JP Morgan has taken a hatchet to Bear Stearns' foreign exchange business, with 62 of 73 positions set to be “put on notice,” according to a Forex Factory story citing “a senior Bear Stearns official.”
Both the New York and London offices of Bear Stearns have been slashed. In New York, 28 out of 34 people working in foreign exchange are expected to receive this week what Forex Factory describes as “consultation letters.” In London, 33 of the 39 team members received notification last week that they had entered a consultation period. It’s unclear how many of these “consultations” will result in job cuts or offers for positions. Apparently some have been offered positions at JP Morgan but turned them down because they were a lower levels—and presumably paid less—than their positions at Bear Stearns.
“Bear Stearns' New York trading operations have almost ground to a halt, with the FX team handling only 1% of its pre-takeover commerce,” Forex Factory reports.
Bear Stearns gets the axe [Forex Factory]
Posted by guest , May 12, 2008 2:11PM
not surprising. JPM is HUGE in FX. Could easily absorb BS.
Posted by Sledgehammer , May 12, 2008 2:23PM
This department didn't stand a chance with the merger.
As an aside, JPM has already established several layers of JPM mgmt over Prime Brokerage (which it has said they plan to keep largely intact). Although this makes things far less efficient, it would be indeed a sight to see the old Bear PB honchos having to kiss the asses of their new masters.
Posted by guest , May 12, 2008 2:31PM
Sledge,
I thought JPM had a reasonable PB operation, FX Prime?
Posted by guest , May 12, 2008 2:35PM
14:11 is totally right.
JPM is a behemoth compared to BSC and FX is all a scale business nowadays. The whole business could be absorbed with little more than a gurgle.
Wonder how many other businesses are like that? Government bond trading anyone?
my2cents
Posted by guest , May 12, 2008 2:35PM
Feel bad for a good buddy of mine over there. He is way too junior to be getting a offer to stay on. Going to be tough getting a FX job in the next few years.
Posted by Sledgehammer , May 12, 2008 2:50PM
@2:31
JPM does have a solid FX Pb business. I was speaking in terms of a larger, consolidated PB business (incorporating all products).
Bear was not that geared towards non-US clientele in the PB space despite the fact that they had some very smart and capable people working in their London and other non-NYC offices.
The sad fact of the whole JPM/Bear PB merger is that one thing will most likely be lost: the ability to put a face and name to each and every department/product within PB at Bear Stearns (I am sure this was also the case outside of PB). Banks are essentially faceless entities, mired in processes and procedures designed to allow for maximum scalability in the event the bank hires or fires 10,000 or so people.
Bear, despite its faults being large in number, could hustle and deliver a personalized PB service to its clientele. Bear PB personnel definitely could make decisions on the fly (except when up against their army of legal and complaince mafiosi) as opposed to what will happen with JPM.
Sometimes I wonder if the quest for balance sheet has brought with it a grim, impersonal future of mass production and boiler plate service.
-Sledgehmammer
Posted by blndebnker , May 12, 2008 2:54PM
@2:31pm - Bear's FXPB was run right off of their FX desk if I'm not mistaken whereas JPM has a separate FXPB offering that is independent of their desk. They kill it in FX. Like Sledge said, heritage Bear guys didn't have a shot in hell.
Posted by blndebnker , May 12, 2008 2:59PM
Sledge - I have to disagree with you a bit. JPM does offer very personalized, cater-to-the-customer service for their PB clients. They are just not as well known beucase they got in the PB game so late and lacked an EQPB. Once the merger is complete, you can probably expect the same personalized service that both Bear and JPM were offering before. I think the new combined PB is going to be a force to be reckoned with.
Posted by guest , May 12, 2008 3:00PM
Beah FX/Metals suck, really they do. They suck so bad, that less than a year ago, bsc hired a bunch of old time jpm gold clowns........hahaha..left jpm and now they're all fired...karma sucks bitches!!
Posted by Sledgehammer , May 12, 2008 3:04PM
@2:59
I am hoping for that but as someone who deals with pretty much every PB out there on a daily basis and has done so for quite some time I am not close to being comfortable with putting them in the same category when it comes to service.
Posted by blndebnker , May 12, 2008 3:09PM
@3:04pm
That's really interesting. Are you at a HF?
Posted by guest , May 12, 2008 3:15PM
Guest 2:31 here..... Interesting PB insight here, good point to see if this merger (for want of a better term) will produce in the terms of new PB business, most PB clients are locked in with their present PB, in my experience it takes a huge price reduction (maybe not so much of an issue nowadays) or a HUGE cock up to get a PB client to close posn.s and switch PB.
Posted by blndebnker , May 12, 2008 3:21PM
@3:15pm - I heard some major HF players have been ringing up Bear/JPM to get onboard with their new combined PB and that a lot of Bear's former clients are looking into coming back. It will definitely be interesting to see how it all plays out.
Posted by guest , May 12, 2008 3:29PM
3:21, that's very interesting, and ironic in some ways given that it was some of these players that somewhat contributed to the BS downfall by pulling all capital & credit lines, some very short memories methinks.....
Posted by Sledgehammer , May 12, 2008 3:33PM
@3:09
Yes, I am
Posted by Sledgehammer , May 12, 2008 3:40PM
@3:15
Although I would definitely say that PB business is inherently sticky and by that I mean that it is not so easy to move over to another PB. However, I have seen just as many HFs move Pb business due to service as they would for price. There is always the risk of pricing your business too low through brutal negotiations. In the end, the PBs need to make money for it to be a better relationship. I find that the PBs that are extremely aggressive on pricing tend to be spread too thin on service reps - this leads to errors in my opinion. Pricing should reflect balances.
Posted by mrpink , May 12, 2008 3:42PM
I still see BSFX quoting in EUR... Better get a screenshot of it before it disappears..forever gone into the sunset.
-mrp
Posted by guest , May 12, 2008 3:43PM
Foreign exchange? If our dollar gets any weaker there isn't going to be a need for foreign exchange anywhere, we'll all be spending Euros.
Posted by Sledgehammer , May 12, 2008 3:44PM
@3:21
The Bear/JPM PB merger in terms of a total one firm umbrella will not be ready for 18 months - 2 years. This is coming from insiders working on the project. Keep in mind that this will not even catch them up with the competition because the markets, products and strategies will not likely remain static for two years.
The problem with many firms out there at present is that they view PB as an accomodation service instead of as a business. This needs to be its own animal to effectively serve as a gateway to the rest of the firm.
Posted by blndebnker , May 12, 2008 3:46PM
@3:29pm - Oh yeah I know. It always works that way doesn't it?
Sledge - Very insightful and good to know.
Posted by guest , May 12, 2008 3:52PM
What happened at MS
Posted by guest , May 12, 2008 3:53PM
Sledge, I definitely agree with the spread too thin theory, and/or the too much reliance on STP processing, with the PB hoping nothing goes t*ts up in the settlement/matching of a trade.
Some good intelligent points here
Posted by Sledgehammer , May 12, 2008 3:59PM
@3:52
MS will be laying off some people firm-wide which means that a large chunk will come from fixed income and other "focus" areas related to subprime toxicity. The rest will be spread over the whole firm which of course will become highly political in nature. Look at what happened last week at UBS - clusterfuck.
Posted by mrpink , May 12, 2008 4:04PM
@ 3:43... So funny, and sad that it may be true...
-mrp
Posted by Sledgehammer , May 12, 2008 4:11PM
@3:53
I guess a lot of the misconception with those starting or managing a PB business at these banks is that they believe that there is a quick way in. There really isn't. This takes about 5 years starting from scratch if the proper $$ are spent on tech and retaining talent. It is such a client-driven business that it requires a firm to either be a niche player or a full-service player.
Posted by guest , May 12, 2008 4:15PM
Sledge, as there's no doubt your very familiar with this area, care to opine (on a totally individual basis) your ranking of the top PBs?
Posted by Sledgehammer , May 12, 2008 4:23PM
@4:15
Tier 1:
Morgan Stanley
Goldman Sachs
Tier 2:
Deutsche Bank (will soon be in the top tier)
UBS
Lehman Brothers (for quant strategies only)
Barclays
Credit Suisse (keeps moving up)
Tier 3:
Citi
Merrill Lynch
Bear/JPM
That would be it for the PBs who operate globally across product classes.
Posted by guest , May 12, 2008 4:29PM
Sledge,
Thanks, interesting as this ranking pretty accurately reflects your "5 years starting from scratch" observation.
Guest 2:31
Posted by Sledgehammer , May 12, 2008 4:38PM
@4:29
There has to be scalability that only comes from doing this for 4-5 years but not too much so that the firm turns into a faceless culture.
I am very bullish on Deutsche and CS in this space. ML is starting to turn things around within PB (West Coast and London teams are solid).
The biggest mistake I see these firms make is believing their own BS and not paying attention to their competition. There exists no competitive intelligence function in a formal manner at any of the PBs. Developing too insular of a culture leaves a firm open to personnel raids, being late to technology advances, and losing clientele. Just ask Bear Stearns PB
Posted by guest , May 12, 2008 4:44PM
sledge sounds like a guy who reads the wsj online and spends all day jerking off to online porn in his mom's basement.
I think sledge's real screen name should be wanker 1.
Posted by guest , May 12, 2008 4:47PM
"There exists no competitive intelligence function in a formal manner at any of the PBs"...good point, outside of the many "best of PB" surveys which pop up in various publications with differing degrees of credibility.
You replied earlier you're at a fund, were you at a PB at some time?
Posted by guest , May 12, 2008 4:49PM
he's probably at a bank, a sperm bank offering to use their porn collection, for a small transaction fee.
Posted by guest , May 12, 2008 4:52PM
4:44 nice work, we made it all the way from 2:11 until 4:44 without a f*ckwit comment
Posted by Sledgehammer , May 12, 2008 4:52PM
@4:47
I was at one quite some time ago.
The PB surveys are a bit of a scam in that all the PBs try to get everyone to fill them out and give them top marks.
Posted by Sledgehammer , May 12, 2008 4:53PM
@4:49
It would not be a life wasted
Posted by blndebnker , May 12, 2008 4:55PM
@4:38pm - Bear's PB technology is actually pretty good. From the funds I know, none left because of their service but because of the rumors and credit crunch.
Posted by guest , May 12, 2008 4:58PM
hit dat sheeeet
Posted by Sledgehammer , May 12, 2008 4:59PM
@4:55
I would have to disagree with you on that. Although for a L/S equity fund their technology/reporting is quite decent, for a multi-product, multi-strategy fund they are nowhere close. Check out MS' product as well as ML's.
Posted by guest , May 12, 2008 5:00PM
sledge--since you're such a playahhh, why dont you tell us who you work for and what you do.
And....how with all your responsibilities, you have the time to opine in almost real time, as an anonymous poster here.
Or, did your Mom find out you used her credit card to buy porn and she cut you off?
Posted by guest , May 12, 2008 5:02PM
@4:58
So much for the non-f*ckwit comment streak
Posted by guest , May 12, 2008 5:05PM
5.02...every silver lining has a cloud!
Posted by Sledgehammer , May 12, 2008 5:06PM
@5:00
She caught me
Posted by guest , May 12, 2008 5:09PM
SMACK THE BELLY...YOU LOSE
Posted by guest , May 13, 2008 8:38PM
They maybe out to lunch but JP Morgan has a big appetite.
http://www.bearstearnslives.com/