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Morning Coffee: Barclays bankers’ long list of grievances comes to nothing. UBS's latest layoffs are nothing new

As your grandparents might have told you, “once you find a single reason to be angry about something, you won’t have trouble finding dozens more”. Seldom has there been a better example of this proverb in action than the UK Employment Tribunal case which was recently decided largely in favour of Barclays and against three of its staff.  

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The published judgement defies summary – it begins with exchanges of emails about a football-related knee injury, but then spirals into 460 pages of allegations of whistleblowing, racial discrimination, retaliation and much more. 

The three complainants represented themselves in court and they seem to have worked very hard at doing so. The judgment notes that they provided over 12,000 pages of documents and 18 Excel spreadsheets detailing their many grievances, which included alleged racial discrimination, circumstances in which they were asked to do work they didn't want to do, and seemingly anodyne requests to return to the office weeks after a knee injury.

The story behind the story seems to be that “investment banks aren’t always as glamorous and fun as they look on TV”.  The three worked in middle-office jobs in London, on the model validation team, doing necessary and demanding, but largely routine work checking risk management models and data.  And although the workload was heavy and “stakeholders” often demanding, the pay was quite some way below front-office levels; one Assistant Vice President received a bonus of just £5k ($6.4k) on a basic salary around £60k.

In this sort of pressure-cooker environment, it’s easy for small grievances to get magnified.  The bankers were ambitious to be promoted, but that would require them to take on new responsibilities outside their experience, which they didn’t always want to do.  Everyone thought that their way of doing things was the only technically valid option, and they weren’t slow about invoking regulatory requirements when they didn’t get their own way.  People got very angry about who was and wasn’t copied in to email chains.

The three model validators, who were all French-speaking Cameroonians, then seem to have grouped together to stick up for each other.  This seems to have had the unfortunate consequence of creating further conflicts with management and colleagues, and depriving them of external reality checks. (For example, it’s noted in the judgement that by the end of the process, one of the bankers saw nothing inappropriate about arriving at a discrimination hearing wearing an Andrew Tate branded hoodie.)

The court seems to have regarded two of the employees’ points as having been legitimate but rejected all the rest.  One claimant's suggestion that it was unfair to ask him to work on particular risk models was, for example, deemed unreasonable as that was part of his job description. Overall, it seems like a pretty poor return on what must have been a mountain of work preparing the 12,000 pages of evidence. Two successful claims are disability-related, and seem to amount to recognition that the deterioriation in their mental health as a result of the process itself was substantial. 

Nor is it over yet. It’s noted in the judgement that “each of the Claimants have presented further claims”, but at this stage it’s got to be considered unlikely that any of them end up feeling like winners.  There’s generally no real moral or lesson to learn from this sort of case; it’s just an unwanted window on a part of the industry that front office bankers take for granted. 

Elsewhere, if you’re looking at the headlines to get a sense of where redundancies are being made, it’s important to avoid double counting.  For example, “people familiar with the matter” are saying that UBS Asia is making 70 people redundant in its wealth management business, including some MDs and relationship managers.

Which is probably true.  But banking job cuts often get reported several times; once as well-sourced rumour, then when they’re confirmed, and again when they actually happen.  These cuts at UBS were first known about back in January.

It’s important to keep these things clear in your mind, because numbers matter in terms of what they say about the direction of the franchise.  UBS is the biggest wealth management business in Asia, with over a thousand advisors.  Seventy redundancies in total is a small percentage which looks like a normal rightsizing exercise; twice that and you’re beginning to wonder whether it’s signalling something more strategic.  Remember that people can only be fired once.

Meanwhile …

A very important legal precedent, of interest to anyone working at a pod shop. If you happen to make expenses claims of nearly $300,000 for “trips to Brazil and Hawaii, salon hair cuts, spa treatments and dinners at high-end Manhattan restaurants”, then it might matter a great deal whether you do so in the knowledge that the expenses will be passed through to the underlying funds rather than borne by your employer itself. There is a different federal law protecting investors, and an appeal court has thrown out an SEC prosecution against former Apollo partner Mohammed Ali Rashid on this basis.  (Bloomberg)

The Australian labour market was just looking like it might cool down, and then the multi-strat hedge funds arrived.  Sholto Maconochie, having been part of a “memorable raid” that took him to Jefferies, has now gone to do real estate research at Millennium. (AFR)

It was never really likely that Tom Naratil would just head off to the golf course; the former head of UBS wealth management is now launching a sort of “bad bank SPAC” company, which has a banking licence but no business, until it gets a chance to buy one from the FDIC. (FT)

The “memecoin” sector now has a market cap of $60bn, the highest since before the last crypto plunge.  That’s a bit less than twice as much as Deutsche Bank, although memecoin experts note that “it’s not a great reflection of the actual realizable price”. (Bloomberg)

EY’s new boss Janet Truncale aims to “heal divisions” caused by the attempt to split accounting from consulting last year.  One of the first healing moves is apparently to move one of the people whose idea it was out of a management role and into a “senior advisor” job. (FT)

Has private credit “had its 15 minutes of fame”?  Banks’ leveraged finance divisions and debt capital markets teams are taking some market share back. (Bloomberg)

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AUTHORDaniel Davies Insider Comment

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