The latest is Barclays Capital’s Grant Kvalheim, one of Bob Diamond's two deputies at Barclays Capital, who has apparently decided to "take time away from the industry. Which of course has nothing to do with the billion pound losses sustained by his sub-prime mortgage division.
This follows the resignation of Bear Stearns CEO James Cayne, whose bank started the rot in the sub-prime sector when two of its hedge funds collapsed. Like his former counterparts at Citigroup and Merrill Lynch, he’s taking the rap for his bank’s big losses, which forced it into the red last year for the first time ever.
Cayne will be replaced by president Alan Schwartz, who’s widely considered to be Bear’s star investment banker – although bizarrely, Cayne’s reward for all this will be a cushy job as non-executive chairman, where he’ll act in an ‘advisory capacity’ to his successor. If we were Schwartz, we’d probably ignore him.
But although few tears will be shed among the general populace for the fate of these high-flying millionaire risk-takers, the sub-prime fallout is about to get a lot more bloody. Some banks have already started laying off staff, including Lehman Brothers and Dresdner Kleinwort, and Merrill has just begun the process of cutting jobs in its ailing fixed income division. But the deepest cuts could come at Citigroup, which is likely to shed about 10% of its 300,000 staff. So it’s not just the top dogs that will suffer.
And as if BarCap didn’t have enough to worry about, even its good news stories are getting a negative spin. After taking out an advert in the FT yesterday to publicise its latest newly-promoted high-fliers, it found itself under attack because just five out of the 80 were female. It never rains but it pours...