While the framing of their bonuses is on the agenda, the trading room operators feel unjustly pilloried.
He brews several billion euros every year – “yards”, in the jargon of traders – but he rolls in a small family sedan. He buys his costumes on sale, and not at Armani’s. The tenant of his 90 square meters in Paris, he spends his holidays, with wife and children, on the Atlantic coast, where he owns a house. Trader for fifteen years in a large French bank, trained on the job as it no longer exists today, he is one of those “masters of the world”, as said Tom Wolfe in The Pyre of Vanities, one of ” these young people who play speculate, “according to Nicolas Sarkozy. His bonus? He did not touch it this year. And, anyway, he always indexed his standard of living on his fixed salary, sparing the rest.
Marc * is not an atypical case in his profession. The finance lords working in Paris have less brilliance than the heroes of Wall Street or American Psycho. Not necessarily Porsche, Patek Philippe on the wrist, dinners washed down with great wines in three-star before finishing in a can, line of coke as a bonus. Currently, they have more blues. Damaged by the Kerviel affair, named after the Société Générale trader who has made them all potential thieves, shaken by the financial crisis, they are now designated as the sole culprits and pilloried for their bait. of the supposed gain. Limiting their remuneration to put an end to speculation has become a major objective of European politicians united behind Nicolas Sarkozy. This is even one of the main issues at the G20 finance ministers’ meeting in London today and tomorrow, before the Pittsburgh summit on 24-25 September.
Premiums “at the head of the customer”
“One throws the opprobrium on a professional category by generalizing, reacts Guillaume, 40 years old, specialist of the products” exotic “in an Anglo-Saxon bank in Paris. Certainly, we will not make anyone cry about our fate. We have chosen a silver craft, we must assume it, but we cannot last if we do not find another interest. My job is not to speculate and endanger the global economy. “Their job is unknown, it’s part of the misunderstanding. Traders are financiers, often engineers from major schools such as Polytechnique or Centrale, maths cracks, who design sophisticated investment products (“derivatives”) on the equity markets, currencies, rates or commodities, so complicated that even the people who control them in their banks do not always understand everything. They are a few hundred in Paris, secondary financial center compared to London or New York. Around this elite is a population of sellers who market these products and executives of the “back office” who provide administrative monitoring of operations. They work in a few major banks: Société Générale, BNP Paribas, Crédit Agricole, Natixis, HSBC … which they insured, before the crisis, up to 40% of profits.
So, go around, there is nothing to see? No. The subject of bonuses is well debated, even in the middle. Because the biggest bonuses are perceived by the heads of the trading room or trading desk managers, like Andrew Hall at Citigroup, which claims the $ 98 million that are “due”. These managers then allocate the bonus envelope for their team “on a discretionary basis,” as currently used. “At the head of the customer”, translates an employee; “Jaw variables”, according to one expression reported by another. In Paris, bonuses are not, in fact, fixed in advance according to a contractual system based on the results of each. “In these remunerations, there is a share of the bluff,” says Olivier Godechot, sociologist, a researcher at the CNRS, author of the book Traders (The Discovery), which evokes a “financial hold-up”. Adding: “The particularity of the sector is that employees are the accumulation points of know-how and wealth creation. They appropriate the activities that allow the company to generate money. They can, therefore, transport them elsewhere and threaten their employer to do so in a very credible way. Thus, in 2000, two heads of the room gave 48 hours to their bank to buy them, with their teams, on the terms proposed by a competitor: 10 and 7 million euros each. ”
“I had a heart attack at 31”
This influence – or nuisance capacity – which encourages mercenary behavior, is often poorly experienced internally. “One can be bitter, when one has done the best results of his team, to learn that others touch much more than oneself,” notes Marc. “The average operator feels that the excesses of the environmental benefit above all to a very limited number of executives. Because if they still work and always more to increase the mass of bonuses paid to all staff, it is above all to better justify their own compensation, “indignant Guillaume, himself responsible for a team. If we can establish an average, the profit-sharing of traders roughly represents, theoretically, 7 to 9% of the net sums they made to their bank in the year.
The proposals that Nicolas Sarkozy wants to adopt at the next G20, to limit and frame bonuses, are received with skepticism. Even though many operators are willing to adhere to the idea of performance-related time spread. But the penalty … “Are we asking Thierry Henry or Brad Pitt, who earn tens of millions a year, to give bonus match or seal in case of failure of the match or the film?” strangle Guillaume. After the “tsunami” last October, business was gradually distributed in the spring, with the rebound in markets allowing the resumption of hiring, especially in London, and the return of bonuses. “As morale began to return to the trading floor, people are once again very worried about what will come out of this,” says Nadia Tortel, a headhunter at Singer & Hamilton. There have been social plans everywhere in the banks. People are now wondering if they will have to go to work in London or Geneva because of the new rules. Among the most experienced, many take advantage of this period to try to turn the page, go around the world, open a restaurant in Corsica or join the financial departments of companies, even divide their salary by seven or eight.
Gerard is one of them. At age 40, he resigned this spring, after sixteen years of finance. “I’m worn out. I lost my first wife because of my job and it almost happened with the second. I was redone eight centimeters of intestine. I had a heart attack at 31 years old. This summer, I saw my 7-year-old daughter more than during the last six cumulative years. This job is not just fiestas. It’s also a fifteen-hour day when, when you get home, you watch CNBC and watch Wall Street on your BlackBerry. You wake up at 3 am to see what Tokyo is doing, and you end up pestering yourself at home because you’re hanging on the phone. All my friends tell me that I made the right choice. “Gerard has even developed a program of gradual cessation so as not to go suddenly, from the maximum pressure to agonizing idleness. He is now working on a business creation project in services. A little disillusioned, he wants to recall the function of his old job: “If there are traders, it’s because there are people who put their money on a life insurance with guaranteed capital: it is necessary although there is a moron who takes risks to ensure the yield. It’s not the real estate loans that support the banks and pay the salaries of their bosses. “