Today this report had fallen from one to two

Monday, September 15. The fourth Bank business us, Lehman Brothers, announcing his bankruptcy, making falter the world of finance. If European and French banks are less exposed to the crisis of the "subprime" than Anglo-Saxon counterparts, they nevertheless deal with the turmoil. The first stigma are. Natixis (Caisse d'Epargne) provides for the abolition of 800 positions internally, in addition to 850 jobs among its subcontractors.

Calyon (Crédit Agricole) announced 500 deletions of posts (half in France) by mid-2009. "We are counting on the turnover, for, each year, of 10 to 20 of the workforce", says the Director-General, Patrick Valroff. The trend is therefore not to dry redundancies, "is still targeted volunteer, said Didier Mas, central steward CFDT but, about 4,500 employees in France, this plan will affect 2,500 people", in the most exposed activities. Like the "structured credit" "derivatives exotic actions" and more generally "exotic products", the company wants to ease for the benefit of less volatile sectors.

At BNP Paribas CIB (& Corporate Investment Banking) as in SG CIB (subsidiary of Société Générale), refers coyly to "adjustments" to sectors with strong development, such as emerging markets or even capital markets, structured finance and the derivatives. "The temptation might be, as in 2001, to the cuts in the numbers of certain trades, said Johan Brucale, the Office of Michael Page recruitment." But the risk is that the banks lack skills when these activities will depart.

Weaknesses and inertia

Beyond these "adjustments", banks have become aware that they must strengthen their risk control (market risk, counterparty risks related to a third party, credit... risk). During the euphoria of these last years, all the services accompanied the development of front office, forgetting sometimes absorbed by this quest for profit, their role of counterweight. "Good practices were known, but not necessarily implemented", says Joseph Florentin, associated with the Office of Eurogroup Council. For evidence, audit reports sponsored by the Kerviel case revealed "weakness of the supervision of the trader and control of market activities. But also a difference between the means of these control functions and the volume of market operations. This inertia also has a structural cause: the Organization silo, trade by trade, prevented a comprehensive and transversal risk view. That is why, a few months ago, SG CIB, Calyon and Natixis launched a vast construction site to strengthen and restructure this service risk. (BNP Paribas CIB having a developed culture of risk already has, according to management, developed device).

Since ads are cycled through. Calyon has implemented a team dedicated to the follow-up of the counterparty risks on market operations, whose role is to harvest information and "translate" in "risk scenarios. The Bank also established a strategic Committee of risks, which brings together, every month, the Directorate-General, risk management and trade patterns. Its mission Adapt permanently the policy of the business risk. Finally, Eve and anticipating risks function was created. With at its head a frame broken in different trades of the Bank and with a transverse vision. "It is not the shadow to the light, but it is a very significant step forward." "This watch activity existed but informally and fragmented", says Jérôme monkey, delegate CEO of Calyon.

Same strategy at Natixis with the appointment of a head of the "supervision and active management of risk". "With his team, he is in daily interaction with the front office." They help the business to understand the risks, are simulations, present it to the internal control... ", explains François Casassa, Secretary General of Natixis and HRD group. The idea is therefore not only to have a cross-cutting approach, but also to create more link and interface between market trades and risk control function.

Operational goals

At Société Générale, losses in the case of Kerviel being higher than those of the "sub-prime" crisis, the Bank undertook also actions to limit operational risk: awareness of front office about fraud, strengthening computer security but also the independence of the services responsible for the production and audit. The Bank including plans to implement a "product control" Department Anglo-Saxon, dedicated to the task of checking the daily profiles. Of term between 500 and 600 people in the world, it would a mission until then "divided between middle-office and accounting and financial management", note Pascal Augé, HRD of SG CIB.

More centralized, control of the risks is also easier to measure. "That is why, and this is new, this function risks will now have a formal meet operational performance goals", notes Pierre Reboul, associate of the firm Roland Berger. But it needs to strengthen the role of managers and the function of control within the directorates of operations. "Managers can only be excellent technicians, knowing the tools, but with often little financial sense." "Today, they should control the process and understand the economic value of products, summarized Philippe Auther, Associate Director of BearingPoint. This led logically to closest profiles markets, with a level of knowledge almost comparable to that of front office regarding the complexity of products, financial arrangements and trading practices. Thus, at Calyon, the new boss of the counterparty risks has an operational universe as former head of the Telecom division.

Entry to the Executive Committee

Sign of the growing weight given to these media, some officials functions sit for a few months, the Executive Committee. At Calyon, the Director of risk has joined this strategic instance as early as July. "This allows a narrowed cockpit and guarantees that no decision will be taken unless the dimension risks not has been examined", adds Jérôme monkey.

This rise in power and skills opens up new possibilities in terms of career development. Long boudées, especially by young graduates, middle and back office functions appear today as strategic. "Can now a career in media professions." "It is classic in London and the trend began to develop in France", said Pascal Augé of SG CIB. But must promote these routes and to change attitudes, including front office, so that these functions are more seen as having a role of mere censors. For many, this evolution must go through a review of the remuneration. "Anyway, cannot want more comprehensive profiles without raise wages accordingly and increase the variable part", note Ewa Brandt, HRD to the BFI of Natixis. For the moment, these write-ups are primarily at case by case. They are even more necessary that the disparity was flagrant with front office, before the bonus be revised downward. When a "risk manager", a listener or a management controller, earned around the 75,000 euros per year, a young trader, he exceeded the 250,000 euros. Today, this report had fallen from one to two. But it is only a one-time phenomenon. Calyon decided flat to its system of remuneration. Online focus, inter alia, the bonus guaranteed, granted to traders regardless of their results. Is no the best effect in times of crisis. In attacking their middle and back office functions, banks embark on a vast construction site. But the effects will be beneficial in the long term when the situation to clarify.