How NOT To Lay-off Investment Bankers
The cull was generally regarded as a bunged and botched exercise undertaken by professionals who should have know better. The bank downsized the securities unit some four years ago, after allegedly raking up losses of over $900m. Included in the cull were the firm's 10-strong prop trading team, who are said to have been called early one morning at their homes and told that their services were no longer required.
The problem was, so it was reported in the media at the time, that the traders were still running open positions, mainly in convertible bonds. And some of them, miffed that they had been canned in a rather callous manner, are alleged to have called up traders at rival firms and spilled the beans on the positions, enabling their rivals to allegedly turn a healthy profit by pulling their bids on the bonds they knew Commerzbank was getting ready to dump. The German bank is thought to have lost another $85m that week, just because of the careless way it is said to have fired their traders. In the end, the bank is said to have had to recall some of the traders anyway, as it required their help to close-out their positions.
And then there was the great example set by Merrill Lynch which, in 2001, was looking to dump thousands of bankers during the difficulties following the bursting of the dot.com bubble, and post September 11th. Some bright spark at Merrill had the great idea of simply calling for volunteers for redundancy, and the firm offered between 12 to 54 weeks salary in the form of a severance to all those who wished to jump under their own steam. What happened, of course, was that many good members of staff, confident that they would soon find another job, took the packages, leaving a lot of dross left to help run the business.
And then there was the sad case of the ABN AMRO banker who learned of his fate when he couldn't access his bank parking space in the car park. The security guard apparently told the hapless banker that he was no longer on the approved list, and the banker put two and two together. Then there's the story of the banker who found out that he was to be laid-off when he sent a reminder e-mail to himself at work, only to receive an automated bounce-back saying that he had left the firm. IT had jumped the gun and set-up the auto response a few days too early. And then there's the story of the poor unfortunate with the same Christian name as his boss who answered his superior's telephone, only to be called up to a room to be made redundant by Human Resources. It was later that day that executives realised that the wrong employee had been let go. The bank is said to have then laid-off the intended victim, but decided to save a few more pennies by letting its earlier error stand.
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