In the middle of a pandemic, when lots of banks are asking deep and meaningful questions about the future of the office building itself, Goldman Sachs has just signed a 12 year lease on a brand new one, in the middle of Paris. What is going on?
The unexpected office is unlikely to have much effect on Goldman's short term return to work plans (just 20% of staff returned to the current Paris office in late May), as the development project isn’t going to be completed until the third quarter of next year, but even so this looks like a commitment to getting people together in one place instead of a distributed model where people sit at home. After all, central Paris office space isn’t cheap. - Even if Goldman got a good deal as an anchor tenant during a global downturn, they’re unlikely to have paid for the space if they’re not planning to use it.
This might have some implications for their future strategy. There’s a cynical proverb in the investment banking industry to the effect that nearly everything is about either parking spaces or seating plans, after all. Apparently, Goldman will account for 81% of the floor space at 83 Avenue Marceau (which was clearly in an earlier stage of development when the Google Streetview car drove past it). That means that they will have a good selection of corner offices and are likely to have their name on the front of the building. At present, they occupy a significantly smaller proportion of 5 Avenue Kléber, five minutes walk away, where the named occupant is the French insurance company Scor.
Both buildings are convenient for the Métro (Kléber is the nearest station, George V probably more convenient particularly if you need to go to La Défense). There’s also a decent car park right next to the new Goldman office, which might be extremely important in a world in which public transport is no longer favoured, particularly during peak commuter times. But this highlights something that could become a key issue; this part of central Paris has notorious traffic problems. Goldman staff will already know that there is no way at all to travel to or from their office by taxi without taking a huge risk of being late. With reduced capacity on public transport, this could become really acute – if you’re feeling entrepreneurial it might be a good time to start selling expensive cycling helmets to Goldman bankers so they can make use of the electric scooters.
Most importantly, though, the new office has room for a lot of growth. At present, there are about 200 Goldman Sachs employees in Paris. Their new lease is for 6,500 square meters (just under 70,000 square feet). Going by estimates from Knight Frank that a financial services employee will need at least 135 sq ft in order to maintain two metre social distancing, that would suggest capacity, even post-coronavirus, for 518 bankers. Even if we allow for Goldman to be particularly generous with space, and set aside some areas for gyms and climbing walls, they could double their headcount. With JP Morgan having bought space for another 450 bankers earlier in the year and several other firms looking to make Paris more of a hub post-Brexit, there could finally be some good news on the horizon for the French labour market.
Elsewhere, and more seriously, the banking industry has begun to, nervously, publicly address the widespread protests across the USA. After Mark Mason of Citigroup’s blog post on Friday, Larry Fink and David Solomon have also made statements, encouraging their employees to “have conversations that may take us outside our comfort zone”. And it does appear to be a uncomfortable issue – as he says in an interview, Mr Mason had been debating all week whether to say anything publicly, but realised that he had to as all the people around him were looking to him as one of the very few top-level African-American banking executives.
Of course, having those difficult conversations might be even more difficult when employees can’t meet face to face and read each other’s emotions. Some providers of monitoring software are claiming that homeworking bankers have formed into cliques and increased their use of racist and sexist language in private chats, although they don’t seem to have provided any specific examples of this happening. Politics is always difficult to handle in the office and will most likely be even more so when people are under unusual stress and missing a layer of human contact. But perhaps Mr Mason and Mr Solomon are right that we’ve been making excuses for not tackling these issues for too long.
The coronavirus job cut hiatuses are all coming to an end. Deutsche has formally resumed cost cutting, Credit Suisse has made it clear that cuts will be starting soon and HSBC has been urged by its board to increase its ambitions. (Financial News)
Iqbal Khan’s new lieutenant in the USA is Jason Chandler, a former university soccer player who wants to lend money to the mega-rich secured against their planes and art. (Finews)
American students have invented an app called “Beulr” (after the film Ferris Bueller’s Day Off) which will sign into Zoom calls automatically and play a looping video to make it look like you’re in front of your screen. The app was quickly banned by universities, but a version targeted at bankers with compulsory but boring team videocalls might be worth having. (WSJ)
The Jeffries / Cantor poaching lawsuit rumbles on, with Jeffries accusing Cantor Fitzgerald of making a “concerted effort” to stop employees from paying back bonuses. (Bloomberg Quint)
Promotions at Goldman Sachs macro trading teams following the retirement of Kayhan Mirza. Ram Sunderam is now head of global currencies and emerging markets, Kunal Shah is global head of emerging markets and Rajesh Venkataramani is the new head of G10 FX. (Financial News)
Leonardo Del Vecchio has asked for permission to raise his stake in Mediobanca to 20%. He’s an unusual activist investor, in that he thinks investment banking is good and wants Mediobanca to do more of it and less “stable” retail business. (Bloomberg)
Have you been having strange and vivid dreams since the lockdown began? It’s apparently quite common according to sleep experts who have noted a sharp rise in insomnia too. (WSJ)
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