JPMorgan’s head of Asia equities trading, Cyril Levy-Marchal, has joined Capula Investment Management’s expanding Hong Kong office.

Levy-Marchal joined Capula at the end of April as a portfolio manager, having previously spent 10 years at JPMorgan in both London and Hong Kong. Until September 2010, he was global head of equity flow derivatives trading before he moved to Asia to become head of derivatives trading, replacing William Lee. He has been a managing director since 2005 and left JPMorgan in May last year, remaining on gardening leave until last month.

Before joining JPMorgan, Levy-Marchal was head of the equity derivatives prop trading desk at Credit Suisse. Like a lot of equity derivatives specialists, he attended an elite French university and holds an MSc in Finance from the HEC School of Management.

Fixed income-focused hedge fund Capula, which had $9.6bn in assets under management as at 30 June 2013, launched its Hong Kong office in 2012, headed by Antony Hung, a former Bank of America Merrill Lynch veteran. A number of hedge funds expanded into Asia at the time in order to capitalise on China beginning to open its capital markets to international investors.

Capula is making a habit of hiring senior ranking derivatives specialists from investment banks. As well as Levy-Marchal, it also hired Mathias Berenger, managing director and head of European vanilla options at Credit Suisse, in April.

At the same time, however, some senior staff have departed. Amol Devani, who was managing director and head of the foreign exchange options desk at Goldman Sachs before leaving for Capula in August 2012, has now left the firm, according to the Financial Conduct Authority register.

Capula was set up by former JPMorgan prop trader Yan Huo in 2005 and had $13bn in AUM at the beginning of 2013. It has a reputation for paying well – its London partners earned an average of £2.2m in 2013, down from £4.1m the previous year. Huo himself took home £56.6m in 2012, and £12.5m last year.

Related articles: 

Five smaller firms with an appetite to hire investment bankers

Hedge fund partner hired by Morgan Stanley to run FX desk

Senior female Morgan Stanley trader joins hedge fund less than a year after promotion

The post JPMorgan big-hitter joins notoriously high-paying hedge fund appeared first on eFinancialCareers.

In a matter of weeks, this year’s summer analyst classes will start in the City of London and on Wall Street. If you’re wondering where to satisfy your stomach during your Wall Street internship, we have some important suggestions here. If you have less prosaic concerns about how to handle yourself during your months on the trading floor, we suggest you digest the advice below, from traders who’ve been there and know what will hit you.

1. You will need a pen and paper

“This sounds silly and basic,” says Terri Duhon, a former JPMorgan trader and author of ‘How the Trading Floor Really Works,’ “but the best advice for anyone going into a trading internship is to carry a notebook and pen everywhere you go.

“Take notes and write down all the words you don’t know the meaning of,” says Duhon. “There’s a lot of lingo on the trading floor and you can’t be expected to turn up with a full understanding of it in your head. Nor can you always ask people to explain.”

2. People will not want to talk to you when you want to talk to them

This brings us to point two: just because you’re sitting next to a professional trader, that does’t mean you can keep pestering him/her with questions.

“You need to know when to ask a question and when to keep quiet,” says Lex Van Dam, an ex-trader at Goldman Sachs who now runs a pseudonymous financial education company.  “Don’t ask a lot of questions. Just observe. A trading floor internship is as much about observing as it is about asking a lot of questions,” he adds.

3. You will be asked to do multiple things by multiple people and you yourself must manage this

Internships in any area of an investment bank can be about feast and famine – you either have nothing going on, or there’s so much happening that you can’t cope. “If persons a, b, c and d ask you to do something, make sure that they know you’re juggling multiple tasks. You need to establish deadlines and prioritize the tasks that you’re given,” says Duhon. “This may sound easy, but a lot of interns overlook it,” she adds.

Matters are made worse by the fact that people who work on trading floors are not always ‘natural managers’.

4. The lingo 

Trading floors are places with their own argot. Before you arrive, make sure you have an understanding of the following words/phrases: bid, ask, offer, spread, long, short, hedge. There are good lists of trader terms liberally spread across the internet – try here, or here or <arel=”nofollow” href=”http://fermatslastspreadsheet.com/2011/11/30/mine-yours/” target=”_blank”>here.

5. The players 

What does a hedge fund do? What does the buy-side do? What’s an institutional investor? What’s a real money investor? What’s the sell-side? What’s the FICC business?

6. You will be among cynics

Traders are cynics says Van Dam. “They always think the worst is going to happen. You always need to be able to talk about the negatives as opposed to the positives. If you go in there and say it’s good  and markets are rising, you’re not going to seem credible.”

7. You will be among jokers

Traders also like playing jokes. Especially on interns. Do not leave your work or personal emails open and unattended at any time.

8. You’ll need some anecdotes

Traders will warm to you if you have some funny stories, says Van Dam. Come armed some interesting tales of life at university. Do not tell them when markets are tanking.

9. Don’t even think about writing anything inappropriate in emails

Banks now have no tolerance for anyone who writes anything inappropriate (ie. uses expletives, sexist language, makes lewd suggestions) in emails. And yes, your emails and telephone calls will be monitored.

Related articles:

Does it really matter that you’re not joining an investment bank in the front office?

Is RBS still a good bank in which to start your career?

The post Nine things to know before you even think about starting an internship on a trading floor appeared first on eFinancialCareers.

We offered a guide to the best investment banking jobs, the best banks to work for across various divisions and the best pay packets on offer among U.S. institutions. This, and the rest of the top stories on eFinancialCareers over the last week.

The 10 most desirable and lucrative jobs on offer at GS, JPM, BAML, MS and Citi right now

Forget the firing in financial services, here’s where the bulge bracket banks want to hire.

Eight tips for coping with interviews when you’re introverted or socially awkward

Technical experts can fall down during the recruitment process because they fail to express themselves fully. Here’s how to make it through the interview process.

The best and worst European investment banks to work for in 2014, by Morgan Stanley

A guide to which institutions to work at by business area, courtesy of banking analysts at Morgan Stanley.

How bonuses of $250k, $500k and $1m are structured at JPMorgan

As part of a series of articles looking at how punitive each of the major investment banks is with bonus payments, here’s an exclusive insight into pay at JPMorgan.

Senior IB traders reduced to trading from home. Should you?

One JPMorgan commodities trader has decided to go it alone. Is this really the secret to making lots of money?

Who will replace Brady Dougan at Credit Suisse? Top tips from the Swiss press

Shareholders in Credit Suisse want a sacrificial lamb in Brady Dougan. Here’s who could replace him and the potential consequences for employees.

Is this the best banking job in Asia for making a career change?

Operational risk; the job where 35% pay rises are on offer in Asia.

Five banks with expansionary FICC businesses. And who you need to know if you want to get hired there

Not every bank is retrenching in fixed income. A guide to who’s hiring and the pros and cons of working there.

Hedge fund partner hired by Morgan Stanley to run FX desk

In another sign that investment banks want to hire traders from hedge funds, Morgan Stanley has just poached a senior FX pro.

GMAT or GRE? It shouldn’t be a question for aspiring MBAs

The GMAT is still the best option for prospective MBAs despite the recent status boost for the GRE exams.

The post Career Crunch: The most attractive investment banking jobs, how to ace interviews as an introvert appeared first on eFinancialCareers.

These are still difficult times for investment banks. While capital markets revenues boom, sales and trading revenues are floundering. A new report from banking analysts at JPMorgan predicts that fixed income currencies and commodities (FICC) revenues will be down another 19% in the second quarter of 2014 compared to the first. Equities revenues are expected to be down another 8%. M&A revenues are expected to be down 16%. Only equity capital markets (ECM) and debt capital markets (DCM) revenues are expected to rise quarter-on-quarter, with meagre increases of 7% and 8% respectively doing little to offset the weaknesses elsewhere.

If you’re going for a new banking job now, therefore, you need to make sure that you know what you’re getting into. With some banks pulling back from entire business areas, it’s worth asking the difficult questions upfront instead of being hit with a horror story later on.

JPMorgan’s analysts flag the strategic issues facing five major banks today. If you’re interviewing with Credit Suisse, Morgan Stanley, BNP Paribas, SocGen or Barclays in the next few months, it may be worth probing the areas below.

1. Awkward questions to ask in interviews with Credit Suisse’s investment bank  

JPMorgan’s analysts say Credit Suisse’s investment banking strategy is unsustainable in the long term. This is because, ‘the value of the private bank cannot be unlocked and the implied CoE will stay high as long as CSG does not restructure its FICC business further, consuming 34%E of group and 58%E IB capital in 2015E.’ In other words, Credit Suisse needs to pull back even further from fixed income currencies and commodities (FICC) trading if its share price is to reflect the value of the entirety of its activities – including the successful private bank. Matters have not been made better by a $2.5bn fine in the U.S., which has eroded Credit Suisse’s capital base.

Questions in Credit Suisse interviews should therefore centre around further fixed income restructuring. Credit Suisse is already pulling back from the rates business and is cutting risk weighted assets allocated to rates by 40%.  However, despite cutting foreign exchange and emerging markets staff, there’s been no indication that the Swiss bank is planning a more dramatic move away from fixed income trading. This is despite yesterday’s revelation that revenues in its sales and trading businesses will be down by a ‘mid-teens’ percentage in the second quarter.

2. Awkward questions to ask in interviews with UBS

JPMorgan’s analysts really like UBS – it’s their top investment banking pick when it comes to the likelihood that the stock price will rise. However, they don’t like UBS so much that they have no doubts about it whatsoever. The downside risks for UBS, according to JPM, lie in its so-called ‘no-core’ investment bank, which is in the process of shedding a massive $72bn in risky assets. This is down from $114bn at the end of 2012, but JPMorgan’s analysts have said the disposals aren’t happening quickly enough. In today’s note they say there’s is a risk of further markdowns on these legacy positions, and that the bank will make a loss in disposing of them. Due to the legacy asset issue, a pool of analysts are predicting that UBS will fail to meet its return on equity target of 16% by 2016.

If you’re interviewing at UBS, it’s worth asking (gently) abut the ROE target. How happy is the bank with the speed of asset disposals? What happens if the ROE target isn’t met? Will the bank make further cost cuts (and redundancies?).

3. Awkward questions to ask in interviews with BNP Paribas

All has not been well at BNP Paribas. The French bank is facing a $5bn fine for defying Iranian sanctions and there were reports last week that it would be banned from shifting money into and out of the US.  However, JPM’s analysts suggest that BNP’s problems go deeper than its run-in with the U.S. authorities. They claim that revenues in BNP Paribas’s investment bank are particularly reliant on ‘client flow and market volatility,’ with BNP focused on, ‘corporate demand for derivatives, hedging and structured finance products.’ When flow dries up and volatility falls (as has happened in the past 12 months), therefore, BNP will be in trouble. The French bank also faces difficulties in the U.S. market (where it’s been laying people off) as a result of new U.S. government requirements that subsidiaries of European banks hold more capital. And then there’s BNP’s exposure to the government debt of countries like Italy, which could become an issue again if concerns re-emerge about economic growth in the eurozone…

If you’re interviewing at BNP Paribas it’s therefore worth gently probing the capitalization of the U.S. subsidiary (particularly if you’re interviewing for a FICC job in the U.S.). It’s also worth questioning how the bank is dealing with lower flows and volatility and whether it expects revenues to come back. And how does it feel about the eurozone debt crisis – has it disappeared, or simply been swept under the carpet?

4. Awkward questions to ask in interviews with Barclays 

As per the strategy it outlined at its investor day a few weeks ago, Barclays is now pulling back from fixed income trading. Much of the fixed income business which now be grouped together in a bad bank, which is to be wound down in the style of UBS. This clearly entails execution risks (as for UBS), but JPMorgan’s analysts say it also raises issues about how Barclays will manage its earnings, which are likely to be very volatile in the short term. Add to this the fact that Barclays is not the UK regulator’s favourite bank and still faces judgment in the FX-fixing investigation, along with uncertainty about the UK, capital regime and the future looks cloudy for the house of Jenkins.

If you’re interviewing with Barclays, it’s worth asking how the bank plans to manage the transition to becoming a less fixed income-focused house. Are litigation issues now in the past? Truly daring interviewees could ask whether it make sense for Barclays to run an investment bank out of the UK, when the regime in the country seems so unfriendly to it.

The post Awkward questions that JPMorgan suggests asking in interviews with CS, UBS, BNP and Barclays appeared first on eFinancialCareers.

If you think earning a Chartered Financial Analyst (CFA) certification is the key to riches, think again. While a CFA credential can certainly brighten up a resume, it shouldn’t embolden you to charge in to your manager’s office and demand a pay increase.

From a recruiter’s perspective, quantifying the monetary value of a CFA is rather difficult. “Don’t expect a boost in salary right away” – or your worth in the job market to suddenly skyrocket, said Kristin Paszczak, a division director at Robert Half International in Chicago. “Clients aren’t willing to add on another 10% or 15% [in salary] just because of a CFA.”

And that is where the disconnect is – many CFA candidates assume that firms will open the purse strings. Just like with newly minted MBAs, a lot of recent CFA holders come to the market with unrealistic earning expectations, she said.

“All other things being equal, it’s a value-add,” Richard Lipstein, managing director at Gilbert Tweed International and vice chairman of the board of directors of NYSSA, said of the CFA certification. “It’s a badge of honor. It says you have the quantitative and analytical underpinnings to do the job.” But does it substantially increase your earning power? “I don’t have enough evidence to say that,” Lipstein noted.

The CFA Institute didn’t respond to requests for comment on the earning power of chartered certificate holders.

“It holds weight but I don’t know how much. If I pass my salary doesn’t go up,” one test taker told us. “If I get my CFA it doesn’t really open any doors. It’s just impressive.”

Indeed, hiring managers appear to lean more on experience. One recruiter who asked to remain anonymous recently worked with a project manager who will be taking one level of the test come June, and is rather skeptical of what it will bring him financially.

“I am doubtful that he will do much with it as I think his potential with his CFA depends on his network and prior experience,” the recruiter said. “I don’t think he will have great opportunities as a CFA without the network and pedigree. Yet someone more entrenched in that market would do better.”

None of this is to say a CFA certification is worthless. Far from it. It’s a great addition to a financial toolkit, particularly for those in asset management, but it’s seen more as a supplementary piece by many. And it is not something that will dramatically or immediately increase your earning power.

The one major plus of a CFA, especially when compared to an MBA, is it’s one-size-fits-all quality. “If you get an MBA at Long Island University, it doesn’t have the same cache as a Harvard MBA,” said Lipstein. “A CFA is a CFA is a CFA.”

RELATED CONTENT:

The 10 commandments for succeeding at CFA exams

The most (and least) stressful jobs in banking and finance

U.S. bankers victims of RBS’s math problem

The post CFA offers prestige, but don’t expect a huge pay raise appeared first on eFinancialCareers.

By all accounts, American bankers in London are not happy. They find themselves adrift in a city of astronomical house prices, depressing weather and sullen markets. They want to go home. Things seem better in New York. Their wives aren’t happy: “New Jersey homes are much larger and more affordable,” complains one grey spouse.

Fortunately, therefore, Deutsche Bank is coming to the rescue! As has been widely reported, the German bank is still going for it in fixed income, currencies and commodities (FICC) sales and trading. Deutsche is building its FICC business in the U.S., where it hired seven traders and analysts in early May and one senior rates salesperson last week.

Last week’s hire at Deutsche was Chris Yoshida from Morgan Stanley. This should excite U.S. bankers in London because Yoshida, an American by birth, had been marooned in the City ever since transferring to Europe with Morgan Stanley in 2005. Now Deutsche has given him an opportunity to go back home again. Even better, Yoshida has gained a promotion: at Morgan Stanley he was in charge of EMEA rates sales, at Deutsche he’ll be in charge of EMEA rates sales.

Other American fixed income bankers in London may want to get in touch with Colin Fan, head of Deutsche’s markets business.

Of course, there are questions about the wisdom of Deutsche’s FICC expansion at this point in time. But Deutsche is a special case, explained Anshu Jain in an interview with Bloomberg yesterday. The German bank can hire selectively in FICC because it saw this situation coming and cut risk weighted assets and headcount early, Jain said. In the past two years, Jain explained that FICC RWAs were cut 20% and headcount was cut 17%. Now Deutsche is out there sniffing out opportunities again, and U.S. bankers in London can benefit. No mention was made of Deutsche’s dramatic fall in FICC revenues or market share, however.

Related articles:

How bonuses of $250k, $500k and $1m are structured at Deutsche Bank

Deutsche Bank’s new strategy is a little bit Barclays, a little bit Goldman Sachs

One chart that may dissuade you from joining Deutsche Bank’s FICC business

The post Deutsche now providing opportunities for disappointed U.S. bankers in London to go home appeared first on eFinancialCareers.

In a bad sign for fixed income currencies and commodities (FICC) professionals everywhere, Goldman seems finally to be deciding that FICC revenues won’t be coming back soon after all. Fox News reports that, ‘a sharp reduction in trading revenues has caused a panic inside Goldman Sachs,’ and that there will be more redundancies imminently unless things improve.

Fox’s revelations follow Goldman COO Gary Cohn’s disclosure earlier this week that Goldman has quietly cut 10% of staff from its FICC business since 2010. The current lack of volatility is “abnormal” said Cohn, adding that, “If markets never move or don’t move, our clients really don’t need to transact.” Fox didn’t indicate when the new redundancies are likely to happen, but Goldman’s traders must hope that their performance is better than that of rivals like Citigroup, which is expecting a further 20-25% drop in trading revenues in the second quarter of the year.

Separately, the inter-dealer broking sector has sealed its reputation as the least salubrious place to work in financial services. Fresh from allegations of assassination, sexism, nepotism and cage-fighting, brokerage firm BGC Partners is at the centre of a new storm alleging that its new employees are compelled to take place in a boorish initiation ritual known as the ‘run.’ During the run, new traders are compelled to sprint across the floor while water is thrown at them by colleagues. The practice has been brought to light by the ex-head of BGC’s swaps desk Robert Bou-Simon. Having refused to submit to the run, Bou-Simon was allegedly taunted by BGC employees for his lack of manliness. He is now suing BGC for unfair dismissal. Matters are complicated by the fact that Bou-Simon was found asleep at his desk, suggesting he wasn’t exactly a model employee either. Despite the company’s allegedly corrosive culture, Bou-Simon worked for BGC for five years between 2000 and 2005 before returning of his own accord in 2012.

Meanwhile:

Mike Corbat says volatility will probably rise in the second half. (Bloomberg)

Mediobanca is hiring ex-investment bankers from Barclays as it tries to reposition itself as a boutique. (Financial Times) 

Och Ziff is closing, but most of its staff are simply following key hedge fund manager David Fear across to a new Ziff family private office, (WSJ) 

Jezri Mohideen, the former head of rates trading for Europe and APAC at RBS, is suing the bank for racial discrimination after losing his job during the investigation into Libor fixing. (Businessweek) 

Actually, the US government wants to fine BNP Paribsa $11bn for violating sanctions on Iran. (Telegraph) 

The mark of a fair society is not that it rewards ability but that it does not do so. (Stumbling and Mumbling) ,

Related articles:

Senior banker says juniors loving six day working week. Go to Australia, get a huge promotion

How to become a financial Samurai. Citi CFO says it’s better to be a banker than a trader

How to earn £300k a year in trading. Senior banker warns: ‘Don’t sleep because you will die soon.’

The post Morning Coffee: Goldman finally admits it’s overstaffed. The most degenerate place to work in finance? appeared first on eFinancialCareers.

Investment banks have no problems attracting enough candidates for their graduate jobs. For every available position last year there were 135 applications and even when some firms released new front office role outside of their usual recruiting season in March this year, they were easily over-subscribed. But what about their ongoing appeal to students?

On Wall Street the trend is one of recovery for the investment banking ‘brand’. Students, particularly those studying business-related topics, view banking more favourably after the 2008 financial crisis hit the sector’s appeal. JPMorgan and Goldman Sachs both made it into the top 10 of the latest desirable employer rankings by research firm Universum and while European firms were low down the list, their standings were still higher than in 2013.

In Europe, though, banks have a problem. Google, Microsoft and the professional services and consulting firms all dominate the top ten, with only Goldman Sachs and JPMorgan making gains in the last year to rank a not-overly-impressive 14^th and 17^th respectively.

Deutsche Bank, last year’s top-ranked bank, has fallen by five places, UBS and Bank of America Merrill Lynch, which came in 38^th and 43^rd in 2013, have now dropped out of the top 50 entirely in Europe.

Lest we forget, Deutsche has been at the centre of a series of rate-rigging scandals and its co-head of investment banking Colin Fan warned its employees of “vulgar behaviour” that could damage the bank’s reputation only this month. Meanwhile, Bank of America Merrill Lynch hit the headlines last year when an investment banking intern, Moritz Erhardt, died after working consecutive all-nighters. Not exactly the sort of thing to ingratiate the firm with potential graduate employees.

In theory, this isn’t too much of a problem for the banks – after all, their main recruitment route comes through their summer intern pool and most candidates are competitive,  driven and know exactly what they’re getting into.

Except there are a couple of issues to consider. Firstly, investment banking recruiters regularly tell us that they don’t just want to hire typical candidates; namely, finance and economics students from top universities, but they also want to recruit top graduates studying liberal arts subjects who perhaps would never have considered a career in finance.

Then there’s the fact that investment banks continue to struggle to hire for technology and operations positions – and they are competing against firms like Google and Microsoft for these roles. If students are viewing banks less favourably, this is cause for concern.

Related articles: 

More Graduates Shun Investment Banking

The 10 most desirable and lucrative jobs on offer at GS, JPM, BAML, MS and Citi right now

Investment banks and private equity firms battle for ‘elite’ junior bankers

The post Investment banking popularity on the slide in Europe, on the up in the U.S. appeared first on eFinancialCareers.

Investment banking summer internships are always harsh, but this year’s banking interns may be inclined to temper that harshness with pragmatism. Is it really worth working stupidly long hours when your health may suffer as a result?

The excessive hours worked by some banking interns were highlighted by the tragic death last summer of Moritz Erhardt, Erhardt had been interning in IBD at Bank of America when he died in the shower at Claredale House, a residential facility in Hackney which houses around 200 interns from banks across the City of London. An inquest found that Erhardt died of an epileptic seizure, of which the coroner said fatigue could have been a possible trigger. Erhardt, who had sent emails at 5am prior to his death, was said to have worked three consecutive all-nighters at BAML, plus five other all-nighters in a two week period. His death led to revelations of the ‘magic roundabout’ - a practice in which reportedly get a taxi back to their accommodation at 5am, shower and change their clothes while the taxi waits outside, and then go straight back to the office.

In the immediate aftermath of Erhardt’s death, rival banks were said to have emailed staffers requesting that they go easy on the students who were with them for the summer. In the months that followed, most introduced policies to reduce the pressure on the junior bankers who worked full time. But summer 2014 marks the first set of internships after Erhardt’s death. So, what’s changed?

We asked Bank of America, Barclays, Citi, Credit Suisse, Goldman Sachs, JPMorgan, Morgan Stanley and RBS to talk to us about the alterations they’ve introduced to their summer analyst (AKA intern) programmes. Not all were willing to comment. Bank of America, which was at the centre of last year’s storm, said it had nothing to add to the changes that were reported to its full time analyst programme in January 2014. Similarly, most banks said summer analysts will protected by the measures introduced to prevent full time analysts from overworking. No banks were willing to talk frankly about the issue of interns overworking, but many gave us information on background. Based upon this information, this is what this year’s banking interns should expect:

1. Summer interns may be compelled to take a holiday in the middle of the internship 

The length of summer internships at investment banks varies. At Bank of America, Erhardt’s internship was reportedly an intense seven weeks. At Deutsche, investment banking internships last around nine weeks. At Goldman Sachs, internships last for ten weeks and at JPMorgan and Citi internships can go on for up to 12 weeks.

During long internships like JPMorgan’s, it’s standard for interns to be offered a short period of holiday leave. In the past interns typically didn’t take this leave, preferring to dazzle their prospective employer with their commitment. This year, we understand that JPMorgan and others will be compelling interns to take their allocated time out – although days off are likely to be dotted around the internship rather than taken consecutively in one block. At Deutsche Bank, intern holidays (in regions where they’re offered) will be both encouraged and tracked.

2. Interns will be made to take time off at the weekends 

Christian Meissner, head of investment banking at Bank of America, said this week that analysts at the firm are benefiting from BofA’s insistence that they take at least four weekend days off each month.  This policy applies equally to interns. Other banks have introduced similar protections for weekends: Goldman Sachs insists that juniors are out of the office between 9pm on Fridays and 9am on Sundays, Credit Suisse insists they’re out between 6pm on Friday and 10am on Sundays, Citi insists they’re out between 10pm on Friday and 10am on Sunday, JPMorgan demands that juniors have one full weekend off per month, and Deutsche now stipulates that its junior bankers have at least five weekend days off monthly.

Most banks are policing these ‘weekend off’ policies rigorously. Interns who work weekends in contravention of the policies will typically need sign-off from a very senior manager (eg. group head level at Citi).

3. Interns will be intensely monitored to ensure they’re not being given too much work by inept managers

The problem of over-worked interns in investment banks is partly down to the high-performance culture of the interns themselves (they want to work hard and to be seen in the office at 2am), and partly down to poor management.

“There is really nothing in this business that requires pushing people to work these kind of long hours,” says one junior banker on the forum discussing Erhardt’s death. “Most of the 4am, 5am, 6am nights that I have had were caused by ridiculous requests by seniors that could wait till tomorrow,” he adds.

Accordingly, banks like Deutsche and Goldman Sachs have tried to restructure junior bankers’ workload to avoid unnecessary requests from senior staff and prevent long working hours. At Deutsche Bank, a ‘feedback loop’ has been added to track interns’ progress. At JPMorgan, interns have a mentors to help guide them during the internship and communicate working norms. JPMorgan’s interns will also need to fill out a weekly review sheet stating how long they’ve worked and what they’ve been doing so that managers can review their workload and assign projects more effectively.

Interns who do find themselves working stupidly long hours this summer may want to step back and question whether it’s all worth it: yes, you might get a £45k job offer when you graduate, but banking is a marathon and not a sprint, Those who succeed and earn the most money long term are those who can pace themselves and don’t burn themselves out at the start.

Related articles:

Nine things to know before you even think about starting an internship on a trading floor

Diary of an IBD intern: Intelligence is a subsidiary requirement in investment banking

Diary of an IBD intern: Everyone in the front office is from Oxbridge or the LSE

The post A year on from the death of Moritz Erhardt, what can banking interns expect this summer? appeared first on eFinancialCareers.

Easy there Poindexter. New analysis suggests that traders who rely on technical analysis should put away their pricing charts and trend maps and just stick to the fundamentals.

The study, conducted by Maastricht University and Santa Clara University, found that technical analysis leads to “dramatically” lower returns than fundamental analysis, according to Bloomberg. The reasoning is rather simple. Technical analysis leads to more trades, more concentrated portfolios and often greets investors with more non-systematic risks.

How much is it costing traders? Enough to make a sizable difference at year-end. The authors of the study say that trend spotting can cost a trader, on average, one-half of a percentage point per month. The costs associated with the trading veracity linked to technical analysis add on another 20 basis points.

No Pay Day for CFA (eFinancialCareers)

If you think earning a Chartered Financial Analyst (CFA) certification is the key to riches, think again. While a CFA credential can certainly brighten up a resume, it shouldn’t embolden you to charge in to your manager’s office and demand a pay increase.

Topical Interview Questions (eFinancialCareers)

If you’re interviewing with Credit Suisse, Morgan Stanley, BNP Paribas, SocGen or Barclays in the next few months, it may be worth probing these areas.

Signs Missed (WSJ)

There were clear telltale signs of fraud that should have been recognized by Citigroup employees at the bank’s Mexican unit, Chief Executive Officer Michael Corbat said on Thursday. The 11 employees who were fired earlier this month were let go because of their inaction.

Cheaper Locales (Insurance Journal)

AIG is set to move several thousand jobs from New York to lower cost areas like Texas and the Philippines. The writing was on the wall last year when the insurance giant’s CEO told workers not to buy a new home in New York. A fairly ominous statement.

Ziff Brothers Out of the Hedge Fund Game (WSJ)

The Ziff brothers are shutting down their second family office hedge fund after top portfolio manager David Fear decided to leave the firm. Between the two closures, a few hundred people are out of work, though many are joining Fear at his new fund.

Ackman Going Public? (Dealbook)

Bill Ackman is considering launching a hedge fund that will be listed on a public exchange. The idea would be to get rid of all those pesky fund redemptions. It’s an interesting idea.

Fighting the Good Fight? (NY Times)

Hedge fund manager Nelson Obus was subpoenaed by the SEC back in 2002 for allegedly trading on inside information. His trial began just this week. He’s spent more than $9 million on legal fees in a civil case that would see him pay a fraction of that if he loses.

Buzz Around the Office

The Blackout Express (Fox News)

The CEO and co-founder of Snapchat is not having a good week. Emails that he sent during his fraternity days were leaked, and they are basically unprintable.

Quote of the Day: “It’s difficult not to conclude from the change in the market structure that the rates business will never be as profitable for banks in the future as it has been in the past.” – Credit Suisse Chief Financial Officer David Mathers

The post The hard work traders put in that sends them backwards appeared first on eFinancialCareers.

Saturday 7 June is CFA exam day. If you’re not ready now, you may never be. The CFA says you need six months to prepare for each of its exams. If you haven’t prepared yet, you might therefore want to give up and go for the December 2014 exams instead. Alternatively, you can spend the next seven days seriously flogging yourself in the hope that you can miraculously join the 62% of CFA I candidates who actually pass.

CFA coaching companies are short on advice for slackers are trying to make amends at the last minute. “I can’t give you any advice as this goes against the grain of everything we’re trying to teach,” one coaching firm told us. “Success is strongly correlated with the time you start revising,” an ex-Deutsche Bank trader agreed.

Unfortunately, you can’t wind back the clock. If you haven’t revised enough for the CFA Level I exam next Saturday and you’re not prepared to give up gracefully, there is only one thing you can do: shut yourself in a room and study hard. This is our seven day last minute CFA I revision plan. We’re not guaranteeing it will work.

Saturday and Sunday: Questions, questions, questions

At this stage in the CFA cycle, it’s all about running through real exam questions. You’ll find out what you don’t know. You’ll also get to practice exam technique.

Spend Saturday and Sunday looking at CFA I question banks. Thousands of questions are provided by Schweser’s QBank and you should be able to stipulate whether you want to complete difficult ones or not. Go for 100 sets of QBank questions in each sitting, “I am going buck wild on the QBank,” says one candidate, setting the tone. QBank is available via the Schweser site and is expensive. Cheaper CFA I sample questions are also available here, or here, or here. 

When you find a question you don’t understand, make a note of it. Group what you don’t know into subject areas and revise the necessary formulae and techniques when your 100 question sessions have finished. Elan offers some helpful free CFAI formula sheets here.

Monday: EOC questions only

The CFA offers practice questions at the end of each chapter of its curriculum materials.  Initially ignore the CFA’s (turgid) reading matter and go straight for these questions. Focus only on the aspects you don’t know.

Revisit the notes you made over the weekend.

Tuesday and Wednesday: Mock tests in own time, revisit notes 

You need to start testing yourself on proper mock exam papers. CFA Level I is about timing. On Saturday, you will have just 90 seconds per question. However, it’s only Tuesday and Wednesday and you have the luxury of running through mock exams in your own time. You can find cheap or free CFA I mock tests at: Passed Tense, soleadea and Analyst Notes.  Use these tests before you get serious.

Revisit the notes you made over the weekend.

Thursday and Friday: Serious mock tests in seriously timed conditions

It’s time knuckle down. Endeavour mock tests in timed conditions. The closest approximation to the exam is provided by the CFA Institute. This is sent to every registered candidate and can also be downloaded here. Beware taking any CFA I mock papers from previous years: the curriculum may have changed and you could find yourself fretting over questions which won’t recur.

Other challenging and accurate CFA mock tests are provided by Schweser and Elan. Elan’s is said to be the harder of the two.

Saturday: Time’s up

If you manage to pass the CFA I exam having crammed frantically in the last week and slacked before, you’ll be incredibly lucky. You’ll also be exhausted. Saturday evening may involve you lying in bed.

Related articles:

CFA offers prestige, but don’t expect a huge pay raise

What’s the minimum score you can get on CFA Level I, and still pass?

The 10 commandments for succeeding at CFA exams

The post How to pass CFA Level I when you’re seriously panicking with one week to go appeared first on eFinancialCareers.

Annual shareholder meeting season is finally over. While most U.S. banks offered minimal highlights – likely due to their habit of hosting meetings thousands of miles from home – European firms and their vocal investors made plenty of headlines. Here’s a roundup of some of the more priceless moments that you may have missed.

Barclays

The award for most unruly shareholder’s meeting undoubtedly goes to Barclays. Furry over banker pay was the chief topic. While discussing the issue, Chairman David Walker likely learned a lesson: don’t ask angry mobs rhetorical questions.

“Do you imagine we want to pay anyone more in this bank more than we need to?” he asked. Before he even finished the question, the crowd answered with a resounding “yes!”

Share price was another issues “We’re paying for Manchester United but we are getting Colchester United,” was the most creative outcry. “It’s jam tomorrow for the investors but champagne today for the investment bankers,” was the more blunt version.

Shareholders even blasted the bank for its debit cards and the length of the line to get into the actual meeting.

Bank of America

One of only two of the largest U.S. banks to host shareholders at their headquarters, Bank of America was the likeliest firm to make headlines.

Chief Executive Brian Moynihan was grilled over a number of odd subjects, including the lack of handicapped parking spots at a single branch and the type of light bulbs he personally uses. He was also asked what steps the bank is taking to reduce carbon emissions.

After being chastised for his bonus, Moynihan watched two female shareholders begin screaming at each other, with one ending her diatribe by telling Moynihan that she loved him. “You and my mother,” he responded. “I’ve got two now.”

Of course she didn’t stop there. “You are a credit to the Irish,” she told BofA’s top man. “Up the rebels and the Brits from Ireland. You are the finest CEO in America and the hope for America Up the stock to a million and I’ll marry you in the morning!”

At least Bank of America was able to avoid what happened last year, when protestors dressed like zombies to object to the bank’s housing foreclosures.

JPMorgan

JPMorgan hosted its meeting 2,000 miles away from home in Tampa, Florida, so nothing much happened. The lack of fireworks was a major disappointment for two local men who set up lawn chairs with the hope of enjoying the spectacle of protestors. None showed up (probably because it was hosted in Florida in May) but the men didn’t go home empty handed. The staff brought them turkey sandwiches, pasta and cookies, according to the Wall Street Journal. Not a bad day.

Three years earlier, when JPMorgan held the meeting in Ohio, 400 protesters mobbed the scene, resulting in multiple arrests.

Deutsche Bank

The big takeaway from Deutsche Bank’s shareholder’s meeting was the German bank’s plan to raise capital (and dilute shareholder value). Much of the action took place outside the meeting, where protesters dressed as pigs and clown fish, according to Reuters. One was even riding around on a cardboard tank, objecting to…something.

Inside, Deutsche execs were literally booed like underperforming athletes. “When is this nightmare finally going to end?” one investor said in the meeting, referring to the 15% drop in the bank’s stock price over the last year.

Investment banker pay – which totaled €4.5bn – was yet another topic. “If that’s still not enough for people, especially for the investment bankers … then let them move on!” bellowed another shareholder.

Credit Suisse

Swiss executives were greeted with yet another sausage incident, this one stranger than the last. One Credit Suisse shareholder walked up to the stage, pulled a sausage from his pocket, showed it to the board, and then took a giant bite. No other commentary. This comes six years after a shareholder presented UBS chairman Marcel Ospel a string of sausages during his final annual meeting. Clearly some negative connotations with sausage over in Switzerland.

RELATED CONTENT:

The hard work traders put in that sends them backwards

How to pass CFA Level I when you’re seriously panicking with one week to go

Investment banking popularity on the slide in Europe, on the up in the U.S.

The post The most creative ways shareholders complain about banker pay appeared first on eFinancialCareers.

Banks in Asia are offering their staff ‘laughter yoga’ to improve their well-being, top tips for the upcoming CFA exams and other top stories on eFinancialCareers over the past week. Take a moment to catch up.

Signs that recruiters are not being truthful with you

How can you tell when a recruitment consultant is being economical with the truth?

The 10 commandments for succeeding at CFA exams

The CFA requires over 300 hours of study for each level and has a success rate of under 40% at level one. Here’s how to ensure you make the grade.

Non-Ivy League schools that can help you get a job in asset management

Obviously, hedge funds and long-only asset managers hire from the Ivy League, but here’s a guide to some more surprising institutions they also tend to fish from.

The ‘laughable’ new way that Citi and HSBC bankers in Hong Kong are boosting their careers

Forget mindfulness or meditation, banks in Asia are keeping their employees happy through ‘laughter yoga’.

The top five best paid jobs in risk management globally when you have five years’ experience

Risk remains incredibly hot, but pay still lags the front office. Here are the positions that pay over six figures.

An indication of what Goldman intends to do with pay and hiring

Goldman Sachs has given its annual update on its strategic direction. What should you expect to happen to compensation and recruitment?

Ex-BNP Paribas managing directors launch new hedge fund

Gerardine Davies, who at one stage in her career was one of the most powerful women in investment management, has re-emerged in the City after a two-year break.

Awkward questions that JPMorgan suggests asking in interviews with CS, UBS, BNP and Barclays

JPMorgan has released a large research report into prospects for investment banking this year. If you’re interviewing at these institutions, here are some probing questions to ask.

Take inspiration: These five investment bankers are going it alone

A number of senior investment bankers have given up their day jobs to launch their own venture.

Investment banking tech guru quits and starts own firm

Kirat Singh was responsible for some of the biggest investment banking tech projects of the last ten years, but you’ve probably never heard of him.

The post Career Crunch: Common fibs of finance recruiters, how to ensure you pass the CFA appeared first on eFinancialCareers.

Hedge funds are usually small organisations and a period of underperformance doesn’t automatically equate to job losses as is usually the case in investment banking. So it is with AKO Capital, the $9bn equity fund founded by former Egerton Capital Partner Nicolai Tangen, where profits fell by over £60m on last year but which bolstered headcount nonetheless.

AKO Capital LLP posted operating profits of £88.5m for the year to 28 February 2014, compared to £149.3m for the previous year, according to accounts released recently on Companies House.

Much of this was allocated for ‘discretionary division’ among the firm’s partners. The highest paid member received £41m this year, down from £84m in 2013. AKO added two new partners in 2014, taking the total to 20, meaning that average compensation (excluding the highest paid member) was £2.4m in 2014, compared to £3.75m in 2013.

However, outside of the upper ranks, AKO Capital has been also been hiring. It now has 28 people working in research functions, up from 20 in 2013, and it also hired two new staff in administrative functions. Staff costs increased from £1.7m in 2013 to £2.3m this year.

AKO Capital was founded by Tangen, a former partner at Egerton Capital, in 2005 and he has since amassed a personal fortune of £250m, according to the latest Sunday Times Rich List. Before joining Egerton in 1997, he headed the Nordic department at Cazenove and has since hired a number of former colleagues at AKO including Gorm Thomassen as portfolio manager and equity analysts Mike Yates and Erik Karlsson.

AKO’s tendency to hire despite poorer performance echoes other UK hedge funds this year. Winton Capital Management, BlueCrest Capital Management and Capula Investment Management, all posted profits down on prior years, but continued to bolster headcount.

Related articles:

JPMorgan big-hitter joins notoriously high-paying hedge fund

Ex-BNP Paribas managing directors launch new hedge fund

Take inspiration: These five investment bankers are going it alone

The post Hedge fund loses £60m in 2013, continues to hire regardless appeared first on eFinancialCareers.

There will be an unusually large number of 20-something bankers on holiday this year. In the past, junior banking staff were usually compelled to forego holidays at the final moment by despotic line managers. This is no longer so. Under new measures to ensure that junior bankers don’t overdo it, holidays have instead become compulsory. 

At Citigroup, for example, all analysts and associates must take 100% of their allotted holiday time. This measure is referred to within Citi by the authoritarian, non-beachy moniker of ‘Mandatory Vacation Utilization,’ and is tracked by senior management.  At JPMorgan, analysts and associates reportedly get four weeks’ holiday per year, and are actually encouraged to take it. At Goldman Sachs, juniors get three weeks’ vacation per year and (following a memo last November), are made to take at least one, if not two, of those weeks in full five day slots.

Given that senior bankers like to disappear in July and August, now seems the most auspicious time for juniors to make use of their new-found holiday entitlement. However, as the King Juan Carlos of Spain has illustrated, poor holiday choices can be detrimental to your career. If you’re spending time out of the office, don’t spend it killing endangered species.

Do spend it reading. JPMorgan has issued its summer reading list. You can see it here. It includes some esoteric stuff (The Future of the Mind), an existential self-help manual (An Astronaut’s Guide to Life on Earth) and a recipe book.    

If JPMorgan’s 11 books are insufficient to keep you occupied, you could also read Goldman Sachs’ favourite business book of the past year – ‘The Everything Store,’ a biography of Amazon.  Or you could try the other six finalists on Goldman’s shortlist, including something on how big data is taking over the world. 

Needless, to say junior bankers may also wish to read Piketty, even though it may leave them questioning whether banking will ever enable them to become as rich as they’d hoped.

If you’re a 20-something financial services workhorse, it’s probably not worth reading your literature in expensive locations like Song Saa Private Island in Cambodia.  Leave these to the VPs and MDs. Impress your line manager with your willingness to push the holiday paradigm. For example, there’s a rudimentary ex-charcoal burner’s hut with five star ratings deep in a Swedish forest. You may not get a tan, but you will come back from your imposed relaxation time with anecdotes about reading your books by candlelight.

Related articles:

How to pass CFA Level I when you’re seriously panicking with one week to go

Awkward questions that JPMorgan suggests asking in interviews with CS, UBS, BNP and Barclays

Eight ways you must behave if you want a job at Goldman Sachs

The post How junior bankers at JPM and GS must spend their mandatory holidays appeared first on eFinancialCareers.

Want to work for a boutique investment banking firm? Now’s the time. Boutiques are thriving according to Bernstein Research. Last week, Bernstein held its ‘Annual Strategic Decisions Conference’ and every attendee was reportedly super-bullish about the M&A cycle. Boutiques are “uniquely positioned” to benefit, says Bernstein. They are also, ‘benefiting from a secular shift towards independent advice.’

But not all boutiques are equal. If you want to work for two of the biggest (Moelis & Co and Greenhill & Co), this is the invaluable information Bernstein imparts.

1. Greenhill is focusing on corporate clients and doesn’t work much with private equity clients

If you want to work with private equity (PE) clients, Greenhill isn’t the place to do it. The firm has decided to market its services to corporate clients instead of the PE market. PE funds’ purchases are often highly levered, meaning that boutique firms, which don’t offer financing services, are at a competitive disadvantage to bulge bracket banks (which do). Greenhill reportedly thinks that the market for selling M&A advice to PE clients is volatile, driven by credit markets, and highly competitive. It’s avoiding it for that reason.

2. Moelis is marketing itself to PE clients 

While Greenhill is steering clear of the PE market, Moelis is steering directly into it. Bernstein reports that Ken Moelis likes working with PE clients: he thinks they want differentiated ideas and will pay for ‘consistent, creative ideas flow.’

3. Greenhill is working with firms that are targeted by activist investors

M&A deals involving activist investors who want to restructure a business and its balance sheet are increasing.  Greenhill is riding that wave. The firm told Bernstein that it usually works on the defence side, in situations where, for example, ‘a company with many unrelated lines of business may come to them to do a breakup analysis in anticipation of an activist.’ As activist driven M&A becomes a bigger thing in Europe, this is expected to be a growth area.

4. Moelis is expanding internationally through joint ventures and strategic alliances. Greenhill isn’t 

If you work for Moelis, it may be difficult to get a transfer overseas. Rather than opening his own offices in smaller markets, Ken Moelis has gone for alliances and JVs. This is in contrast to Greenhill, whose international expansion is driven by organic growth and overseas acquisitions.

5. Moelis and Greenhill both want to open offices in Brazil

Brazil is the promised land for boutique M&A houses. Both Moelis and Greenhill want to expand there. This is despite Goldman’s decision to shelve aggressive expansion plans in the country.

6. Moelis and Greenhill both think Asian M&A is a nightmare

If you work in M&A, you probably don’t want to work in Asia. Both Moelis and Greenhill are disenamoured of the continent according to Bernstein. This is because companies in Asia expect M&A advice for free and will reward banks toting free M&A bankers with underwriting work. Nonetheless, Moelis would like to expand in South East Asia but can’t find any good quality staff there.

7. It’s become less easy to negotiate an improved package if you’re leaving a bulge bracket U.S. bank for Moelis 

Moelis & Co has made a habit of hiring senior bankers from large banks. This year, for example, it’s recruited people from Credit Suisse, Bank of America, and Barclays.

In the past, Ken Moelis said it was necessary to lure these bulge bracket bankers with premium pay. Now, however, he says they’re willing to join Moelis even if the firm doesn’t buy out 100% of their stock – ‘people are making the choice to leave anyway as the desire to work at the large firms declines.’

8. If you leave Moelis within two years of joining, your cash bonus will be clawed back 

‘Moelis even goes as far as putting a clawback provision on cash bonuses if the employee goes to a competitor within two years,’ reports Bernstein.

9. There’s a sweet spot for becoming an MD at Greenhill and it occurs when you have 20 years’ experience and are aged between 40 and 55

Related articles:

Moelis & Co.: many chiefs, lots of Indians

Front office hiring is back in investment banking. Here are nine expanding sectors

The post Nine things you must know before you try working for either Moelis or Greenhill appeared first on eFinancialCareers.

As Chinese companies look to make more overseas acquisitions, Chinese banks are finding themselves short of cross-border M&A expertise.

But because poaching from global investment banks is often too expensive, Chinese banks are now tapping another source of M&A talent: the Big Four consultancies in Hong Kong.

Chinese companies continue to expand overseas on the back of Shuanghui’s landmark $4.7 billion acquisition of Smithfield Foods in the US last year. The number of China-outbound M&A deals reached a record 110 in the year to April, while volumes reached $27.3 billion for the same period, also a record, according to Dealogic.

Moreover, in an easing of government regulations last month designed to speed up smaller foreign acquisitions, Chinese companies investing under $1 billion in an overseas company no longer have to seek a full review by the National Development and Reform Commission.

Related articles: 
Why some bankers in Asia are quitting after just a month on the job
Nine wonderful ways that Chinese banks try to retain staff
Behold the banks in Asia that buy out deferred bonuses with cash guarantees

As outbound M&A flourishes, Chinese banks, led by Bank of China International, Citic Securities and China Securities International, are trying to hire more cross-border M&A professionals, according to an anonymous headhunter who works with these firms.

“Chinese banks are predominantly strong capital-markets platforms, but M&A expertise is an area they need to build up, in view of stronger recent M&A activities,” adds Stanley Soh, regional director of Asian financial services at search firm Global Sage in Hong Kong.

Chinese investment banks, however, generally aren’t opening up their cheque books to hire rainmakers from the likes of Goldman Sachs and Morgan Stanley. “Clients in China aren’t so accustomed to paying high M&A fees to banks, so cost is important when hiring and bulge-bracket bankers’ expectations need to be adjusted to today’s market realities,” says Rafael Brana, a consultant at search firm Bo Le associates in Hong Kong.

Deloitte, EY, PwC and KPMG in Hong Kong have been advising Chinese banks for several years and that now makes their M&A staff prime poaching targets. “They have the mid-market M&A skills that Chinese banks are after – and crucially, they are affordable,” says Brana.

“While the compensation of Big Four candidates is lower, the rigorous nature of their training and their client exposure allows them to perform M&A roles at Chinese banks,” says Soh from Global Sage.

The staff they are seeking

Not every Big Four M&A consultant is an ideal fit for a Chinese bank, however. For starters, you need cross-border, not just domestic Chinese, M&A advisory experience, says Soh. “And this means you must be fluent in both Mandarin and English,” adds Brana. “I’m also seeing more job mandates this year where a third Asian or European language is an extra advantage – Spanish to help Chinese companies in South America, for example.”

It also helps if you’re a mainland Chinese national working for the Big Four in Hong Kong rather than a local. As we’ve highlighted recently, the bureaucratic culture of Chinese banks can make some new recruits quit after just a few months in the role. “Hong Kong nationals, especially those from Western firms, often find it difficult to cope in mainland organisations. Chinese find it easier,” says Brana.

Chinese Big Four employees with a Western education and alumni contacts within potential acquisition companies overseas are in particular demand, he adds.

Why make the move?

Put simply, if you’re a Big Four consultant, joining a Chinese bank may be your only avenue into front-office investment banking. “Headcounts are still tight in the global banks in Hong Kong,” says Soh. “Recent Big Four recruits to Chinese banks have mentioned better pay, a strong client base, accelerated career progression and opportunities to tap the Chinese market as reasons for moving.”

The post Chinese banks poach Big Four employees in bold new hiring drive appeared first on eFinancialCareers.

As advisory and financing work picks up, now is the time for relationship bankers to shine – especially in the UK, where banks’ relationships with corporate clients are mediated by so-called ‘corporate brokers’ who help clients understand how their actions will impact their stock price.

Accordingly, Bank of America Merrill Lynch (BAML) has poached UBS’s corporate broking supremo, Tim Waddell. Waddell, a red-haired six foot two inch Scottish rugby player and UBS veteran of 30 years, will reportedly be tasked with building BAML’s relationships with existing British clients and adding new ones. In his new role (officially titled vice chairman of global corporate and investment banking in EMEA), Waddell is reunited with Alex Wilmot-Sitwell, another old-school ex-UBS banker who is BAML’s head of Europe and emerging markets ex-Asia.

Separately, Goldman is reportedly pushing into the non-glamourous area of commercial banking. The firm has appointed a new head of strategy in the form of Stephen Scherr. Bloomberg says Scherr’s role will include ‘seeking opportunities for revenue growth even if broader market conditions don’t improve in the near term.’ More specifically, the FT says Scherr will be looking at how to increase the size of Goldman’s commercial bank and wealth management division. Raising the status of commercial bankers has ruffled feathers at JPMorgan and BAML in the past, making it interesting to see how Goldman’s investment bankers get on with their new commercial bedfellows. Goldman’s wealth management division seems solidly elitist, however: at a conference last week, Goldman COO Gary Cohn reportedly said that the average account balance for Goldman’s wealth management customers is $40m – far higher than at rival firms.

Meanwhile:

RBC Capital Markets has hired two top ranked retail researchers, Richard Chamberlain and Mark Wallis, from BAML. (Financial News) 

Pay for banking chief executives rose 10% last year. (Financial Times) 

Pay for Ross McEwan at RBS was 20% that of Lloyd Blankfein at Goldman Sachs. (Financial Times) 

John Phizackerley, ex-head of Nomura in EMEA, is set to become chief executive of Tullett Prebon. (Financial Times) 

Barclays is cutting 100 jobs in Asia this week. (Bloomberg) 

UBS and RBS’s Connecticut trading floors are becoming horribly empty. UBS has put a few compliance staff on its floor, to help fill the space. (Financial Times)

Beware the CFA zombies. (Alphaville) 

Finance firms will be hiring 18% more graduates this year than last year. KPMG and PWC will be hiring 30% more each. (City Am) 

I made $1m in a trade against a hedge fund and was compelled to pay $500k of it back. The hedge fund was an important client and my trade was jeopardizing millions in fees. (Guardian) 

The post Morning Coffee: BAML lures large Scottish rugby player. Goldman’s going (sort of) downmarket appeared first on eFinancialCareers.

By now you should have done the majority of the 300 hours of study recommended to pass each of the three CFA level exams. If not, don’t panic – there are still possible short cuts. If so, do you really know all you need to know? Do you know the methodology for some of the most complex theories that are likely to crop up in the exam?

Fear not, we’ve spoken to training companies who prepare students for the CFA to provide us with some of the toughest practice questions they coach on in order to ensure that students do not slip up in the exam – as well as tips for getting to grips with them more easily. Do you agree? If not, post your questions below.

Related articles:

CFA offers prestige, but don’t expect a huge pay raise

Five smaller firms with an appetite to hire investment bankers

1. Level I: Jane Acompora is calculating equivalent annualized yields based on the 1.3% holding period yield of a 90-day loan. The correct ordering of the annual money market yield (MMY), effective yield (EAY), and bond equivalent yield (BEY) is:

A. MMY < EAY < BEY.

B. MMY < BEY < EAY.

C. BEY < EAY < MMY.

Tim Smaby, VP, Advance Designations, Kaplan Professional:

“The key is that this question can be answered without doing any numerical calculations if you understand the differences in how the yields are calculated.

No calculations are really necessary here because the MMY involves no compounding and a 360-day year, the BEY requires compounding the quarterly HPR to a semiannual rate and doubling that rate, and the EAY requires compounding for the entire year based on a 365-day year.

A numerical example of these calculations based on a 90-day holding period yield of 1.3% is: the money market yield is 1.3% × 360 / 90 = 5.20%, the bond equivalent yield is 2 × [1.013182.5 / 90 – 1] = 0.0531 = 5.31%, which is two times the effective semiannual rate of return, and the effective annual yield is 1.013 365 / 90 – 1 = 0.0538 = 5.38%. Calculating the semiannual effective yield using 180 days instead of 182.5 does not change the order.”

2. Level I: A semi-annual pay floating-rate note pays a coupon of Libor + 60bps, with exactly three years to maturity. If the required margin is 40 bps and Libor is quoted today at 1.20% then the value of the bond is closest to:

A. 99.42

B. 100.58

C. 102.33

Nicholas Blain, chief executive, Quartic Training:

“Floating rate bonds are pretty difficult to value accurately, as they are an essential component to swaps. However, there is an approximation provided in the CFA curriculum, and a rather neat Quartic short-cut too.

A floating-rate note can be (roughly) valued on a coupon date by discounting current Libor + quoted margin (think of this as the regular coupon) at current Libor + required margin (think of this as the discount rate). In other words, we discount what we get (PMT) at the rate that we need (I/Y).

On the calculator: N = 6, I/Y = (1.2 + 0.4) ÷ 2 = 0.8, PMT = (1.2 + 0.6) ÷ 2 = 0.9, FV = 100 è PV = 100.58.

There are short-cuts you can use. Firstly, note that if a bond is paying exactly what is required (i.e. quoted margin = required margin) then the bond will trade at par on each coupon date. In this question, the bond is paying 20 bps per year more than required. This means that we should pay a 20 bp premium per year. Three year maturity means a 60 bp premium. Hence our quick “guess” is that the bond should trade at 100 plus a 60 bp premium, or 100.60. Answer B is the only possible answer.

3. Level I: The following details (all annual equivalent) are collected from Treasury securities:

Which of the following rates is closest to the two-year forward rate six years from now (i.e. the “6y2y” rate)?

A. 2.0%

B. 3.0%

C. 4.0%

Nicholas Blain, chief executive, Quartic Training:

“Calculating forward rates from spot rates and spots from forwards can be done easily, and quite accurately, with the banana method, which we’ll come to below.

Note that the six-year spot rate (say, z₆) is 2% and the eight-year spot rate (z₈) is 2.5%. Let’s call the 6y2y rate F, to keep notation easy.

To solve this, draw a horizontal timeline from 0 to 8, marking time 6 on the top. To avoid arbitrage, investing for six years at z₆ then two years at F must be the same as investing for eight years at the z₈ rate. Mark above your timeline “z₆ = 2%” (between T = 0 and T = 6) and “F = ?” (between T = 6 and T = 8), and below the timeline “z₈ = 2.5%”.

Algebraically we can say that: (1 + z₆)⁶ x (1 + F)² = (1 + z₈)⁸.

With a bit of effort, this solves as: F = [(1 + z₈)⁸ ÷ (1 + z₆)⁶]^0.5 – 1 = [1.025⁸ ÷ 1.02⁶]^0.5 – 1 = 4.01%.

Here’s our banana method, though. Just below the timeline you have drawn, write down how many bananas (or any other inanimate object) you have received if you get 2.5 per year for eight years. Answer: 20. Now write down, above the timeline, how many you get in the first six years, at 2 per year. Answer: 12. Now calculate how many bananas you must have got in the last two years. Answer: 20 – 12 = 8. This is over two years, hence 4 per year, answer C. Banana method gives 4.00%; accurate method gives 4.01%. Close enough!”

4. Level II: Using the information in Exhibit 1, which of the following is closest to the value of a European call option with a strike price of $100?

A. $4.78

B. $5.55

C. $11.54

Tim Smaby, VP, Advance Designations, Kaplan Professional:

“This is a three-minute question that can take you less than one minute if you get through the initial shock of not having memorized the Black-Scholes Model. On the other hand, if you had memorized the Black-Scholes model, it would take you 20 minutes to reverse engineer the data to get to the value of the call option. The trick is that you are given all the information for put-call parity. This result can be obtained using put-call parity in the following way:

Call Value = Put Value − Xe^−rt + S = $4.78 − $100.00e^{(−0.07 × 1.0)} + 100 = $11.54

The incorrect value of $4.78 does not discount the strike price in the put-call parity formula.”

5. Level II: (Excerpt from item set)

Financial information on a company has just been published including the following:

Dividends and free cash flows will increase a growth rate that steadily drops from 14% to 5% over the next four years, then will increase at 5% thereafter.

The intrinsic value per share using dividend-based valuation techniques is closest to:

A. $121

B. $127

C. $145

Nicholas Blain, chief executive, Quartic Training:

“The H-model is frequently required in Level II item sets on dividend or free cash flow valuation.

The model itself can be written as V₀ = D₀ ÷ (r – g_L) x [(1 + g_L) + (H x (g_S – g_L))] where g_S and g_L are the short-term and long-term growth rates respectively, and H is the “half life” of the drop in growth.

For this question, the calculation is: dividend D₀ = $240m x 0.6 ÷ 20m = $7.20 per share.

V₀ = $7.20 ÷ (0.12 – 0.05) x [1.05 + 2 x (0.14 – 0.05)] = $126.51, answer B.

However, there is a neat shortcut for remembering the formula. Sketch a graph of the growth rate against time: a line decreasing from short-term g_S down to long-term g_L over 2H years, then horizontal at level g_L. Consider the area under the graph in two parts: the ‘constant growth’ part, and the triangle.

If you look at the formula, the ‘constant growth’ component uses the first part of the square bracket, i.e. D₀ ÷ (r – g_L) x [(1 + g_L) …], which is your familiar D₁ ÷ (r – g_L). For the triangle, what is its area? Half base x height = 0.5 x 2H x (g_S – g_L) = H x (g_S – g_L). This is the second part of the square bracket.

Hence the H-model can be rewritten as V₀ = D₀ ÷ (r – g_L) x [(1 + g_L) + triangle].”

6. Level III: Terry Bowers, an analyst at MDU Investments, observes that China bonds offer a comparable interest rate to U.S. bonds. In contrast, short-term U.S. interest rates are currently 3% higher than short-term China rates.

The forward currency market is active and efficiently priced, and Bowers expects that the current China bond spread over comparable Treasuries will remain the same should the Federal Reserve increase interest rates 75 basis points as forecasted. An analytical firm has furnished a country beta of 0.36 for China with the United States, and a particular China bond issue that Bowers is interested in has a duration of 3.8.

Assume Bowers is correct that U.S. interest rates will increase 75 basis points and the nominal spread between U.S. and China bonds will not change. Further assume Bowers believes the U.S. dollar will depreciate 2% over the year against the Chinese (CNY) currency, Bowers’s optimal strategy to maximize total return is to buy the:

A. U.S. bond.

B. China bond and buy the USD forward.

C. China bond and then sell the CNY in one year.

Tim Smaby, VP, Advance Designations, Kaplan Professional:

“Investing in the foreign market (China bonds) exposes Bowers to two sources of return: the RFC of the bonds and the change in the CNY, the RFX. Bowers is assuming the nominal spread in the bonds will not change (i.e., the yield of both bonds will increase 75 basis points). (He is assuming a yield beta of 1.00). The assumption in this type of analysis is the two bonds have equivalent duration.

Thus, both will decline equally in price and will have equal RFC. The RFX of the U.S. bond is zero; there is no currency exposure. For the China bond, the expected decline in the USD of 2% is equivalent to an approximate 2% appreciation of the CNY. This means purchase of the China bond will be superior to the U.S. bond for Bowers.

However, he must also consider any premium or discount currency hedging will earn to determine if an unhedged or hedged currency exposure is optimal. The forward premium or discount depends on the differential in short-term interest rates. The U.S. short-term rate is 3% higher, which means the CNY will sell at a forward premium of 3%. Bowers should buy the USD forward (sell CNY forward) buying future dollars at the 3% discount.”

7. Level III: (Excerpt from item set)

The P&S 400 Index has a current value of 1200. It has a continuous dividend yield of 2% and the risk-free rate is 5% on a continuous basis. The price of a nine-month forward on the P&S 400 Index is closest to:

A. 1173

B. 1227

C. 1237

Nicholas Blain, chief executive, Quartic Training:

“The basic rule for pricing forward contracts is:

Forward price FP = spot plus cost of carry minus benefit of carry.

The cost of carry includes interest: hence for most contracts the spot is multiplied by (1 + R_F)^T or e^RcT. Other contracts (e.g. commodities) may include storage and insurance. Benefits of carry include dividends (discrete or continuous), coupons, convenience yield (for commodities), or the foreign interest rate (for currency forwards).

In the case of an equity index forward, you may be able to do the entire calculation in your head.

In this question the spot price is 1200. The cost of carry is 5% and the benefit of carry is 2%. Never mind the continuous nature of these rates, for the moment. We can say that the net cost is 3% per year, or 2.25% for nine months. 2.25% of 1200 is 27, hence our estimate of the forward price is 1227, answer B.

If we do this accurately, we get:

FP = S₀ x e^{(Rc – dc)T} = 1200 x e^{(0.05 – 0.02) x 0.75}  = 1200 x e^0.0225  = 1227.31. Good guess!”

The post Seven of the hardest CFA questions, with expert tips on how to answer them appeared first on eFinancialCareers.

Where are banks hiring as we enter the second half of 2014? Which are the jobs that every firm is releasing onto the market in such numbers that finding the staff to fill them is like recruiting a vegan army in McDonalds?

Globally, technology and compliance are the bulk hiring areas for banks in 2014. Front office recruitment – into markets and corporate finance jobs – is fractional by comparison.

The charts below are based upon the jobs Barclays, Citigroup, Deutsche, Goldman Sachs, JPMorgan and UBS, are advertising on their own careers sites now. Although inevitably biased towards the back office roles which make up the bulk of banks’ recruitment and are most commonly advertised to the general public, they show a clear trend for technology and compliance hiring at every major bank American and European, investment banking-focused and universal.

While tech and compliance hiring are a consistent theme, there are interesting discrepancies between banks. UBS, for example, seems to be focusing disproportionately on sales and trading hires – despite having pulled back from fixed income sales and trading in 2012. Corporate finance recruitment at Deutsche Bank seems to have dwindled away as the bank focuses on retooling its fixed income business.  Barclays, by comparison, is doing some comparatively heavy hiring in corporate finance after promising to shrink its sales and trading business from now.

At Citigroup and JPMorgan, the appetite for technologists is accentuated by each banks’ massive appetite for technology staff to support their operations worldwide – neither bank offers the opportunity to break out technology jobs for the investment banking business alone. At UBS, technology roles are investment banking specific. In terms of the sheer volume of open vacancies, JPMorgan’s technology business is the place to send your CV to – the U.S. bank has over 1,800 open technology positions globally. It’s not surprising that JPMorgan is paying millions to upgrade its offices so that they look more like Google’s.

Total number of compliance, technology, securities trading, research and investment banking jobs on offer at Citi: 1,679 (compliance 242, technology 1,322, sales, trading and research 90, investment banking 25).

Total number of compliance, investment banking, sales and trading and technology jobs on offer at UBS: 308 (compliance 82, investment banking 43, sales and trading 54, technology 129).

Total number of compliance, equities, FICC, IBD and technology jobs on offer at Goldman Sachs: 296 (compliance 57, equities 26, FICC 21, IBD 37, technology 155).

Total number of compliance, corporate finance, global markets and technology jobs on offer at Deutsche Bank: 309 (compliance 61, corporate finance 5, global markets 50, technology 193).

Total number of compliance, investment banking, sales and trading and technology jobs on offer at JPMorgan: 1,837 (compliance 384, investment banking 95, sales and trading 80, technology 1,837).

Total number of markets, investment banking, compliance and global technology jobs on offer at Barclays Investment Bank: 136 (markets 5, investment banking 36, compliance 36, global technology 59).

Related articles:

Awkward questions that JPMorgan suggests asking in interviews with Credit Suisse, UBS, BNP Paribas and Barclays 

Eight ways you must behave if you want a job at Goldman Sachs 

An indication of what Goldman intends to do with pay and hiring

The post The jobs Citi, UBS, GS, DB, JPM and Barclays need to fill, in six easy charts appeared first on eFinancialCareers.