Morning Coffee: British bankers lose their flight and taxi perks. The people making a hot summer even more unbearable for Citi
One of the warning signs that an investment banking franchise is in trouble is that memos start going round the office telling everyone that business class travel is being curtailed . It tends to be followed by strict limits on client entertainment, or even the banning of particularly popular and expensive restaurants.
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This is often regarded as the ultimate in false economies – it doesn’t really save all that much money, and the problem in banking is almost always “not enough income” rather than “too much costs”. If you make it more unpleasant and difficult for bankers to schmooze clients, they will do less of it. That usually means that fewer deals will be done, revenues will fall and pressure to cut costs will redouble. It’s how franchises get into a death spiral of falling headcounts and worsening losses, which often doesn’t end until the business is completely lost.
So should staff be worrying at HSBC, Standard Chartered and Lloyds Banking Group, all of which have imposed various degrees of hair-shirtedness on their bankers this year? Maybe. But maybe not. There does seem to be at least a little bit of realism in the approach being taken; for example, StanChart CFO Diego DiGeorgi admits that his measures (no business class flights if the scheduled time is five hours or less) are “hygiene measures” rather than “transformation agents” which might make a real difference to the cost base.
That might not be much comfort to someone who has just got off an economy flight from Hong Kong to Tokyo, or from London to Tel Aviv, and who’s expected to walk straight into a series of meetings. But on the other hand, it puts the focus on people who are taking business class for
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