Inside Business
January 27, 2014 2:42 pm
Mohamed El-Erian’s decision to quit sends bankers right message
Pimco chief’s decision to leave is good news for the sector
Mohamed El-Erian did something last week that other people working in finance should consider copying: he quit.
His resignation as chief executive of Pimco surprised most investors and colleagues – although the most senior ranks at the big US bond house had been informed months earlier as Mr El-Erian sought to put a succession plan in place.
The gruelling hours were even more important, however. In his valedictory emails, perhaps wary of the cliché, Mr El-Erian avoided saying he wanted to spend more time with his family. But that is, in fact, his main reason for leaving, according to people close to him.
One tells me that on an average day Mr El-Erian’s alarm clock goes off at 2.45am. He usually gets to the office by 4.15am, gets home to his family about 7pm, eats, goes to bed by about 8.45pm and does it again.
That schedule does not mean he needs sympathy. Mr El-Erian helped set the hard-charging pace at Pimco, according to people familiar with the company’s culture – augmenting, or exacerbating, a challenging climate created by Mr Gross.
Giving up annual pay said to be $100m, Mr El-Erian, 55, told friends he wanted to embark on a “third career” after working as a senior International Monetary Fund official and then as an investor for Pimco and Harvard University. He leaves on his own terms.
That result should be an aspiration more widely shared in two other categories of finance jobs.
First, the junior ranks of investment banks who are looking for improved working conditions. The death from epilepsy of a young Bank of America employee working very long hours (although an inquest found it was only possible that work contributed) has already helped fuel an arms race among Wall Street banks looking to be seen to provide a better work-life balance to those on the bottom rung. Although these young employees have been treated as cannon fodder in less sensitive times, there is a growing feeling that other employers, including those in Silicon Valley, are offering graduates a more attractive option.
But the implementation is halfhearted. Senior Wall Street executives “joke” through gritted teeth that they have to work every weekend but their junior staff don’t. Also the promised palliatives – such as “take a Sunday off every month” are not particularly generous by the standards of most other jobs. Banks tend to be good at paying, not pastoral care, and most people who go to work for them expect that.
And any junior investment banker expecting the drudgery to turn into a dreamland as a result of the raft of similar initiatives at companies including Goldman Sachs, Credit Suisse and BofA is likely to be disappointed.
In many banks, the Financial Institutions Group is a ripe target. Once a prized gig whose alumni include Ruth Porat, Morgan Stanley’s chief financial officer, and Chris Flowers, the private equity investor, the FIG arms of the major banks are eerily quiet.
With the Federal Reserve threatening to block any significant bank mergers in the US, FIG bankers are left hoping that the Fed will moderate its stance or that Asian banks will start investing in a bigger way in the US. They can also hope that Wells Fargo, one of the few institutions with the financial firepower to do a transformational deal might buy Standard Chartered – as one optimistic banker told the Financial Times last week.
Tom Braithwaite is the Financial Times’ US Banking Editor
Copyright The Financial Times Limited 2014
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