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Extreme violence lies in Isis DNA

It is just over 10 years since Nicholas Berg, an American businessman working in Iraq, was brutally decapitated on video by Abu Musab al-Zarqawi, the thuggish leader of al-Qaeda in Iraq.

With the murder of the American journalist, James Foley, on Tuesday, the US and its Western allies were vividly reminded of the worst excesses of the Iraqi insurgency in the wake of the 2003 invasion.

But it is not just in the manner of its bloodlust that the Islamic State in Iraq and the Levant (Isis) and AQI share a gruesome symmetry.

The two organisations also share a lineage. The threadbare remnants of AQI – all but crushed by the US troop surge in Iraq of 2007 and the “sons of Iraq” movement to turn Sunni tribes against the jihadis – morphed into the earliest version of Isis.

But more importantly, Isis is also the operational, strategic and ideological twin of its predecessor.

“There is almost no difference in the organisations,” says Afzal Ashraf, a former RAF captain in Iraq and now consultant at the Royal United Services Institute.

Mr Ashraf points in particular to the shared heritage of Isis and AQI in drawing on former members of Saddam Hussein’s Ba’athist regime. Both are “parasitic insurgencies” that co-opt disenfranchised factions to their cause, he says.

It is perhaps for this reason that both AQI and Isis have historically shared a primary concern with the “near enemy” – other Arabs – rather than the far enemy – Western infidels – as their main targets. Isis, like AQI, is primarily a sectarian organisation, dedicated to eradicating the Shia governments in Baghdad and the Alawite regime in Damascus.

Military analysts also point to the similarity in battleground tactics used by Isis with those used by AQI, in particular the way both deploy force in circles of pressure, particularly around cities, using waves of car and truck bombs.

An image grab taken from a propaganda video released on July 5 2014 by al-Furqan Media allegedly shows the leader of the Islamic State (IS) jihadist group, Abu Bakr al-Baghdadi, aka Caliph Ibrahim, adressing Muslim worshippers at a mosque in the militant-held northern Iraqi city of Mosul. Baghdadi, who on June 29 proclaimed a "caliphate" straddling Syria and Iraq, purportedly ordered all Muslims to obey him in the video released on social media

For Fawaz Gerges, professor of international relations at the London School of Economics and an expert in al-Qaeda and Islamic extremism, the defining characteristic of the Isis/AQI approach, however is the their particular “use of violence”.

“Groups like al-Qaeda used violence in a tactical way, in a way proportional to their aims,” he says. “For Isis and AQI the savagery is the point. The action is what matters, not the ideas. To Zarqawi and Baghdadi [the Isis leader], the spectacle and the limitless force – beheadings, crucifications, people being buried alive – is what matters.”


New York and London vie for crown of world’s top financial centre

Seven years ago, a report commissioned by Michael Bloomberg, New York’s then mayor, warned the city was in danger of being dethroned as the world’s financial capital by London.

New York was becoming less attractive as a place to do financial services business because of a mixture of excessive litigation, stifling regulation and restrictive immigration rules, according to about 50 chief executives interviewed by McKinsey for the study. London, by contrast, was exerting a pull on banks and investment houses as British politicians trumpeted the capital’s “light touch” regulation.

Six years on from the collapse of Lehman Brothers, both financial centres are transformed. Banks on both sides of the Atlantic were floored by the crisis, but, having taken risk off their balance sheets, are now bouncing back.

Regulators, meanwhile, have toughened their safety and soundness requirements and, particularly in the US, are on a mission to extract maximum penalties for past misdeeds.

Where does that leave the head-to-head battle between New York and London? Which financial centre is in the ascendancy? And will Asia’s hubs in Hong Kong, Singapore and Shanghai steal the global crown?

For now, the largest New York-listed banks by market capitalisation dwarf their London-listed rivals and the city remains the undisputed global king of equities.

Its two stock exchanges – NYSE, which this month hosted the Alibaba initial public offering, and Nasdaq – have held IPOs that raised a combined $77bn so far this year, or 41 per cent of the $186bn raised globally, according to Dealogic. London raised just over $25bn, for a share of 14 per cent.

Christian Meissner, global head of corporate and investment banking at Bank of America Merrill Lynch, says the world’s deepest capital markets are in New York.

“As much as London might think it’s the financial centre, I think New York is still ultimately the centre of the financial system.”

“It’s the dollar, it’s the Fed – it’s because US capital markets and the US economy are the deepest, it has the largest number of big companies.”

Mr Meissner says London is a close second.

“If you’re doing business in Asia and the emerging markets, London is much more convenient. It has the timezone and is the most global.”

Xavier Rolet, chief executive of the London Stock Exchange Group, insists that overall the City of London is clearly the world’s leading international financial centre. And the recent spurt in the UK’s economic fortunes have given it another boost.

Chief Executive of the London Stock Exchange Group, Xavier Rolet, addresses the delegates at the annual Confederation of British Industry (CBI) conference in central London on November 4, 2013. British Prime Minister David Cameron on Monday welcomed a call from the nation's business leaders for Britain to remain in the European Union, ahead of a referendum in 2017. AFP PHOTO / LEON NEAL (Photo credit should read LEON NEAL/AFP/Getty Images)

“In the last two years, the regulatory and fiscal measures introduced by the UK government to recalibrate [small business] funding around risk and equity capital have nurtured a tech revolution which has helped fuel an impressive economic and jobs recovery,” says Mr Rolet, pictured. “Ensuring that these minnows succeed on the path from ‘start-up to stardom’ is one of LSE’s priorities.”

The UK dominates in currency trading and over-the-counter interest rate derivatives, accounting for 41 and 49 per cent of turnover in each market, respectively, according to the Bank of International Settlements.

By contrast, the US has a 19 per cent share of currency trading and 23 per cent of OTC interest rate derivatives.

London recently became home to the first clearing bank outside Asia for the renminbi, boosting its attempt to be the leading offshore trading centre in the Chinese currency.

“London has a huge timezone advantage,” says Kevin Burrowes of consultants PwC. “It remains the biggest foreign exchange market because of the ability to trade with east and west in the course of a normal business day”.

So far, at least, new European restrictions on bonuses have not undermined London dramatically, with no wholesale shift of financial services jobs away from the UK, either to New York, or Asia.

After dipping during the crisis, the total number of banking jobs in London broke through pre-crisis levels last year, hitting 147,100, according to a survey by industry group TheCityUK. That took total financial services jobs in the city, including finance and fund management, to a record 367,300.

Though like-for-like figures are difficult to come by, estimates from the New York State Department of Labor suggest the city has 502,400 finance and insurance jobs – 8 per cent lower than the sector’s employment peak in 2007.

Even so, the bonus pool for employees at New York securities firms last year was at its largest since 2008 – at $26.7bn, up 15 per cent on 2012, against the £14bn ($22.9bn) paid out across the UK’s insurance and finance sectors as a whole.

There are anecdotal suggestions that the impact of new bonus rules and other regulatory pressures has yet to feed through fully: 90 per cent of senior City staff now say they are willing to move abroad, up from 77 per cent last year, according to a survey by recruitment company Astbury Marsden.

New York wins the super-rich contest – it has 98 dollar billionaires to London’s 55, according to estimates by WealthInsight.

WPP Chief Executive Martin Sorrell talks during a session at the World Economic Forum in Davos on January 22, 2014. Some 40 world leaders gather in the Swiss ski resort Davos to discuss and debate a wide range of issues including the causes of conflicts plaguing the Middle East, and how to reinvigorate the global economy. AFP PHOTO / ERIC PIERMONT (Photo credit should read ERIC PIERMONT/AFP/Getty Images)

A recent survey conducted by Wealth-X, a research company, and UBS, the Swiss bank, also found that New York was the home of the biggest number of billionaires – 103 – followed by Moscow (85), Hong Kong (82), and London (72).

There is a soft appeal to both London and New York, says Sir Martin Sorrell, the British chief executive of advertising group WPP, who spends about 100 days a year working in each city.

He says the longer commutes and earlier workday start times in New York can be frustrating, but that both cities have “superb” cultural offerings and are making strong pushes to grow their technology sector.

London, he says, is challenged by its poor airport infrastructure and uncertainty over the future of the UK’s status within the EU.

“From my point of view, both cities work extremely well,” says Mr Sorrell, pictured. “I probably deep down prefer London, but I’m increasingly ambivalent and agnostic.”

While regulators in both cities have taken off the gloves in response to a series of market manipulation scandals, New York’s enforcers are seen by many as acting tougher. Even before French bank BNP Paribas was hit with a record $8.9bn penalty for evading sanctions, Wall Street banks and their foreign rivals had paid out $100bn in US settlements since the financial crisis.

But by imposing a large chunk of recent penalties on banks outside home territory, New York authorities risk a backlash against their domestic operators by foreign regulators, says Mark Yeandle, author of the most recent Global Financial Centres Index, a twice-yearly ranking which assesses a range of competitiveness measures.

London’s future is tied to whether Britain stays in the EU and the prospect of it leaving has unnerved investors. Wall Street banks have been considering plans to move some London-based activities to Ireland – partly because the eurozone’s impending banking union threatens to isolate Britain, but also in the case of a UK exit from the EU.

As former mayor Bloomberg’s McKinsey study suggested back in 2007, business can shift to jurisdictions where the legal and regulatory environment is more attractive. And in today’s world, New York and London have reason to be wary of their Asian rivals.


World’s most advanced hacking spyware let loose

A participant sits with a laptop computer at the Chaos Communication Congress in December 2010

A cyber snooping operation reminiscent of the Stuxnet worm and billed as the world’s most sophisticated computer malware is targeting Russian and Saudi Arabian telecoms companies.

Cyber security company Symantec said the malware, called “Regin”, is probably run by a western intelligence agency and in some respects is more advanced in engineering terms than Stuxnet, which was developed by US and Israel government hackers in 2010 to target the Iranian nuclear programme.

The discovery of the latest hacking software comes as the head of Kaspersky Labs, the Russian company that helped uncover Stuxnet, told the Financial Times that criminals are now also hacking industrial control systems for financial gain.

Organised criminals tapping into the networks that run industrial companies, alongside the development of the latest online snooping worm, are signs of the increasingly sophisticated nature of cyber attacks.

“Nothing else comes close to this . . . nothing else we look at compares,” said Orla Cox, director of security response at Symantec, who described Regin as one of the most “extraordinary” pieces of hacking software developed, and probably “months or years in the making”.

However, a western security official said it was difficult to draw conclusions about the origins or purpose of Regin. “It’s dangerous to assume that because the malware has apparently been used in a given country, it did not originate there,” the person said. “Certain states and agencies may well use tools of this sort domestically.”

Symantec said it was not yet clear how Regin infected systems but it had been deployed against internet service providers and telecoms companies mainly in Russia and Saudi Arabia as well as Mexico, Ireland and Iran.

The security software group said Regin could be customised to target different organisations and had hacked Microsoft email exchange servers and mobile phone conversations on major international networks.

“We are probably looking at some sort of western agency,” Ms Cox said. “Sometimes there is virtually nothing left behind – no clues. Sometimes an infection can disappear completely almost as soon as you start looking at it, it’s gone. That shows you what you are dealing with.”

Meanwhile, Eugene Kaspersky, chief executive of Kaspersky Labs, warned that the computer networks that control energy plants and factories are becoming targets for organised crime gangs armed with skilled hackers. He said there was evidence of “more and more very targeted attacks” of the networks that run industrial companies.

The attacks go beyond recent data breaches at US bank JPMorgan and US retailer Home Depot, in which criminals sought credit card details or personal data to attempt false transactions. Mr Kaspersky said criminals have used hacking for everything from bypassing security at ports to stealing grain from a Ukrainian factory by adjusting the digital scales to read a lower weight.

The most public incident of cyber industrial crime was exposed when Europol smashed a drugs ring last year that was hacking into the control systems of the Belgian port of Antwerp, to move containers holding drugs away from the prying eyes of customs inspectors.


London ranked most expensive city globally, Savills report shows

Collage of Hong Kong and London skylines

If there is one guaranteed conversation in London pubs and bars, it is the growing ire of residents over property costs in the country’s capital.

A report published on Tuesday suggests that they have a lot to moan about. Rising rents and a strong pound have made London the world’s most costly city to live and work in, according to Savills, the estate agent.

The UK capital knocked Hong Kong off the top spot for the first time in five years, according to an analysis of the most expensive metropolises for employees.

Living and working costs in London have risen almost 40 per cent since 2008 in dollar terms. Of the top 12 cities, only Rio de Janeiro, at 86 per cent, and Sydney, up 58 per cent, have risen more over the period.

“I don’t think it’s desirable necessarily to be the most expensive city to occupy, but on the other hand, you probably wouldn’t be the most expensive city if you weren’t also the most desirable,” said Yolande Barnes, director of world research at Savills.

“You can look at it two ways. From an investor’s point of view, it means their returns have grown nicely. But, as an occupier, looking to rent in the city, clearly it makes London less attractive compared with other cities employers might look at.”

London real estate costs per employee grew in US dollar terms by 5.3 per cent over the first six months of the year to $121,000 a year. Hong Kong was second at $116,000, down 5.6 per cent, according to the twice-yearly survey.

The UK capital’s property market has been the subject of debate in the country, prompting Bank of England governor Mark Carney to introduce limits on mortgage borrowing.

There are many reports ranking the world’s most expensive cities. The Savills report includes costs associated with renting and occupying residential and commercial space, but not food, travel and other expenses.

In contrast, a report published earlier this year by the Economist Intelligence Unit, which compared more than 400 individual prices across 160 products and services in 140 cities, showed Singapore overtaking Tokyo as the world’s most expensive city. London was ranked 15th.

Elsewhere, New York, Paris and Tokyo made up the rest of the top five, with emerging market centres such as Moscow, Dubai, Shanghai and Mumbai each making the top 12.

The Savills index measures the total costs per employee of renting, living and working space on a US dollar basis in 12 world cities.

Fluctuations in living and working costs reflect not only the strength of a city’s residential and office rental markets and occupier taxes and costs, but also the impact of fluctuating exchange rates on the cost of doing business globally.

Savills’ top 12 most expensive cities to live and work
 City  2014 rank  Annual cost/ employee June 2014  Change Jan-June ($)  Change since 2008 ($)  2008 rank
 London 1 $120,568 5.3% 38.7% 5
 Hong Kong 2 $115,717 -5.6% -0.4% 1
 New York 3 $107,782 -1.7% 18.1% 4
 Paris 4 $105,550 -0.6% 5.0% 2
 Tokyo 5 $76,211 3.6% -22.7% 3
 Singapore 6 $74,890 -1.2% -1.0% 6
 Moscow 7 $70,499 0.2% -5.1% 7
 Sydney 8 $63,630 5.5% 57.7% 9
 Dubai 9 $52,149 25.1% -16.0% 8
 Shanghai 10 $43,171 -1.5% 24.6% 11
 Rio de Janeiro 11 $32,179 6.7% 85.6% 12
 Mumbai 12 $29,742 4.9% -20.8% 10

By the end of June, sterling had reached a six-year high against the dollar, as investors bet on the likelihood of the Bank of England becoming the first leading central bank to raise interest rates.

Savills, meanwhile, attributes Hong Kong’s fall in the rankings to a dip in local property prices – one of a number of leading cities to have seen either modest price growth or small falls in dollar terms, as market activity turns to “second-tier” cities.

“US cities like San Francisco, LA, Chicago and Miami are strong,” said Ms Barnes. “In Europe, there is more reluctance to invest because of euro risk, but Dublin and Berlin look good. Elsewhere, Jakarta and Dubai spring to mind – with a different risk profile – while Melbourne and Toronto look safer, if less exciting.”

She added that the lower level of rental price growth in big cities meant currency fluctuations produced some of the biggest changes in the rankings. “For multinationals looking at their local costs, it is this which is likely to exercise them more than property markets over the next year,” she said.

However, Hong Kong remains comfortably the most expensive in the world for real estate – with average prices still 40 per cent higher than in London. London is also still some way off the live/work accommodation costs record, set by Hong Kong in 2011 at $128,000 a year.

Housing costs in Hong Kong doubled between 2008 and 2013, as record low interest rates combined with a fast-growing economy and strong demand from Chinese buyers.

However, last year the government took a number of steps to cool the market, such as increasing stamp duty for non-resident buyers and tightening lending rules on mortgages.

That caused a drop in prices for much of the last 12 months, although they have been creeping back up over the summer to post fresh record highs.

As the Hong Kong dollar is pegged to its US counterpart, the cost of living in the former British territory is not subject to the same currency fluctuations as most other parts of the world. Inflation in Hong Kong has also been running much higher than in the west.

Last year consumer prices rose 4.3 per cent, while the economy grew 2.9 per cent.

US alarmed by prospect of Scottish ‘Yes’ in independence vote

A Yes vote for independence would be an economic mistake for Scotland and a geopolitical disaster for the west, senior US figures – including Alan Greenspan – tell the Financial Times as Washington wakes up to the chance that its closest ally could break up this week.

Having assumed for months that No would win comfortably, Washington has reacted with alarm to opinion polls showing that Thursday’s referendum is going down to the wire.

“We have an interest in seeing the UK remain strong, robust and united,” said Josh Earnest, the White House spokesman.

Mr Greenspan, former chairman of the US Federal Reserve, said the economic consequences of independence would be “surprisingly negative for Scotland, more so than the Nationalist party is in any way communicating”.

“Their [nationalist] forecasts are so implausible they really should be dismissed out of hand,” said the normally circumspect Mr Greenspan, noting the pace of decline in North Sea oil production.

Despite Nationalist claims to the contrary, he said there was no chance of London agreeing to a currency union. Differing fiscal policies would also cause any Scottish attempt at using the pound regardless to “break apart very quickly”.

“There’s no conceivable, credible way the Bank of England is going to sit there as a lender of last resort to a new Scotland,” said Mr Greenspan.

Many US officials combine ancestral roots in Scotland and knowledge of the Scottish Enlightenment’s influence on the US constitution with strong emotional ties to the UK, an ally the US has fought alongside for 100 years.

“Like many Americans, and given that my name is Robert Bruce, I have an admiration for the Scots, their heritage, and their role in US and world history,” said Robert Zoellick, the former deputy secretary of state and World Bank president.

“But a break-up of the UK would be a diminution of Britain and a tragedy for the west just at a moment when the US needs strong partners. I strongly suspect it would not work out well for the Scots either.”

Senator John McCain, a former Republican presidential candidate who regards the UK as Washington’s most important military and intelligence partner, said he was reluctant to comment on an internal issue in another country.

“But I don’t see how it could be helpful, not just as far as intelligence ties are concerned, but to the unique military relationship as well,” he said.

The US is especially worried that a Scottish Yes vote could increase the chances that the rest of the UK might vote to leave the EU, which US officials believe would make Britain a much less potent partner.

“That is our nightmare – Scottish independence followed by a British exit from the EU,” said a senior administration official.

Former Federal Reserve Chairman Alan Greenspan Interview...Alan Greenspan, former Federal Reserve chairman, sits for a photograph following a Bloomberg Television interview in Washington, D.C., U.S., on Thursday, Dec. 6, 2012. Greenspan said "the Bank of England is in good hands," when asked about the transition from the leadership of Mervyn King to Mark Carney. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Alan Greenspan

Another big issue for the US would be the uncertainty surrounding the future of Britain’s nuclear deterrent in the event of Scotland becoming independent.

The US would like Britain to remain a nuclear power, but some officials worry about the ability of a smaller UK to sustain other conventional forces, while also paying for the nuclear weapons.

Foreign policy thinkers also fear that a Scottish Yes vote would embolden Russia – especially in Ukraine – even as it weakened the UK and thus Europe’s ability to mount a united response.

“Russia could argue that separatist movements are actually perfectly legitimate, whether in Crimea or eastern Ukraine,” said Ivo Daalder, former US ambassador to Nato and now president of the Chicago Council on Global Affairs. “Of course, a democratic process that takes two years is not the same as an annexation and a fake referendum.”

US banks face $100bn liquidity shortfall

The largest US banks have a $100bn shortfall to make up in order to meet new liquidity rules designed to avert a future crisis, the Federal Reserve has warned.

On Wednesday, US regulators finalised details of the liquidity coverage ratio, which will require banks to hold a certain amount of assets that can be quickly turned into cash – to provide protection in the event of a future credit crunch.

If the ratio were applied now, banks subject to the new measures would have to hold a total of about $2.5tn in high-quality liquid assets over a 30-day stress period, Fed officials said – which is $100bn more than they currently have. Assets considered to be of requisite quality include Fed reserves and Treasury securities.

This liquidity rule, which is the US version of the global Basel III reforms aimed at preventing a repeat of the financial crisis. It will apply initially only to the largest US banks. But the Fed anticipates proposing a plan that would extend the measures to the US holding companies of the largest foreign banks, which have to be established by July 2016 under new Fed rules.

“As the financial crisis demonstrated, most of our largest and most systemically important financial institutions did not hold a sufficient amount of high quality liquid assets to independently withstand the stressed market environment,” Fed chairwoman Janet Yellen said. Lack of assets to meet outflows was a key reason Lehman Brothers collapsed.

Compliance with the US liquidity rule will be phased in, with banks having to fully meet the requirements by January 1, 2017, a more stringent deadline than Basel, which gives banks until January 1 2019.

In most respects, the Fed plan largely mirrors the initial proposal issued in October – one exception being the final rule that allows the biggest banks to phase in the daily reporting requirements and calculate their liquidity coverage ratio on a monthly basis during the transition period.

Regulators also broadened the categories of certain debt and equity securities that can be counted as high quality liquid assets. Any investment grade corporate debt security issued by a non-financial sector company that has a proven liquidity record can be included in a certain category of liquid assets.

Local governments were one of the groups that expressed serious concern about the liquidity rule because it did not count municipal bonds as high quality liquid assets that banks would want to hold. US cities warned they would face a crunch on budget to pay for schools, roads and sewage systems if the liquidity rule was approved.

Although the final rule still excludes muni bonds, the Fed staff recommended establishing a new proposal that would allow the most liquid muni bonds to be included as high quality assets.

In another change, the final rule does not apply to certain nonbanks that have been designated as systemic risks by the Financial Stability Oversight Council, such as AIG and GE Capital. A different liquidity rule is expected to be issued for those companies.

In a separate move, officials also proposed new rules on margin requirements for swaps that are not cleared by a central counterparty that differ from the initial 2011 plan to take into account liquidity costs for market participants. It also largely reflects recommendations made by the global Basel Committee of regulators in September 2013.

Regulators said on Wednesday they hoped the plan provided incentives for such transactions to be cleared.

As part of global reforms in the derivatives markets, many kinds of swaps are required to be cleared but certain tailored swaps were not included in that mandate, leaving regulators worried about loopholes.

The new proposal sets a minimum initial margin requirement for a covered swap entity involved with a counterparty that is a financial end user or swap entity, which is much more stringent than the standards for cleared swaps.

Five things to know about US bank liquidity rules

(1) Banks must hold high quality liquid assets equal to projected stressed cash outflows over a 30-day period.

(2) Requirement applies to the largest US banks. Regulators expect to issue a similar rule for the biggest foreign banks with US operations in the future.

(3) Banks must be fully compliant by January 1 2017, two years before the Basel III deadline.

(4) Municipal bonds are excluded from the definition of high-quality liquid assets but regulators are working on a proposal to include the most liquid muni bonds.

(5) The rules do not apply to nonbanks designated as posing systemic risks by US regulators. Officials will formulate a separate liquidity proposal for systematically important institutions.

Goldman gives junior bankers 20% pay rise

The Goldman Sachs logo is displayed at the company's booth on the floor of the New York Stock Exchange in New York, US, on Friday, July 19 2013

Goldman Sachs is increasing salaries for junior bankers in the US by about 20 per cent in an increasingly frenetic war to attract and retain young graduates.

Some first-year employees will see their salaries increase to about $85,000, according to people familiar with the matter. The change does not affect bonuses, which can equal the salary. It does not affect every new recruit, and is not being rolled out internationally.

Wall Street banks, which have been trying to rein in overall remuneration costs, have come under pressure to improve salaries for their junior staff. Rivals, including Morgan Stanley, have already moved to increase base pay.

Many bankers complain that, while they may be receiving a large bonus in deferred stock, they need cash to spend on expensive Manhattan rents.

The move comes amid a broader reappraisal of pay and conditions at large banks, which are having to deal with private equity firms poaching their staff, Silicon Valley technology companies looking for talent and the death of a Bank of America intern who was working long hours.

BofA announced last month that it would hire more junior staff in an attempt to improve the work/life balance of its bankers. Several banks have attempted to limit work at weekends. Goldman has taken this approach and warned of disciplinary consequences for bankers who breach the new rules.

Last October Goldman announced the findings of a “junior banker task force” set up to improve conditions.

Its proposals included hiring more entry-level employees, called analysts, and providing additional opportunities for these analysts to spend time with their managers and clients.

“The goal is for our analysts to want to be here for a career,” said David Solomon, Goldman’s co-head of investment banking. “We want them to be challenged, but also to operate at a pace where they’re going to stay here and learn important skills that are going to stick. This is a marathon, not a sprint.”

In 2012 Goldman ended two-year contracts and bonuses for analysts at its investment banking operations. The move to give these junior bankers full-time employment contracts from the start was designed as a way to prevent them from being poached by hedge funds and private equity groups.

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