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Morning Coffee: Citi’s tiny New York layoffs raise more questions than they answer. Sam Bankman-Fried is too special to do hard time

It’s frustrating but inevitable – big things take time to do.  For example, a restructuring program as big as Citigroup’s is inevitably going to require an extended period for execution, during which there’s a cloud of uncertainty hanging over the employees.  Although CEO Jane Fraser promised her staff that 2024 is going to be a “turning point”, and the management “delayering” ought to be all but finished by the end of this month, the total headcount reduction under the “Bora Bora” programme will be 20,000, and could take as long as two years.

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Which means that, understandably, Citi bankers will be hanging on to any crumbs of information which come out from announcements or official filings.  Like the ones made with the New York State Department of Labor, reported on yesterday by Financial News.

And “crumbs of information” is what they are.  We are told that there were 286 roles cut since the start of February, of which 44 were in the Global Markets division, three in Citigroup Technology Inc, and the rest were in Citibank N.A., the main banking entity. 

This is actually a surprisingly small number.  It’s 2% of Citi’s total New York staff, and about the same percentage of the overall redundancy plan.  At that sort of run rate, the plan might take four years to complete, not two.  And since we’ve been given to understand that the redundancies will fall heaviest on support staff rather than revenue generators, why only three in technology?

Unfortunately, the answers to all these questions may just be “you can’t read too much into these sorts of data points”.  A total of 20,000 headcount reductions will not mean 20,000 job losses of the kind that you have to make filings for; a lot of them will be carried out by natural wastage, and February is one of the biggest months for job moves. The staff working for Citigroup in technology jobs may not match up well at all to the employees of Citigroup Technology Inc.  And the restructuring program is likely to have concentrated first on geographies where making people redundant takes a long time; on that basis, New York would be one of the last. 

So newsflow like this is not necessarily going to give nervous employees what they want. And consequently, a lot of Citi bankers are going to remain nervous.  This sort of uncertainty is often quite damaging for a franchise, as people’s natural response is to look around for an insurance policy, and the best employees are the most likely to find one.  This can often mean that while trying to cut ten jobs in a business line, you end up losing fifteen people, including five that you really wanted to keep. Communication about sensitive human resources matters like this is always difficult, but over the next two years, Citi will hopefully be doing its best to reassure as many bankers as possible that they’re not the ones with something to fear.

Elsewhere, crypto’s most Very Special Boy, Sam Bankman-Fried is up for sentencing.  If he got the maximum sentence for all the crimes he was convicted of, and they ran consecutively, he could theoretically be looking at over a hundred years; more realistically the sentences will be concurrent, so the downside risk is more like twenty.  Sam’s lawyers have filed a 100 page sentencing memo saying he shouldn’t be sentenced to more than five or six years.

Among the arguments they make is that he’s already miserable (he suffers from “anhedonia”) and that his unique personal manner is actually a result of previously undiagnosed autism.  His parents suggest that his inability to respond normally to social cues would mean that he would be in danger in a prison environment, although his cellmate actually says he’s a really nice guy and quite popular.

There’s a danger of feeling too much desire for revenge; people should be sent to prison as a punishment, not for further punishment.  But on the other hand, a six-year sentence would mean that S B-F would be out in less than three years (assuming good behaviour and allowing time served on remand), and it feels like the investing public deserve a longer break than that.  Although his lawyers claim he’s a low recidivism risk, he’s apparently already advising the prison guards to buy Solana.

Meanwhile …

Eisler Capital wants to hire 25 new portfolio managers. (Financial Times) 

Stripe employees will be feeling a bit more “fintech autumn” than “fintech winter”. The latest opportunity to sell their shares to outside investors is going to value the payments company at $65bn, which is below the $95bn peak, but above last year’s price and certainly better than many fintech stock options. (Bloomberg)

It seems that Jack Ma’s Ant Group is outbidding Citadel Securities for the former Chinese joint venture brokerage of Credit Suisse.  The franchise might not be quite what it was, but the winning bidder will get at least some of the staff, a well-managed business with functioning IT systems and those all-important securities licences. (Euromoney)

Young Americans are sceptical of the stock market, they’ve been burned by crypto, and so in order to make a dent in their student debt, some of them are investing in … sports betting? (WSJ)

In a dispute over a £35m loan from a Greek shipping billionaire, Amanda Staveley is getting a few more stamps on her loyalty card from the coffee shop by the High Court. (FT)

Brevan Howard is looking for 15 interns in its Abu Dhabi office, concentrating on local Emirati talent and looking for quants and coders. (Financial News)

A subsidiary of Santander is offering retail clients a set of price targets on over 1,000 stocks, “based on artificial intelligence”.  That might strike a lot of people (equity analysts, compliance officers, retail investors) as a bit frightening, but apparently “the accuracy of the models should improve over time as they are updated”.  So that’s all right then.  (Bloomberg)

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 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 libelous (in which case it won’t.)

AUTHORDaniel Davies Global Editor

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