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Was Fab Gallo at BofA right about traders in the office?

As has been widely reported, traders aren't hugely keen on returning to the office after COVID 19. A Bloomberg survey of 85 of them Europe earlier this month found that 80% wanted to carry on working from home for at least part of the time when the pandemic ends. A senior trader in London explained the appeal: remote working suddenly makes trading jobs sustainable from a lifestyle and a health perspective.

However, as traders trickle reluctantly back to offices globally, it's worth revisiting the reasons banks wanted them to stay there in the first place. It's also worth looking with hindsight at some of the numbers from banks' first quarter performance. 

One of the most vocal exponents of traders staying in the office was Fabrizio (Fab) Gallo, the New York-based head of equities trading at Bank of America. On March 25th, Gallo held a conference call with the bank's most important equity and equity derivatives traders, including Glenn Koh, global head of equities trading and Cyrille Walter, the firm’s global head of equity derivatives. Gallo said that having traders working from home wasn't ideal for the provision of "proper and orderly markets." Traders who were in "critical functions" really should come into the office, he added - unless they didn't want to work in critical functions and to be paid accordingly. While BofA would happily make exceptions for people with underlying illnesses, Gallo said that simply proclaiming, "I don't feel comfortable sorry," wouldn't cut it over time.

Ultimately, BofA was forced to capitulate after its traders complained about being forced to execute transactions from the office as lockdowns kicked in. On March 23rd (actually two days before Gallo's tirade), a memo went out saying that traders could execute trades from home if they wanted to.  Right now, three months later, around 95% of all BofA's sales and trading employees are still working from home offices. Staff are expected to return in phases with around 30 days' notice, although it's not clear when this will be.

Based upon his statements in March, Gallo would presumably like his team to return as soon as possible. And it's worth noting that while his equities traders remained in the office, they outperformed rivals - many of whom went home a few weeks earlier.  Revenues in BofA's equities sales and trading division rose by  43% year-on-year in the first quarter, far more than at JPMorgan (28%), Goldman (22%) or Citi (39%), and hit record levels. Gallo even got a special mention from BofA chief executive Brian Moynihan in the bank's first quarter call. While BofA's traders sat in the office, something went right. The bank's 10Q filing shows that the bank had around 40 days when it made more than $50m trading all products in the first quarter, compared to around 20 one year earlier. 

Bank of America is due to release its second quarter earnings on July 16. It will become apparent then whether Q1's equities trading feat was repeated with most people sitting at home. In the meantime, Gallo himself is presumably back in the office (and maybe never left) and other BofA traders may be feeling the pressure to accompany him. After all, he was fairly explicit back in March that working from home would eventually equate to lower pay. In a year of bumper trading revenues and mounting cost pressures this is likely to feature strongly in trader's contemplation of their bonus potential as the year goes on.

Have a confidential story, tip, or comment you’d like to share? Contact: in the first instance. Whatsapp/Signal/Telegram also available. Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)

Photo by Matthew Foulds on Unsplash


AUTHORSarah Butcher Global Editor
  • Lu
    2 July 2020

    Sales & Trading may have a good first half year but doesn’t mean they should get paid more.
    You have to contribute success of sales & trading revenue YTD to unprecedented volatility that won’t sustain and company platform instead of individual merits.
    Make more sense to use sales trading bonus pool to help LOBs that adversely affected this year like commercial banking. Fed asked commercial bank to help Main Street and sales and trading bonus pool should help commercial bank. Just ask “efficiency ratio” question in next earning call and you will find many other big shareholders will agree with you.
    The bonus for sales trading people is they still have a job when traders in other banks lost their job and can’t find a new one.

  • Jo
    27 June 2020

    Insider comment here.

    I feel this article misleading. The fact is, whether wfh or not, BofA sales trading pay won’t be big anyway. Why? Because BofA is a bank, and bank’s revenue is getting hit hard because of loan provision and lower interest rate. Sales and trading bonus pool will be averaged for helping out other divisions like capital market or investment banking or even commercial banks.

    Also shareholders of banks will try to curb trader pay, trust me. Unless banks doing more dividend or buyback, shareholders will try to improve efficiency ratio in every possible way for this industry of no growth. nothing is more politically correct than cutting expensive traders. this happened many times over past several years. Shareholder argued that “you can’t just pay trader because of P&L, you have to account for P&L volatility across multiple years”. What a smart nonsense. In a low volatility market, no matter how hard we try, we can’t keep up. Standard deviation of sales trading p&l is big no matter what.

    Finally keep in mind business model of BofA Sales and Trading is more like a platform business, traders make money here because of flow on this platform. If they are unhappy with bonus and go to smaller banks, their P&L won’t look the same. BofA equity derivatives, for example, had many people left already over past years. What I can tell you is majority of their P&L are not as good as when they were in BofA. “without platform you are nothing” is harsh, but it’s fact in this highly commoditized industry. Banks don’t feel the need to pay you because
    1.they can replace you easily with so many traders lost their jobs in pandemic
    2. Such market volatility unlikely to happen again over next several years

    Given how successful BofA equities’s platform strategy, no one in BofA sales and trading is indispensable, even Fab himself. It is NOT a business rely on individual contribution.

    bonus in BofA sales and trading will still be ugly next year too. Like other manager in big banks, management’s job is to give you unrealistic hopes and then crush it again next January when announce bonus. Happened so many times in past decade. You really think this time will be different?

    BofA and other banks is not generous in term of bonus pool compare to Morgan Stanley or Goldman Sachs. Federal Reserve would rather banks use surging p&l to increase capital reserve than paying traders.

  • Ma
    26 June 2020

    Bottom line, a 20th century legacy trader is outspoken about pay at his department being all about face-time. It won't come as a surprise to people who have deflected to the buy side or the younger generations: banks are just about facetime, small talks and internal beauty contests. The so called "revenue-generating" functions are process operators who just ride the franchise and volume curve. All they need is a monitor and a mouse to click: one can do that from home.. but wait how do you parade and pretend to be so critical to the firm's revenue generation when you're alone at home in your pyjamas?

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