Macaskill on markets: 2016 – the year in banking

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By:
Jon Macaskill
Published on:

The European Central Bank meeting in December provided a reminder that it is tough to make predictions – especially about the future. Goldman Sachs’s chief currency strategist Robin Brooks was forced to admit that he had dropped his crystal ball on his foot in predicting euro parity to the dollar by year-end and revised his forecasts for 2016 before 2015 was out. Undeterred, Euromoney’s Jon Macaskill makes his own predictions for the coming year in investment banking.

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January


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Goldman Sachs praises Robin Brooks for adopting the “fail fast, fail often” mantra so beloved of Silicon Valley with his Mystic Rob currency predictions. “Robin ‘gets’ that Goldman is now more of a technology firm than a bank,” says CEO Lloyd Blankfein, in announcing a rebranding of the firm as Goldman 8.0. “That is why he will be among the first team members to receive his bonus in our new cryptocurrency SETLCoin. Maybe he knows how that will work in the real world. Let’s hope so!”


Goldman’s rebranding as a client-friendly technology firm with a new motto: “Sure, take our stuff” is undermined later in the month, when the Wall Street Journal reports that president Gary Cohn threw a chair through a conference room window upon learning that Blankfein intends to serve another 18 months as chairman and CEO.

“I can categorically deny that Gary broke any furniture in our old New York headquarters, or GS 8.0 East, as I now call it,” says communications head Jake Siewert. “Plus I’m a bit disappointed at the Journal after we gave them all those stories about how we are now more like a tech firm than a bank.”

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February

Morgan Stanley CEO James Gorman reveals that his Christmas purge of fixed income staff has been completed ahead of schedule. “I’m glad to say that I was able to tick one of the boxes on my Christmas Eve to-do list by ruining the festive season for a lot of people,” says Gorman. “I am today also reversing our former policy of hiring a trading hotshot from Goldman every time we want to build up in fixed income, then retreating in disarray two years later. I have instead appointed a former drummer from Spinal Tap as our new head of fixed income, and feel confident that he will be with us until and unless he gets the sandwich order for Ted Pick and the equity guys wrong.”

Gorman also pledges to root out the source of news stories about how Morgan Stanley was rebuilding in fixed income and punish that source, unless it turns out to have been his own off-the-record briefings.

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March

Barclays chief executive Jes Staley unveils a new strategy at the firm’s investor day. “I am going to cut costs until there is enough money left to persuade Blythe Masters to take over as head of our investment bank,” says Staley. “Please Blythe! The guys here are just the worst. You can bring your new bitcoin firm with you if you want, and maybe make up an entirely new set of acronyms for us too.”

Staley also announces a plan to shift much of the remaining Barclays bad bank exposure to a special purpose vehicle controlled by former CEO Bob Diamond.

“It all looks a bit complicated, but everybody knows you can trust Bob when it comes to these highly-structured vehicle things,” says Staley.

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April


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UBS investment banking head Andrea Orcel receives the coveted Sprezzatura Award for best-dressed man in finance, the first time that someone has won the prize five years running. He takes the opportunity at the ceremony in Milan to condemn the poor decisions that left UBS with its reputation in tatters. “When I see our former employees go to court I am appalled by their failure to meet even basic sartorial standards,” says Orcel. “Look at Tom Hayes with his stained t-shirts and ill-fitting suits. I call today on all our employees – past and present – who end up in court to make an effort to dress properly. It only takes a few minutes, and it can really make an impact in persuading people to look past your history of bad advice and trading abuses.”


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May

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Deutsche Bank CEO John Cryan
renews his pledge to do ‘whatever it takes’ to push the few remaining veterans of the Anshu Jain era out of the firm. Speaking at Deutsche’s annual general meeting in Frankfurt, Cryan details a new location policy designed to weed out any overpaid investment bankers who failed to take the hint at bonus season earlier in the year. London-based staff will relocate to Birmingham, while New York dealers will be shifted to Detroit. “I was surprised to find that we also had some investment bankers in Frankfurt,” Cryan says, before repeating the line in flawless, if slightly menacing, German. “But I was able to fit them into our new strategy goal of ‘no bankers by 2020’ by arranging for them to move to space that Volkswagen won’t be needing in its Wolfsburg complex.” 

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June

HSBC unveils its own new location policy, ending months of suspense about whether it would shift its headquarters from London to avoid punitive UK taxes and regulation. “I think we have milked this one for about as long as we can,” says CEO Stuart Gulliver. “We even got away with suggesting that we were thinking of relocating to New York, which was pretty comical. I am therefore pleased to announce that our Pivot to Asia will be complemented by a Pirouette back to Europe. We looked long and hard at Liechtenstein and Nicosia as potential HQs, before deciding that London with Chancellor George Osborne watching your back is about the lightest regulation a major bank could sensibly want.”

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July

Credit Suisse CEO Tidjane Thiam admits that he is having doubts about his policy of abandoning return targets for his investment bankers, and instead forcing them to shadow wealth managers and make suggestions for tweaks to their pitch documents. “I used to agree with John Cryan’s view that there is no place in investment banking for investment bankers,” says Thiam. “But let’s face it, they used to make decent money every so often, and now they spend all their time setting up secret meetings with the wealth managers’ clients and then claiming they should get 80% of any related compensation. That is why I am formally adopting the UBS policy of stating that our investment bank makes an enormous return on equity, as long as we don’t factor in regulatory fines and litigation costs.”

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August

The UK’s Financial Reporting Council inaugurates its ‘name and shame’ policy for asset managers that fail to demonstrate responsible stewardship and use their roles as shareholders to press companies to maintain governance standards. One industry guru claims that the regulator should go further and investigate governance and compensation practices at asset managers themselves. “I used to take pretty much whatever I wanted at the end of the year,” says former Pimco head Bill Gross. “But then I was worth it. Some of those other bozos at Pimco used to load up their funds with strange derivatives and skewed administration costs, so no-one knew what was really going on.”

Later in the month, Gross loses his legal suit for $200 million of unpaid Pimco bonuses, but pledges to appeal the decision in order to bring “much needed transparency to the world of fixed income asset management”.

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September

JPMorgan CEO Jamie Dimon shocks the markets by announcing a plan to break up the biggest US bank. “Hillary is going to get elected in November and she already pledged to increase the too-big-to-fail charges on us yet again and generally get in our business. You know what? I just don’t need this anymore,” says Dimon. “And no, I won’t be available to serve as Treasury Secretary in the new Clinton administration. Why not appoint Mike Mayo and see if he is up to doing a proper job?”

Dimon’s move leads to renewed pressure for a formal reinstitution of Glass-Steagall separation of commercial and investment banking in the US and calls for other break-ups. Bank of America’s COO Tom Montag is quoted as saying that he could split the firm’s investment bank out in: “10 minutes, tops. I never tell Brian Moynihan what I’m doing anyway, so I don’t see why we need a holding company CEO in the first place”.

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October

Bob Diamond reveals that he has made a 30% return on his purchase of assets from Barclays’ bad bank in just six months. Regulators announce an investigation into his structuring vehicle ‘Three Card Monte’, but the quick profit nevertheless places pressure on Barclays’ CEO Jes Staley to resign. Staley lets it be known that he is a candidate for his old job running JPMorgan’s investment bank, once it is de-merged, and renews his call for Blythe Masters to join him in “getting the band back together”. Critics remind Staley that he only got the Barclays job because he claimed that he “wasn’t really an investment banker”, prompting him to announce that he would like to run the former JPMorgan private bank instead.

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November

Standard Chartered CEO Bill Winters discloses that Diamond has offered to swap a part ownership in Three Card Monte for African assets from Standard, which will later be combined with Diamond’s sub-Saharan regional banking operation Atlas Mara. “Unlike Jes Staley and certain other ex-JPMorgan staff I could mention, I can tell when someone is trying to take the shirt from my back, so the answer is no,” says Winters. “I would also like to remind the board of Barclays that they could have had me as CEO if they had moved a little faster when they were planning to get rid of Antony Jenkins, but as you sow, so shall you reap.”

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December

The acquittal of former Deutsche Bank trader Christian Bittar on Libor manipulation charges is followed by his reinstatement at the bank as global head of rates. “Say what you like about Christian, but he is a guaranteed money maker, and it turns out that life as a second-tier corporate finance house with a German retail bank attached isn’t as wonderful as you might think,” says Deutsche CEO John Cryan. “With JPMorgan breaking itself up and Morgan Stanley focused on equities and wealth management for the time being, I think there is a gap in the market for a European bank that can build a dominant fixed income flow franchise to benefit from all the rates volatility we have seen this year. Now if I could only find some hungry structured credit traders, I think we would have a real shot at making some serious money in 2017.”