“And why are banks typically valued at a price-to-book rather than, say, price-to-earnings or an EBITDA multiple?” Hands shot up all around me as Rupert stood, hands clasped behind his back, and surveyed the room of incoming associate bankers. I’d been reluctant to participate in class since week one, when Rupert posed the question, “How do we forecast interest expense?” to which I responded, “As a percentage of sales.” It warranted the tidal wave of laughter from my classmates that ensued. Even though I quickly recovered by explaining it was in fact the debt schedule that informed interest expense, I had decided to keep my mouth shut in class from then on. Occasionally I did that thing where I’d raise my hand right as the smart kid was called on. After the question was answered correctly, Rupert would immediately ask if I had anything to add to which I’d respond, “Was gonna say the same thing.”
“Mister Keenan, you’ve been relatively quiet the last couple weeks. Would you like to take a stab at it? Why are banks valued on a P/B rather than P/E ratio?” Rupert walked slowly toward me. The expansive room situated in the heart of London seemed to be closing in on me.
“Sure,” I said, slowly lowering the monitor of the laptop in front of me. The prior summer, I’d spent half of my internship in the Financial Institutions group and had done one project on a bank. But that was a year ago. I vaguely remembered creating price-to-book charts but was never explained the rationale behind them.
“Would you care to share it with us?” Rupert continued. I looked across the room and spotted Diyor, an Uzbekistan native and recent MIT Sloan graduate. Even as he slouched in his chair, with his arms folded across his chest, head drooped on his right shoulder, and eyes shut, his six-foot-six frame ensured he was still the most noticeable among the class of forty-five associates. Diyor wasn’t on his own page—the guy was in a different book, so much so that Rupert never deemed it necessary to call him out in class. Probably a smart move.
“Yeah, the banks,” I began. “Banks generally use price-to-book since they don’t usually own their buildings, so depreciation isn’t a big—” Snickering from the Wharton crew in the front row interrupted me. I could hear side conversations starting behind me. Seating was alphabetical by last name—I was in the second row, which meant I was close enough to the instructor to have a clear view of the board with limited distractions, but far away enough to know how far behind I was relative to my classmates. Rupert tilted his head to his right slightly and scrunched up his face.
Diyor’s snoring grew audible. Without opening his eyes, he raised his hand to his face, rubbed his nose, then adjusted his head gently onto his left shoulder, wiping the drool from the side of his mouth.
“Can someone help Mister Keenan out? Gaurav?” said Rupert.
“It has nothing to do with depreciation,” said Gaurav, the ringleader of the Wharton crew. He rotated his torso from his front-row seat, just far enough to catch eyes with me. Then he returned his attention to the front of the room. “Banks and other financial institutions are valued on a price-to-book basis since, by nature of their business, their assets are mark-to-market, and so you’ll see most banks trade around their book value.”
Rupert beamed. “Thank you, Gau—”
“Regarding banks not owning their buildings, Bill was correct, partially. Deutsche Bank, for example, did a sale-leaseback in 2007 in which it sold its Sixty Wall Street building to an investment firm, then leased back the space. This type of transaction is usually done to untie cash invested in a hard asset for deployment into other assets. It also provides the building’s seller with beneficial tax deductions.”
“Well said, Gaurav,” said Rupert. Raj extended a lowered fist and Gaurav pounded it. In my prior life, I would’ve dealt with Gaurav in the following manner: cross-check to his face, followed by me skating to the bench while my biggest teammates cleaned up the backlash from the shit storm I created. But there were no sticks and no teammates in this world. I was unequipped and exposed, and I couldn’t do anything about it except write down what Gaurav said in my notebook so I wouldn’t fuck up this question again.
Diyor emitted a half-grunt, half-snore as he readjusted in his seat, slowly opened his eyes, and consulted his Patek Philippe watch. Diyor waking up in class always meant the same thing.
“Before we adjourn, today’s trivia question,” said Rupert as the room stirred in anticipation and he held up the prize, a stainless steel Nalgene. “In USD, what is the aggregate-dollar-amount investment banks have been fined since 2008?”
“One hundred billion,” shouted someone.
“Including banks that have since gone bankrupt?” asked someone in the first row. Rupert nodded.
“Hundred and fifty billion,” exclaimed someone behind me.
“Forty-seven billion, five-hundred million,” said the girl beside me after some quick math on Excel.
“Two hundred billion,” shouted someone else.
“One dollar, Bob,” said a voice somewhere to my left. I couldn’t identify the speaker, but I desperately wanted to hug him.
A Wharton kid won the Nalgene.
“That’s it for today,” announced Rupert. “Remember to submit your homework before midnight or you will not receive credit. And please make sure to beauty save10—get in this habit, as your VPs will appreciate it once you begin full-time. I know this is the last week of training and I’ve introduced a lot to you over the past six weeks, but bear in mind the final exam is Friday, and this week’s homework assignments will serve as a first-rate review for what you will see on the exam.”
“We can bring a cheat sheet, right?” asked a Wharton kid.
“One-page cheat sheet is permitted,” said Rupert.
“Double-sided?” asked the same dipshit.
“That’s fine, but no magnifying glasses.”
“Can I bring an analyst?” I asked. It went ignored.
Everyone packed up his laptop and training manuals—save Diyor, who traveled with only a briefcase containing a legal pad that had never been written on. Rupert continued, “And remember, your group managers will be sent your scores, so I suggest you all,” Rupert’s eyes met mine, “take this seriously.”
The group of associates, with our matching Deutsche Bank lanyards containing our ID cards draped around our necks, shuffled from the classroom to the dining area just as the dinner buffet was being served. After a month straight of either cockles or Beef Wellington, I’d grown sick of the limited dinner selection, so I settled on a plate of bread and some cold cuts before finding a seat at one of the large round tables.
“You guys start studying for the sixty-three or seventy-nine yet?” asked Phuc, a diminutive Vietnamese guy and recent grad from Dartmouth’s Tuck business school. The series sixty-three and seventy-nine were the regulatory exams all incoming corporate finance analysts and associates needed to pass to be licensed to work.
“No, no, no,” said Vikram, a University of Chicago grad, as he shoveled mashed potatoes in his mouth. “Need to focus on the final exam first.” Vikram popped open a can of Coke. I’d seen days when he’d guzzled three cans before noon. I vaguely remembered Warren Buffett proudly declaring that he drank five Cokes a day, but Vikram was on the wrong end of the genetic lottery, and if his chronic stress didn’t give him a heart attack before the age of forty, then diabetes would no doubt be on the horizon.
“Did you even bring the study guides for the sixty-three and seventy-nine?” asked Phuc.
“Of course. I’m going to read them on the flight back to New York. Then we have three days to cram for the seventy-nine and another week for the sixty-three. But the final exam on Friday should be the focus now,” said Vikram. He took a sip of his Coke. “I heard from my friend at Credit Suisse that they cut the bottom fifteen percent of the class from training—rescinded the offers.” Vikram scanned the table for reactions. He lived for this type of drama.
“I heard that from my buddy at MS too,” said one of the Wharton guys. “Makes sense if you ask me—I think bottom twenty percent was cut there.” Vikram nodded in between sips, almost excited at the prospect.
“What’s on tap this weekend?” asked Wade, one of the associates who’d be working in the Houston office. “Last weekend in Europe. Need to blow it out.” He surveyed the table. Wade had spent the previous weekend in Ibiza. Or at least that was the plan. His flight from Heathrow Friday night was delayed, which pushed his arrival to Ibiza to Saturday afternoon. The lost luggage upon arrival set him back another half-day. All in all, about a thousand-dollar weekend and all he had to show for it were a couple of blurry photos on his iPhone outside Club Amnesia and a few made-up stories about Lindsay Lohan dancing near his table at Club Space. Now that is investment banking.
“I’m organizing a trip to Stonehenge Saturday morning,” said Phuc as he dabbed the sides of his mouth with a napkin. “There’s a bus that leaves every hour on the hour starting at seven a.m. If we leave early enough, we can also check out Avebury. It’s another twenty miles north, but worth the trip—it’s a World Heritage Site, and visitors have free access to the stones! I called yesterday and set up a great group deal for bikes.”
“That could be fun,” said Vikram. “My wife is visiting with our son. Maybe we’ll tag along.”
“I was thinking we check out the bar scene in Shoreditch,” said Wade. “Picked up some absinthe at the duty-free shop last weekend.” Wade’s eyes met mine.
“Heard Shoreditch has some good spots,” I said. I felt bad for Wade. He was one of those guys who felt compelled to always wear a backward hat when he went out socially due to his baldness. I hoped he’d make a lot of money.
“British babes galore, from what I hear,” Wade said. I’d been in Britain for six weeks, long enough to know that if there were British babes, they weren’t in Britain. “You in, Keenan?” he continued. “We can get you on our Tinder Social and get to work tonight. Here.” He handed me his phone. “Me and a couple of the guys already set up an account. Check out our latest match.”
I scanned the first three pictures. “You matched with this group?” I said. “They’re all guys.”
“Go to the last pic,” Wade said as he leaned over and swiped at the phone. “See that hottie?”
“She’s in the background of the picture—doesn’t even know she’s in it,” I said.
“I know.” Wade tapped the phone. “But these guys obviously know where the hot chicks go. So how ’bout it? You want in? Send me a pic of you, maybe a hockey one or something.”
“Unfortunately, already planned a trip this weekend,” I said.
“Where to?” said Wade.
“Stockholm.”
“Awesome!” said Phuc. “I’ve heard the Vasa Museum is a must-see.”
I wasn’t going there for the museums. I’d set up dates with a few girls—five girls to be exact (three of whom I actually knew). I figured two or three would bail, but it seemed like the right number to ensure my last Friday and Saturday nights before work started would be fun.
“And the Nobel Museum,” I added. Phuc nodded as he crammed some Beef Wellington in his mouth.
“I’m really nervous about this exam on Friday, guys. I think this needs to be our focus, and we can worry about museums and Tindering come Friday afternoon,” said Vikram as he shook an empty Coke can, then put it on the table. “I talked to Rupert after class—said he sends the results directly to our group managers. He didn’t know whether they’ll rescind offers, but—”
I stood up and hightailed it to the garbage to bus my tray. I couldn’t take Vikram’s constant exploration of worst-case scenarios. I knew the discussion would eventually circle back to the fact his wife had decided to give up pursuing a career in medicine despite graduating from Northwestern University Feinberg School of Medicine, and now he was saddled with her med-school debt, his business school debt, and the cost of having a two-year-old child.
Typically, after dinner I’d stick around and plug away on that night’s assigned homework for a couple hours, after which I’d spend thirty minutes asking Rupert or the teaching assistant pointed questions to demonstrate that despite my relative underperformance on the weekly quizzes, I was putting in the effort. It was like when I was sucking at hockey and not scoring goals, I’d spend extra time after practice doing self-imposed wind sprints and working on my shot, hoping the coaches would take notice—they didn’t. Anyway, with training in its sixth and final week, the teaching assistant, a current senior associate at Deutsche Bank, was busy “shooting a couple over11 from the tips with rented wrenches” at the Old Course at St. Andrew’s, Muirfield, or Royal Troon. Meanwhile, Rupert had advised us that his evening office-hours would be limited in the final week, since he and his husband needed to oversee the flagstone re-laying of the Gloucestershire rectory they had purchased a year earlier in England’s bucolic countryside. This is all to say that I had good reason to bolt early and work on my homework from the comfort of my sprawling, un-air conditioned, three-hundred-square-foot room at the King Street extended-stay living facility.
The walk back to our lodging was a fifteen-minute stroll from where daily training was held. The final rays of the warm August sun beamed through the large glass windows of the building, temporarily blinding me as I rode the escalator down to the ground floor and exited onto Cabot Square in Canary Wharf. Across the street stood a large figure barely visible in shadows created by large scaffolding, his face obscured by a puff of smoke: Diyor. He raised his vaporizer to his mouth once more, inhaled deeply, then slowly emitted another large puff of smoke. He was going to be joining the San Francisco office in September, but today, he disappeared into a black town-car with tinted windows. Destination unknown.
Aside from the training, the past six weeks in London had been a whirlwind of team-building activities, speeches, and networking sessions at royal-sounding venues, all designed to help mold a sense of unity among the newest class of Deutsche Bank employees—a group totaling over a thousand recent graduates.
The team-building activities were a finance version of ropes courses.12 One person would take charge, a few others would fall in line, and the majority would linger on the sidelines and judge those who participated. The speeches proved more engaging—each week, a couple members of Deutsche Bank’s management team and board of directors visited training to deliver impassioned speeches about our ability to have a positive impact on the company’s future, which was in question after recent headlines implicating the bank in numerous scandals stemming from the financial crisis. CEO John Cryan flew in from Frankfurt to deliver the final speech of training. Strobe lights danced across the packed banquet hall at the InterContinental as U2’s “Beautiful Day” blasted over the loudspeaker. As the lights dimmed, I half-expected to see a hooded Cryan, bouncing from side to side, making his way to the stage trailed by a group of stone-faced, muscle-bound lackeys holding his title belts. I had to resist the urge to stick out my hand for a middle-five from my aisle seat as Cryan strode to the stage wearing a dark blue suit.
He was no prizefighter, but the dark, puffy bags under his eyes and the wrinkles that zigzagged his face told the story of a CEO who was in the midst of battling to keep his bank afloat. Unlike the bank’s previous CEO, Anshu Jain, who had a sales and trading background, Cryan took a job as an accountant after college and spent the majority of his professional career in the corporate finance division of banks, focusing on financial institutions. If there was someone who knew the ins and outs of running a bank, it was Cryan.
He began by outlining “Strategy 2020,” his five-year plan to return the bank to profitability. But that was where his finance-related material ended. Instead of another rousing speech about the promising future of DB and our role in it, he focused his message on the importance of maintaining a balanced life as we began our careers. He noted the recent promise he made to his wife that he would only work six days a week this year. He then reeled off a list of German composers he listened to while in his garden exploring the green thumb he’d recently discovered. In his concluding Q&A session, he demonstrated that rare ability to answer questions in clear, simple language while simultaneously making the individual who asked the question feel like a genius, even the kid who asked where DB’s stock price would be in year. We were in good hands.
But despite the reassurance and comfort Cryan instilled in DB’s newest employees and our nascent careers, a void remained, a void I’d felt since training had begun but had been unable to fill.
As I stood in Cabot Square, the summer sun sunk slowly on the horizon as the palatial buildings cast looming shadows on the narrow sidewalks. Waiting for the stationary, illuminated red guy to turn into a walking green guy, I spotted a girl through the glass window of a coffee shop across the street. She looked to be right in my wheelhouse—cute and nearby. She had Eastern European features, and her dirty blonde hair was in a high, messy bun as she flipped the page of her magazine, oblivious to the American guy still standing across the street even though the little guy had turned green.
I threw my shoulders back, then took the stray strand of hair that had been strategically dangling over my right eye and tucked it behind my right ear. Our eyes would meet through the window, and she’d smile, a slight nod of the head inviting me to sit with her. I’d march in, my presence putting her damn near cardiac arrest, and then I’d blow her away with unparalleled wit and charm as passersby glanced through the window, wondering what on earth this guy was saying to this girl to keep her laughing and playfully slapping his arm.
But before any of that happened, I needed to wait for the traffic to stop, since I had now missed my chance to cross the street. Thirty seconds later, I took a cautious step into the crosswalk, initiating this inevitable chain of events. Halfway across the street, as if in slow motion, she lifted her head from her magazine and looked out the window—our eyes met. I stopped and smiled. Then she sneezed before returning her attention to the magazine. A car honked. I hustled to the safety of the sidewalk.
I went through my usual routine of rationalizing why I shouldn’t approach her—I was leaving London in a couple days so I’d probably never see her after this week; she was reading a tabloid so she was probably stupid; and she had weird ears, which wasn’t true, but I needed to identify some physical flaw. As I went through the checklist, my thoughts returned to the void I’d felt since coming to London. It had grown each week, and I hadn’t been able to pinpoint its cause—but I knew my jokes weren’t as sharp, and it was cause for concern since my new colleagues rarely, if ever, understood them. I couldn’t remember the last time I had landed a joke worthy of a mental self-backslap. Prior to training, I would have said I was objectively around a ten in both cool and funny on a scale from one to ten. Now if you were to run a regression of my coolness on my funniness, R-squared would be for shit and the p-value would be really high or low or whichever one demonstrated statistical insignificance.
I looked at the girl through the window. Best case scenario, I thought, would be her noticing me through the window, scrawling her number on a piece of paper, then pressing it against the glass window—most efficient at least. I played out the scenarios in my head of what would happen if I went in there and talked to her—only one made me smile, and it wasn’t one that ended with me getting her number. It was the scenario where I said everything I shouldn’t say, forcing her to take a fake phone call, leaving me alone and defeated. What made me smile was that I knew I could turn it into a story that my friends would like. And then it hit me—how to fill the void. I didn’t need some girl from a London coffee shop, and I didn’t need her number (which I definitely could’ve gotten).
What I needed was a friend.