Morning Coffee – Why is Deutsche shortening its notice period? The Goldman partners who might be set up for a disappointment
Apocryphally, when one European diplomat in the Napoleonic era heard of the death of another, he responded by saying “I wonder what they meant by that?”. On hearing that some Deutsche Bank traders have had their gardening leave periods shortened from three months to one, people on Wall Street are likely to have had a similar response.
Certainly, the official response that “In common with many peer institutions, we do on occasion flex leaving dates in line with our established policies and procedures” doesn’t make it any clearer why the flex has been flexed at this particular time. There’s two possible explanations that strike the mind.
The nasty possibility is that Deutsche might be trying to address a problem that’s affecting banks up and down the Street – the sudden and rapid decline of staff turnover, as employees get risk-averse in the face of seemingly worsening conditions. When people aren’t leaving in the ordinary course of business, it’s much harder to manage staff numbers downward without redundancies, if that’s what you’re planning.
And the gardening leave requirement in bankers’ contracts is there to put some sand in the wheels of the labour market, by making it more difficult to move job. If Deutsche bosses are thinking about reducing headcount rather than growing it, adjusting the notice period is a cheap and easy way to rebalance things the other way, hopefully getting a little more natural churn and consequently saving a few potential compulsory redundancies down the line.
But there’s a “nicer” possibility too. Which is just that the “established policies and procedures” of every bank on the Street often allow for a bit more generosity toward people who are leaving for jobs at big clients. It makes
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