extravagant year of investment bankers | eFinancialCareers
Now that we are in the fourth quarter, bonus expectations can be calibrated. If you work in an investment banking division (IBD) of a bank, in mergers and acquisitions, or in the equity capital markets, you will likely calibrate your expectations to a very high level.
Jefferies became the first major US bank to release third quarter results yesterday, and they were great. As the blurry graph at the bottom of Jefferies CEO Rich Handler’s Instagram post clearly shows, below, something special has happened to Jefferies’ investment banking income over the past 18 months, and the magic doesn’t seem to wear off.
Jefferies’ third quarter runs until the end of August. Its investment banking income doubled year over year, with strength across all ECM, DCM and M&A sectors. It’s not over either. The pipeline for the fourth quarter is also at an all time high and Handler and Chairman Brian Friedman said they are confident the good run will continue: “We believe the global economy continues to be in a period of recovery. and uptrend, so we expect to see sustained and continued activity in M&A and capital markets. “
Jefferies isn’t the only bank to feel love. The Financial Times reported this morning that the charges exceeded $ 100 billion in the first nine months. In ECM and M&A, they are at their highest level since the records began 20 years ago.
The bonuses will surely be higher. The question is how much. But before bankers start looking for bigger homes or better cars, it’s also worth considering the other story of the day – the end of the SPAC boom. Financial News yesterday quoted anonymous bankers who believe that up to 30% of specialist acquisition companies will struggle to find anything to buy over the next 18 months. Valuations are “just too high,” one said. “It’s a huge struggle to get funds for the transactions, the buyouts are very high and people are starting to bemoan the fact that the PSPC market is in terrible shape.”
On that basis alone – before even adding in supply shortages and the resulting shift to “cope” instead of thriving for some businesses – 2022 might not be so good. Since bonuses are paid with a forward-looking perspective, this could be a factor when banks are deciding their size. Bonus expectations should therefore be calibrated accordingly, and if you get a particularly large bonus you may want to put it aside for more difficult times to come.
Separately, the Financial Times ran a lengthy article on what went wrong in Goldman Sachs’ quest to conquer China. After decades of cultivating Chinese connections and taking 100% control of its mainland franchise last year, Goldman is expected to thrive in China. But the FT notes that its big push in China came at a time when the Biden administration is taking a surprisingly strict stance in China and Beijing is cracking down on Chinese companies. $ 1 trillion has been wiped off the valuations of China’s largest listed companies.
Despite the headwinds, Goldman is supposed to hire. – It is committed to doubling its workforce at its former joint venture partner Gao Hua to 600 people. But insiders say he has already done far too many external recruitments in the country. According to an insider, up to a third of the Chinese investment banking team are new hires. “It’s totally anti-Goldman, massive culture shock,” says a former Goldman banker there.
During this time…
It was a bad year for new registrations in Hong Kong. “This year is kind of a washout,” said a Hong Kong banker. (Financial Times)
UBS, Credit Suisse and JPMorgan have transferred bankers from Hong Kong to Shanghai and Beijing. (Bloomberg)
Verition Fund Management is opening in Singapore and considering an office in Hong Kong. (Bloomberg)
This year’s booming CLO market (and booming CLO job market) will likely be followed by a much quieter year 2022. “We believe a lot of the show we’re seeing right now is before the Libor transition which will take place at the end of the year.” (Bloomberg)
Crispin Odey is making a comeback. His European Odey Inc. the fund grew 100% until September. This was not only due to his investment in Oxford Nanopore Technologies Plc, which debuted on the market this week. (Bloomberg)
Bank of America wants to hire another 10,000 people from low- and moderate-income communities by 2025. They can now also get into operations and technology. (Bloomberg)
Bank of America says the carbon offsetting market could grow 50 times bigger. (CNBC)
Former Barclays CEO Antony Jenkins’ fintech provided some of the technology to JPMorgan’s digital bank. (Financial news)
“We have wide feet, designed to walk 30 miles a day after the caribou migrate. We shoved them into shaky stilettos and wonder why we have terrible corns and paralyzed knees. Same thing with our psyche and our politics. (Psychology today)
Photo by Matthew LeJune on Unsplash
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