Morning Coffee: Boutique bank asked to prove long hours are really necessary. Goldman Sachs CEO wishes he could spend a lot more money on coders
Why do junior bankers work such long hours? Is it an essential part of learning to be a banker, a pointless hazing ritual, or is it a regrettable but inevitable consequence of the way that investment banks and their clients do business? This is, according to a district judge in Manhattan, a “genuine dispute” which now might need to be settled at trial.
The case relates to a former analyst at boutique bank Centerview Partners, whose banking career didn’t last long. Shortly after being staffed on her first deal (and being criticised by her bosses for regularly logging off without asking permission), Kathryn Shiber provided her bosses with medical evidence that she had a mood and anxiety disorder which required her to get at least eight hours of sleep a night.
Initially, Centerview seems to have gone along with this, and her deal team were told that Shiber should be allowed to go home at midnight every night. But a few weeks later, they changed her mind. She was pulled onto a Zoom call told that late working was an essential part of being a junior analyst, and fired.
Perhaps surprisingly, it turns out that Centerview didn’t have a formal policy on working hours, and didn’t include in the job description that junior analysts might have to stay late at night. Presumably they thought it was obvious.
And maybe it is obvious. But “obvious” things have a tricky habit of suddenly seeming a lot less obvious when you have to stand up in front of a judge and say that it’s just always been that way. Long hours for juniors is definitely an “industry norm”, but that might not necessarily mean that it’s intrinsic to the job, rather than something for which reasonable accommodations could be made for staff with medical issues.
For example, it might be argued that Wall Street working practices are inefficient, and that juniors really only work long hours because more senior bankers see their time as a free resource. On the other hand, it might also be reasonably asked whether it’s really credible for someone with an anxiety disorder that’s triggered by lack of sleep to get through the entire application process for an elite boutique without ever realising that this might have been a poor career choice.
So, unless the case is settled before trial, we might get to see this debate, familiar to dozens of internet message board threads and hundreds of late night office conversations, played out in public. We might even see expert evidence brought to bear by both sides. In any case, it’s likely to be entertaining.
Elsewhere, David Solomon of Goldman Sachs is planning to spend $6bn on technology this year. That’s already a lot of money, but according to Solomon “I would have liked to spend eight, but I can’t afford it because I’ve got to deliver returns”. That might possibly be a barbed reference to his peer Jamie Dimon’s determination to make JPMorgan the biggest tech spender in banking no matter what the cost.
Or it might just mean that Solomon really wants to give CTO Mario Argenti a big budget, but feels constrained by the need to maintain cost discipline across the bank. He claims that the new partnership with Cognition Labs has delivered AI tools which “creates massive coding capacity for one coder as opposed to having 10, 20 people sit around for a few days”, for example.
That sounds quite ominous for employment prospects, but that doesn’t seem to be the message that Solomon is trying to send out. He expects that in ten years’ time “we’re going to be running a much bigger enterprise”, and that it will only be in a few areas where AI leads to actual reductions in headcount. In particular, he says that “I’d love to have the capacity to go get more people to spend time with clients”.
Meanwhile…
“I was so used to introducing myself as, 'Wilma, who works at JPMorgan.' I didn't know who Wilma was otherwise”. A former Executive Director at JPM looks back on her career and (although, reading between the lines, she didn’t have a great time after moving from New York to London) doesn’t have any hard feelings about her eventual burnout. (Business Insider)
There is always a fine line in banking when it comes to using your key relationships to get deals. (I have a fantastic network :: You are a bit of a name-dropper :: He is trading off his famous friends). Some people seem to think that Gantry Beach might be crossing the line when it comes to his old college friend, Donald Trump Jr. (WSJ)
Vittorio Grilli is leaving a titular “chairman” role for a real one – having been chair of EMEA investment banking at JP Morgan, he is moving to become chair of the board at Mediobanca after its acquisition by Monte Paschi di Siena. (Bloomberg)
Having been an investment banking research analyst for five years, Lorina Seres is now the official supplier of greeting cards and gifts to the Royal House of Romania. (Business Review)
The International Mathematics Olympiad has always been both a pinnacle of intellectual achievement, and a recruiting ground for the quants of tomorrow. Now Google Deepmind is trying to compete in it too. At present, it’s not quite at the level where you might get an immediate offer from Citadel Securities – it came joint 27th, after having spent a lot of time “jumping right away onto a specific answer and trying very hard to prove it” (Bloomberg)
For the last few decades, multi-strategy funds have made a significant contribution to their returns by getting into commodities trading. In particular, alumni of Commodities Corp, a trading firm acquired by Goldman Sachs in 1997, seem to be everywhere. (Rupak Ghose)
An interior designer who once worked for Ken Griffin is being accused by one of his other clients of buying cheap furniture store items and pretending they were hand made custom goods. (NY Post)
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