Morning Coffee: Brexit disaster for banking jobs in London. Robo screening at Goldman Sachs
If you work in banking in London, the worst has come to pass: Britain is leaving the European Union. As the Financial Times points out, the City will be "profoundly affected." Some existing banking jobs are likely to move to continental Europe; jobs that might have been created in London will not be.
Take Goldman Sachs. When the UK joined the European Union in 1973, the firm wasn't present in the City. Goldman's London office was established circa 1986. By 1992, it had 1,200 people in the London; now it has nearly 5,500. Goldman is in the process of completing a large new office at London's Farringdon - a move which suddenly looks foolish given the firm already acknowledged that it might not "fill all floors" if Britain leaves the European Union and has reportedly been "mapping out" other cities in Europe that it can shift jobs to.
Similarly, take J.P. Morgan. The US bank employs 16,000 people across the UK, in London, Bournemouth and Glasgow and began investing £28.6m in its Bournemouth office in October 2015. Now, that investment looks jeopardized: J.P. Morgan employs 4,000 people in Bournemouth and Dimon indicated earlier this month that the bank would, "have no choice but to re-organize our business model” if Britain leaves the EU.
Nor is it just U.S. banks that are likely to reconsider their London-presence. British bank HSBC has indicated that it could shift trading jobs to Paris. Credit Suisse is already in the throes of moving 30% of its jobs from London - most of them from the back office - but could now be inspired to shift front office jobs too. It's clearly bad news for the backlog of 34,000 people who've been looking for London finance jobs this year, but been unable to find one. - Especially if they happen to be monolingual Britons. It's also bad news for London recruitment firms, who've been twiddling their thumbs for months and were hoping things would pick up if Britain voted to remain in Europe.
Predictably, most people working in finance voted to stay in the European Union. The London borough Wandsworth, which is popular with finance professionals, voted to remain by a "massive margin" (75%). However, the potential pain for London's finance industry doesn't seem to have figured in most people's calculations on how to vote. There may be a good reason for this - as Harvard academics showed in recent research, people take pleasure from inflicting pain on bankers. That pleasure may be mitigated as the pound falls, and a significant proportion of the £66bn in taxes paid by the British financial services sector slips away.
Separately, next time you apply for one of those almost unattainable graduate jobs at Goldman Sachs, your application will be screened by a computer, your first interview will be conducted by a 'robot' (ie. pre-recorded using an interview programme called HireView), and you may be subjected to a computerized "personality questionnaire." Bloomberg reports that Goldman will stop using humans to read resumes and will start using a, 'technology-based resume screening tool to try and identify traits such as grit, or life circumstances.' This is a big change. As an ex-Goldman Sachs recruiter told us recently, every single application at the firm used to be read by a human being. "I would sit there day after day reading through a stack of thousands of CVs," she said. Not any more.
“One thirty-five, what!” cried one dealer. “S**t, it’s broken $1.34,” came a shout moments later. “What is going on here?... I’ve never seen a market like this. This is like the flash crash,” (The Times)
“It’s scary, and I’ve never seen anything like it. We’re going to see outflows from basically any kind of cyclical asset."...“All hell is breaking loose.” (Bloomberg)
Jes Staley: "This is a significant decision and there will be many questions asked in the coming days and weeks about what happens." (Twitter)
Barclays stock down 30%. (Twitter)
John Cryan: "At this stage, we cannot fully foresee the consequences, but there’s no doubt that they will be negative on all sides. As a bank headquartered in Germany and with a strong presence in the UK, we are well prepared." (Financial Times)
Pity the traders who've been up since 2am. (Bloomberg)
Shares of British banks plunged in Hong Kong last night. (WSJ)
Citigroup on Friday downgraded two of the UK’s biggest banks and warned clients of a sharp sell off in UK and European banks. (Financial Times)
As a small city with a population of less than 700,000 people, Frankfurt is seen as provincial and unpopular with staff. (Financial Times)
A survey of 1,500 M&A professionals taken by Intralinks in early June found that 67% of respondents globally felt a UK vote to leave would negatively hit M&A levels in Europe. (Financial News)
Deutsche Bank is cutting 3,000 jobs in Germany. (Bloomberg)
Everyone's Googling "Irish passport." (Twitter)
Half of the investment into the UK comes from Europe. (BreakingViews)
The City, London’s two-millennia old trading hub, has always faced eastward towards Europe. Large swaths of the country have turned their back on both. (Financial Times)
Bank of America just hired Luca Ferrrari, the man with the archetypal banking surname, to be its head of UK M&A. (Financial News)
Obama: "Well, I'm pretty sure my daughters won't end up working on Wall Street." (Bloomberg)
Suddenly, it looks like Trump could get elected too: "Most in the US financial sector assumed Trump had little chance. Thousands of money managers in the US today are rethinking the analysis surrounding the US race and its implications for US markets and their clients.” (Financial Times)
Photo credit: estt