Morning Coffee: 46-year-old Goldman trader with a $35m bonus decides it's time for a rest. Citi's curious trading floor in Paris
The average managing director at Goldman Sachs in London earns circa $1.5m, but not all Goldman Sachs MDs are equal. In some locations, in some markets, there are MDs earning many times more than that. Joe Montesano, a self-described "Goldman lifer," was one of those guys.
Montesano joined Goldman aged 22 in 1999 and has just left again aged 46. Bloomberg reports that he was paid around $35m for 2021 as Goldman's head of America's equity trading and global program trading. 2021 was an epic year for the program trading business, which generated more in revenues per employee than any other area of the bank.
Montesano could presumably have retired to a ranch immediately upon receiving his 2021 bonus, but he stuck around for 2022 which wasn't nearly such a good vintage. After banking one last and almost certainly more feeble payment, he's quit. The Financial Times says he has nothing else to go to. Bloomberg says his exit came as a surprise.
The question for Goldman now is whether more people of Montesano's stature follow him out the door. We've already seen senior exits in London, including Jane Hodges, the firm's co-head of European equity derivative sales, who's also disappeared with nothing seemingly lined up. Sources at the firm tell us there's disgruntlement with the 2022 bonus round and that the "opportunity cost of staying in a sell-side seat is now too high" when the big multi-strategy hedge funds are hiring. However, CEO David Solomon said last week that staff turnover at Goldman is lower than usual this year. As Goldman cuts costs by failing to fill vacancies left by staff exits, the firm might even welcome the disappearance of some more high earners - as long as they don't take revenues with them.
Separately, having reversed its original decision to build a single post-trading Brexit hub in Frankfurt and chosen Paris too after staff allegedly rebelled, Citi appears to be doubling down on the French capital.
Bloomberg reports that Citi is building a new trading floor in Paris, where it now employs 400 people, up from 170 pre-Brexit. The new floor will have 85 trading desks, and Citi expects to increase Paris trading-related headcount from 130 to 250 in the coming years. That includes traders, risk, compliance and other support staff. The US bank is also hiring 60 summer interns and analysts in Paris this summer. Fabio Lisanti, the head of the bank's trading business in Europe, moved to Paris himself this month and is deeply enthused. - "There’s enormous amount of talent locally and some strong domestic players which have grown this talent,” he tells Bloomberg, implying that Citi will be hiring from the likes of SocGen and BNP Paribas.
Citi's new Paris trading floor won't just be differentiated by its population of locals, though, it will also be set up differently. Bloomberg says the US bank is experimenting and that the new trading floor will be structured around 'adjustable standing desks in circular pods' instead of the usual banks of desks in straight rows. The intention is to encourage traders and salespeople to talk and work together more.
Junior bankers who are being "sniped" in their jobs are feeling trapped. “Overwork is very much still here. There is discontent and many people are trying to leave, but it is taking longer. Burnout is a big word, but the level of happiness is pretty low.” (Financial News)
Fixed income currencies and commodities (FICC) revenues have stayed higher for longer than expected. Troy Rohrbaugh, head of global markets at JPMorgan, said last month: “We were completely wrong in budgeting in 2021 and in 2022... It normalised at a much higher level. We predicted more normalisation in 2022, and we were wrong again. And last year was the second-best year we've ever had in markets.” (IFRE)
Todd Barker, the former head of Citadel's Surveyor Capital unit is founding an equity hedge fund called Freestone Grove Partners. (Bloomberg)
Philip John Shaw of Citigroup has been banned from working in Hong Kong for 10 years after he failed to 'discharge his duties as a responsible officer.' (Bloomberg)
Companies issued as much high yield debt in January and February as they did in the whole of 2022. This may now slow to a trickle as fears of rate rises return. (WSJ)
Beware the hedonic treadmill. “The corner office just becomes the place you go and do your work after a while. The shine wears off.” (WSJ)
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