Private Insolvency Management

Well I just got back from an amusing trip out to Zurich, where I gave a presentation to senior management in Private Wealth Management. I did a fine job of summoning faux enthusiasm as I ran through an unnecessarily lengthy presentation, explained how our absurd insolvency scheme could benefit them as well:

"And so, this scheme will enable you to provide your clients with full assurances that they will receive their money back, in the event of an insolvency at some point in the future," I pronounced confidently as I finished.

The PWM managers all looked keen, and agreed they would provide funding to have them added to my insolvency circus project, much to the delight of my Boss when I got back today. More funding equals more work for us - and a higher profile for him as he struggles to try and make MD.

As I packed up in the empty board room afterwards, a manager I used to work with came back in for a chat. He explained that the reason for this sudden interest from PWM is down to the exodus of clients in the last few months. As such, half of the room will be fearing for their own necks when this gets out, and have been looking desperately for anything that might give them an edge when trying to pick up more clients.

When I enquired why they had lost so many, he confessed that PWM have been so busy lying to them about portfolio performance for the last year, that when the bad news had to be finally reported at the year-end, it was the final straw for many.

"Look, the first casualty of a recession is honesty", he said seriously. "My problem with all this is that clients don't believe a word we tell them anymore, so I'm not sure this insolvency protection malarky is going to make any difference."

However bad I think my lot are, it was rather refreshing to get out to the most boring place to work in Europe and find out there is another group of bankers with even fewer morals.

Expenses Scandal Highlights Uncomfortable Parallels

Earlier I drafted up a mock client statement for this ridiculous post-insolvency initiative taking place here at the bank. It looks pretty good to me, but a particularly anal MD just replied back to take issue with my naming the example client 'Dodgy Hedgefund Ltd' (located at 1 Hedgefund Alley, Kensington, London).

Christ, if you can't have a sense of humour in this job then it's time to visit a clinic for some colonic irrigation, miserable old bastard.

On the subject of this initiative, to illustrate how absurd the work is - and current estimates are that it is set to cost over $30 million of the bank's resources to implement, and all the major banks are doing the same - the FT reported over the weekend that the Chancellor is preparing to change laws in this area. "Suggestions that the US operated more effectively than the UK are misconceived," a government official said.

In that case why is the US not rushing to change its bankruptcy laws as well? The problem with the government is that they seem incapable of admitting mistakes, even when they are obvious to all. It is rather like their attitude to MP's expenses, although it would be utterly hypocritical of me to criticise them, given what I have claimed over the years.  

A favourite has to be my generously volunteering to pilot a working from home scheme at a previous bank back in 2002. At the time colleagues smirked at my youthful enthusiasm, but I soon had the last laugh. Without any adequate controls, I went ahead and set-up a full 'home office'.  

That meant decking out my second bedroom (designated as my 'office') with an expensive, new PC of course. I also took the opportunity to furnish the room with a new bed, table, wardrobe and - my personal favourite - a 42" flat screen TV, which I categorised as an 'office presentation device'.  

In fact, there were even further parallels with politicians and their second home allowances now, remembering back. I became particularly ingenious at looking at ways of stretching the 'home office expenses' pot. My logic at the time was much like MP's I suspect, and demonstrates human nature: I treated as unacceptable anything that was refused, otherwise it was open game.  

My team quickly went from ridicule, to amusement, to envy, to applying to join the pilot scheme.

I finally reached the zenith when for 6mths (until they ended the scheme), I charged 40% of my rent as 'office rent'. The logic was infallible: apparently I only lived in a 2 bedroom place because I needed an 'office'. My pad at the time consisted of 2 bedrooms, 2 bathrooms and a main room. So 2 of the 5 rooms were 'office', since the en-suite toilet was also clearly an office expense and a necessity.

I know, all the morals of a politican. I was young.. underpaid.. naive.. how is it that they say it? I made several 'errors of judgement' that lead to 'clerical errors' and 'financial oversight'.  

To you, my internet audience of morality, I throw myself on the alter of judgement.. I have sinned!  Fortunately I couldn't care less about public opinion, so only promise not to pay any of it back.

Old Boy 'Career Breaks'

Well, our junior trader is leaving today; he didn't qualify for gardening leave and instead had his market access revoked, and so has been our tea boy for the last fortnight. He certainly personifies the cocky Essex youth that is the stereotype of the modern City barrow boy trader - if his performance had lived up to even a tenth of that arrogance I suspect he would not be on his way. However he has spent the last week loudly proclaiming he knows the head of an obscure hedge fund (I had to look it up), and will soon be landing a job there.

Either that or he's desperately insecure about his failure to make it here. Naturally we're all assuming the latter for now, and the Desk is running a sweepstake on how long it will actually take him to secure a new position. The stipulation is that it has to be a City job - I've gone for a nice, round 10 months.

Either way he really does seem to have something about him with the girls in the office. Several of them seemed upset at his leaving ceremony this morning. On that note, leaving speeches really are one of the most vacuous aspects of corporate life, but today was a rare exception. The Boss used the occasion to impress us with his leadership and oratory skills, his speech ran thus:

"I would.. err.. first like to say a few words to thank [junior trader] for his outstanding contribution to the Desk and [bank]". We waited expectantly, while the Boss shuffled his feet, clearly not sure what to say next. Bless him, he's never been particularly good at thinking on his feet.

"I know that [junior trader] will be very much missed by many in the team". Whole team turns to look at the PA whom he was rumoured to be shagging - several give her a knowing wink.

"He has contributed a great deal throughout his relatively short time here such as.. err.. " Boss shuffles again uncomfortably, now aware he has not got a clue what the junior trader has actually been doing. Several in the team give the PA another wink - presumably a reference to junior traders actual 'contribution'.

"..such as helping Mark and Gary on the Emerging Markets desk." The Boss was clearly relieved to have strung the whole sentence together, meanwhile I had been toying with whether I should interrupt this nonsense with a few prompts to help him out. I did find my eyes constantly drawn to junior trader's dinner plate ears meantime. Should any of my future children end up with such a recessive gene, I pledge now to ensure they have whatever surgery it takes on their 18th birthday to enable them to hear behind them.

Fittingly I was in the 'Barrow Boy and Banker' last night with some non-City friends, and it still surprises me how so many of the old stereotypes persist about the City. In particular, one of the most outdated is the assumption that the entire place is a plummy, old boys network that relies exclusively on nepotism as the fuel for new entrants. There is the odd backwater such as the Lloyds reinsurance market and some niche private banks, where that is the case, but by and large nothing could be further from the truth. The invasion of Wall Street fortunately ended that particularly unpleasant aspect of the City, and I can honestly say it is now one of the most meritocratic places in the world.

Well with the weekend approaching, L and I need to confirm our holiday plans, and meantime have the good fortune of cat sitting for my brother all weekend. Either way it will be an improvement on the office tedium.

From Ruski With Love

I had a night out with some colleagues at the bank last week who were over from Moscow, and opted to take them to an excellent Russian restaurant over in Chelsea called Nikita's. It's rather like taking an American to the Texas Embassy Cantina I suppose, but I couldn't resist getting their opinion on London's alleged best for Russian cuisine. Sadly none of this is on expenses anymore - a tragic sign of the times.

Actually we had an excellent evening, and I was introduced to their nectar of choice - a fantastic vodka called 'Ruski Standard Platinum' (aka 'Russian Standard' over here). Apart from eating the finest beef stroganoff I have ever tasted, on the recommendation that "it will make it easier for you in the morning" (presumably because it is such a heavy, rich dish), we polished off two full 75clr bottles of Ruski between the four of us, and it took restraint not to order a third. [note: I have just ordered 4 bottles - a couple as gifts I might add]
To my surprise I not only slept fine, but woke up without the slightest hint of a hangover. This could be my new tipple of choice now that I'm getting a bit too old for beer. Let's face it, lager in particular is devil's piss by comparison to fine wine and spirits, and with the added bonus that it wakes you up throughout the night to continually empty your bladder.

As usual, once we had got through the first bottle, we moved away from tedious work discussions such as the Desk performance (bad), and rumours about job cuts (very bad, for an emerging market heavily reliant on commodities for revenue), and onto the requisite exchange of office stories that can only ever be passed on verbally. On the subject of job cuts, it has already occurred to me that I cannot refer to any details around the timing of the impending cull, because it will be too indicative of where I work. As such I shall likely write some entries at the time but not publish them until some time afterwards.

The best story of the night for me was finding out that one of the senior traders I know on the Moscow desk, whom we call Shriek due to her piercing voice, has a husband known in the office for his odd behaviour that verges on psychosis. He apparently calls Shriek at the office 30 times a day, and it has got to the extent that her team has learned his number and filters it out where possible.

It is presumably jealousy, as Shriek's psycho husband even went so far as accusing her of having an affair with one of my colleagues (at Nikita's with me that evening). Shriek's husband had 'proof' - namely that my colleague's wife "told him of the affair". Since both Shriek and my colleague knew this was utter fantasy, rather than her assuming she had a husband who was bonkers, she decided it was a plot by my colleague to ruin her marriage - and aggressively confronted him in the office.

It ended up escalating until even the regional head MD got involved.. before being hastily covered up. From what I hear, they are now quietly compiling a dossier on Shriek for a range of her own odd activity. This one will doubtless be tucked away in her HR file for use at an appropriate time. Like a round of job cuts for example.

Oh, Stop The Baracking

Well, I'll have to put aside my discussions on investment briefly, as there has been an interesting development at the bank.

By good fortune, one of the junior team members has just decided to quit. The reason is being kept secret for now, but he was a veritable Lothario despite ears that stick out like dinner plates, and there are rumours he has been sleeping with the personal assistant of a particularly senior MD in synthetics. If that got found out then it was never going to go down well - particularly if the MD was also getting some on the side.

What was more interesting however is how this fits into the impending job cuts here - our Boss announced his departure rather cryptically this morning; that is was his own decision (yeah, right), and mentioning his leaving date was still to be confirmed "pending some negotiations".

From talking to the chap in question who is leaving, this is all about when he can hand over his work, which sounds reasonable enough on the surface. However our Boss is a sly old fox, and is more likely to be delaying the whole process so that our boy counts nicely in the round of cut backs next month. A splendid idea, and at the same time the Boss can avoid making any of those nasty decisions that reduce team morale.

Otherwise I have a couple of sources dotted around in the Bank, one of whom works for global security. They are very useful to know, because as a group they need to be informed in advance when we're about to fire people so they can be ready for the odd disgruntled former banker who might come storming back into the office to vent their views on life, the universe and anti-Capitalism. Global Security's usual tactics these days has therefore been to simply lock the doors on the day of the cull - unfortunately we all know that game now so it is also taken as a sign that something is afoot.

Apart from confirming my suspicions that a cull is on its way "within a month", he also confessed his team had even gone to the length of locking the office doors periodically on other days recently, to try and make it seem more of a usual event! It sounds like they haven't got enough to do if they're wasting time with antics like that, and a few of them should join the exit queue.

Otherwise my highlight news of the day was waking up to find that the new, incoming President, Barack Obama, is taking the time to make sure we bankers are lined up as the sole fall guys for the global economic crisis. In an age of irresponsibility, there is no doubt that the City and Wall Street ought to be hung out to dry. But so too should the governments that steadily reduced the regulatory framework for years to the point where all this was possible. To use a zoological comparison, if the government is an animal keeper and the City a tiger, it's like putting the tiger in an enclosure next to some lambs, with only a low, wooden fence between them. And then blaming the tiger the next day when you get in to find a blood bath (but a fat, happy cat).

And while we're on the subject of personal responsibility, let's have a moment to think of Average Man On The Street and his stupidity in spending far beyond his means for years by borrowing against the value of his house.

In reality, Barack's barracking is a response to 'Bonusgate' - the scandal currently engulfing Bank of America / Merrill Lynch, in which former Merrills CEO John Thain opted to pay his people a fat bonus before the inevitable bad times engulfed the firm. Thain's head rolled quickly enough this month, although BoA made a poor job of trying to stitch him up by pretending they had no knowledge or influence over the decision.

In reality that is a load of rubbish, as Thain made clear in public interviews that could not be convincingly denied by Bank of America. As such we ought to see Ken Lewis (CEO of BoA) on his way soon as well. It's entirely fair given the amount of public money being used to keep the combined bank afloat, and is probably the first signs that the compensation culture of global banking is changing forever.

Meantime for a man who spent his campaign talking about rising above finger-pointing and blame, and focusing on resolving the problems, the President seems to still have had a spare moment to give a mid-digit to Wall Street for all the problems they are going to cause him for the next couple of years. Fair enough.