Morning Coffee: Citi hopes to lure London bankers back with its shrubbery. The further enfeeblement of financial job cuts.

The marketing guru Rory Sutherland has a famous tip about changing behaviour:

“With economists, it always boils down to bribing people, and with lawyers it always boils down to forcing them to do it through threat and fine or imprisonment. There is a third solution, a far more libertarian solution, which is when you ask nicely? Logically, that’s the one you should explore first.”

Get Morning Coffee ☕ in your inbox. Sign up here.

Banks have always been well-supplied with economists and lawyers, and indeed it seems that when it comes to trying to get their employees back into the office, their first-choice solutions have been bribery or threats.  Surprisingly few have made much of an effort to persuade their staff that the office is actually a nice enough place to be worth half an hour on the train.

In London, Citi seems to be giving it a try.  Back in 2022, when the renovation of its Canary Wharf offices began, we suggested that on the basis of the drawings and plans, it might take the title of “best building in banking” from Goldman Sachs.  The renovation will include “mini villages”, “well-being zones” and a massive “winter garden” atrium, punched through all the floors with cascading shrubbery to stop the carbon dioxide levels getting too high.

Of course, back in 2022, the plan was that the new office would be open in 2025, and the current plan is for 2026. Citi says the project is still on budget, and since buildings tend to last a while, it’s better to do it right than to do it fast. Another big advantage, of course, is that if the start date is delayed, then the coming round of job cuts there will mean plenty of desk space for everyone.

Citi's London office might even end up inspiring a bit of jealousy on the part of bankers based in New York.  In May of last year, there were some complaints that the seating plan in Manhattan wasn’t up to the sudden return from remote working.  Citi has a bit of history in this regard; it was an innovator in hot desking, and under Mike Corbat almost nobody got a private office.

But the British Citibankers seem to be doing better in real estate terms.  They already have a more generous remote policy than many peers (three days a week in the office, with no restrictions on Mondays or Fridays), and it seems that Jane Fraser’s team are offering them more carrot than stick. And, of course, there is much less reason to squabble over who gets the corner office, when the ones in the middle of the building are next to a spectacular atrium.

Elsewhere, Schroders is the latest financial company to announce a totally underwhelming program of job cuts. Although losing your job is never pleasant, and it will presumably come as a shock for the 200 employees (apparently mainly in technology roles) affected, this is only 3% of the total workforce.  Coming shortly after BlackRock’s 1% redundancy program, this might be a trend.

Why so small? Possibly, the answer is that after so many years of consolidation and rationalisation, there just isn’t that much more fat to cut these days.  Schroders has a new CEO who is determined to improve overall efficiency, but this can’t be achieved by making arbitrary redundancies which shrink the revenue line quicker than the cost line.  Unless and until the AI revolution makes it possible to do without whole classes of human employee, we’ve reached the limits.

But it also might be a vote of confidence in the near future.  If you really want to cut costs, the thing to do is not to try to sweat out marginal improvements across the whole business, but to take one of your least profitable business lines and shut it down entirely.   This has the twin desirable effects of generating big-number headlines to show shareholders you mean business, while minimising franchise damage to the parts you want to keep.  The only problem is that it’s a cyclical industry, so you don’t want to be caught short, having got out of a business just as the market turns round.  If managers are scared of cutting, that’s probably good news.

Meanwhile …

AI is coming for equity capital markets jobs. David Solomon at Goldman Sachs says the work of drafting an S1 — the initial registration prospectus for an IPO — which might have taken a six-person team two weeks to complete, but can now be 95% done by AI in minutes. (Financial Times) 

This is an uncommon but by no means unknown phenomenon – Eight Capital, the boutique that had a brief heyday during the Canadian cannabis stock bubble, has decided to just give up, shut down the partnership and go and get other jobs.  A dozen or so of them are heading to Stifel. (Bloomberg)

It’s difficult to be a manager and get honest information from your employees, because a lot of the time the only message they are interested in communicating is “I promise I’m not trying to threaten your status”. (The Economist)

CFA [tm] pass rates are down to the lowest levels seen since the pandemic at 39% for the last round of Level II exams.  Once more, the Institute warns people that if you postpone, you’re on a slippery slope – the average is being severely brought down by the much lower pass rate of candidates who have deferred taking the test at least once. (Bloomberg)

Another bizarre scandal affecting top management pay in Japan – the CEO of MUFG will be docked 30% for three months to show remorse over a scandal where an employee stole $9m of valuables from customer safe deposit boxes. (Express)

“First of all, lose no money”?  Belgian bankers (including investment bankers) are going to be forced to take a version of the Hippocratic Oath in order to work in the industry. (Bloomberg)

Apparently 110 petabytes is enough data to stream a high-definition movie for 275 years.  It’s also the amount of Credit Suisse customer data in Asia that has to be migrated to the UBS systems. (Finews)

As firms rush to de-emphasise their DEI policies under the new US administration, some people have ended up having awkward conversations in which they discover that it was only ever an excuse, and the reason they haven’t been promoted is that they’re not really any good. (WSJ)

Photo by Courtney Smith on Unsplash

Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, WhatsApp or voicemail). Telegram: @SarahButcher. Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. Signal 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 libellous (in which case it won’t.)