Morning Coffee: Slightly pretentious adult-only hotel is new banker perk. Banks' spending increasing faster than revenues

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Morning Coffee: Slightly pretentious adult-only hotel is new banker perk. Banks' spending increasing faster than revenues

It's vacation season in banking, and if you work for boutique firm Houlihan Lokey, it's a vacation season with a difference. - Houlihan announced its policy of paying for a global getaway for all its staff back in April, and three months later, its people are presumably making the most of Instagrammable opportunities on the company account.

Bloomberg has learned that one of the Houlihan holiday options involves five days in a hotel called the Fairmont Royal Pavilion in Barbados, where rooms can cost up to $1k a night. Reviews suggest the hotel is unusually close to the beachfront and that guests can swim out to see turtles, hang around in hot tubs and spend all day eating banana bread if carbs help them unwind. Based in Porters Barbados, the Royal Pavilion is also described as "romantic", with a "slightly pretentious vibe" and is adult-only during the high-season. "The beach is perfectly sandy. The water is blue and swimming perfect," gushed one reviewer, and although others complained of poor food and bird poo on the decking, this is presumably something that can be overlooked when you're not the one paying.

Houlihan's staff don't have to go to Barbados. They can also spend their vacation credits on a ski adventure or culinary experience, but lying on a sandy beach might seem the best option. The free vacation also helps differentiate Houlihan from the junior banker perks offered by rivals, most of which now seem to include identikit $100k salaries for first year analysts and more aggressively protected time off on the weekend.

Is it worth it though? Houlihan has outlawed working past midnight without group head approval, but getting approval for all-night work is rarely an issue when a deal is live. “What good is making half a million if you’re working 20 hours a day?” asks the now ex-banker who runs the Litquidity Instagram account. Houlihan bankers and others will have plenty of time to ponder this in their hot tubs and on their sun loungers this summer.

Separately, there is a whiff of trouble in the air from banks' recent largesse. The Financial Times points out that expenses at the big five U.S. banks were up 21% in the second quarter compared to the second quarter of 2019, before the pandemic hit. However, revenues were up only 10% over the same period. It wasn't all the fault of higher junior salaries and free pastries to tempt people back to the office - banks are also spending more on technology and digitization. “The banks are all in the ring and they’re all ready to fight for revenues. Fighting for revenues means spending more on growth,” says veteran banking analyst Mike Mayo. That's fine for the banks that win - and as long as revenue growth remains forthcoming. Houlihan can at least cancel its holidays next year, but it will be harder to retract the salary increases recently awarded elsewhere.

Meanwhile...

Nomura is also hiking its junior banker salaries to $100k. (Bloomberg) 

Revolut founder Nikolay Storonsky says the company is valued at $33bn because it "outworked everyone else" and didn't have a conservative British mentality. "People [in Britain] don’t make big, ambitious goals. It’s preferred to set moderate goals with a high probability of success. But in order to be really large, you really need to strive for huge goals, which seem like they’re low probability." (Financial Times) 

Jefferies' banking analysts are predicting a difficult quarter at Credit Suisse after so many staff left. "We think revenues will disappoint expectations and show a sudden fall in momentum.” (Bloomberg) 

'Freedom day' has arrived in the UK but JPMorgan and Goldman Sachs will still be expecting their staff to wear masks in their offices when they're not at desks. (Bloomberg) 

A banker who returned to the office expressed his frustration. "It’s nuts that I went in specially only to spend most of the day on Zoom calls to my colleagues who are still at home.”  (The Times) 

It's a good time to work at PWC in the UK. Profit per partner has hit £868k, the highest it's been in the firm's history. (The Times)

It's a good time to work at British law firm Allen & Overy. Profit per equity partner has increased to £1.9m on the back of the M&A boom. (Financial News) 

Profits per equity partner at U.S. law firms have risen by over 13%, to an all-time high of nearly $2.2m. (Economist) 

Joe Biden warned banks to watch themselves in Hong Kong. (Bloomberg) 

Adam Crook, co-head of EMEA FX at Goldman Sachs, gave £100k so that four students on a bursary can attend the fee paying school he went to. (Bolton News) 

Photo by David Cain on Unsplash

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