"You’re fired." The punch line of TV business show The Apprentice suddenly has resonance. In the City, heads are becoming decapitated faster than the tumbrils can collect the carcases. Of course no one is ever officially fired in investment banking. And, because most people depart on "mutually agreed" terms, even when the firing gun hasn’t been used, any departure can cause trouble. Remember how Barclays’ share price plummeted when news leaked that the little-known Ed Cahill, SIV structurer extraordinaire, had left the building. "The situation’s too volatile," a mole whispered. "If you fire someone now, everyone assumes you’re looking at a black hole."
By the autumn, firing – sorry, parting company – had become the new hiring, a heady weapon of potential. But are the people holding the strongest cards those actually in the firing line? After all, what’s so wonderful about sitting tight and dealing with the headaches that remain from the heady days of credit exuberance, particularly when you’ve been earning historic bonuses for the past five years? Much better to slink off and lie low for a few months in the Bahamas or perfect your snow-boarding technique in Verbier. The New Year will almost certainly bring new opportunities.
Of course Osman Sermerci, Merrill Lynch’s former global head of fixed income, who lost his job in October, might feel a bit low. His role lasted a meagre 14 months. However, he’s in good company: the tenure of Citi’s co-head of markets and banking, Tom Maheras, is no more and the revolving door at UBS is turning so quickly it’s making me giddy.
In late September, a mole reports mingling with a select gathering of the rich and famous at London’s Serpentine Gallery. The purpose of the evening was to meet New York’s mayor, Michael Bloomberg. Mole was apparently accosted by Huw Jenkins, the chief executive of UBS’s investment bank, who seemed in excellent spirits. The next morning it was announced that Huw was no longer CEO, and had joined the also semi-detached John Costas as a special adviser. (Do they have adjoining offices on a dedicated ‘special advisor’ floor? We’d love to eavesdrop on those conversations.)
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Huw Jenkins, the chief executive of UBS’ investment bank seemed in excellent spirits. The next morning it was announced that Huw had lost his job. Judging from Huw’s happy demeanour, my theory is correct: ‘You’re fired’, is the new ‘You’re free’ |
Judging from Huw’s happy demeanour, my theory is correct: "You’re fired" is the new "You’re free". Bloomberg himself parted company with his former employer, Salomon Brothers, in 1981. At the time, he is alleged to have said: "I’ll get those guys. They fired the wrong person. Wait until they read about me in The New York Times." A quarter of a century later, Bloomberg is a billionaire, he’s mayor of New York, he may be president of the USA and his eponymous terminals are the life-blood of any trading floor. So who’s laughing now?
I laughed out loud when I saw the list of London’s 1,000 most influential people in 2007, published by the Evening Standard newspaper. Rifling through the finance category, I shook my head in disbelief. The list was inadequate and incoherent. Why was Jeremy Isaacs, chief executive of Lehman for Europe and Asia, missing while his junior, Anthony Fry, was ranked with a flourish just above Louis Bacon, the founder of Moore Capital. Where was Barclays Capital’s tax guru, Roger Jenkins? Roger can take consolation that he is often featured in the social pages with his glamorous wife, swimsuit designer Dijana. It is so important to be on a list isn’t it? And does it really matter what list?
Anthony Alt of NM Rothschild is out, as is Bruce Wasserstein of Lazard and George Robinson of hedge fund Sloane Robinson. Where is Hans-Joerg Rudloff, the eminence grise of Barclays Capital, who sits on the board of Rosneft? And why is senior Morgan Stanley banker Michael Zaoui feted, whereas his boss, Walid Chammah (who moved to London in September), is not mentioned? Finally, one man who won’t be happy is Anshu Jain, Deutsche Bank’s head of global markets. He is dubbed "up and coming". I would have thought Anshu arrived a long time ago.
This is what happens when you let amateurs comment on financial matters. So I have decided to compile (with the assistance of my erudite editor and an informal panel of bankers who know where the real power lies) my own list of the top financiers in London – those individuals who wield true power and are both feared and respected by their peers. The "Abigail list of London’s ‘it’ (or should that be hit) bankers" will be published online on December 10.
In October’s column, I said I was concerned about Merrill Lynch’s third-quarter profits. How right I was. Merrill wrote down $84 billion in the third quarter and posted a loss in excess of $ billion. Stan O’Neal became the highest profile victim of the sub-prime crisis to date. This would seem to put Merrill near the top of a new league table: losses incurred because of the credit crunch. Merrill was the biggest underwriter of CDOs in 2006. One has to assume that Merrill is kitchen-sinking: being very conservative in a quarter where everyone got it wrong so that in future things will look much rosier.
Competitors are rubbing their hands with glee. "Merrill’s risk-management system must still be in nappies," a rival gloated. And don’t forget that arch-enemy Goldman Sachs’s results were glossy, with third-quarter net income rising by 80%.