixed income, but says it's not going to last. (WSJ)
Jamie Dimon won't be leaving J.P. Morgan to join the Trump Administration after all. (Fortune)
The newer, gentler Goldman Sachs (Youtube)
Private equity funds are leaving London. (Financial News)
"Under-performer? Eat worms." (Daily Mail)