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Morning Coffee: What you think you know about investment banking is all wrong. Computers earning $300m+

investment bank league tables

Forget Leicester City (and the other, lesser, Premier League teams whose names I can’t recall), investment banks all want to be top of the league. Being seen has highly-ranked brings in more business and when it comes to these deals, the bigger the better.

Investment banks “live and die” by these league tables. For highly-rated investment bankers, this has been a boon – any slide down the league tables means that a firm will re-invest in people to try and play catch up, or raise pay to keep up with the competition.

Or they could try a different tactic – spinning the rankings. Regulators have questioned the veracity of these league tables. Investment banks work on deals that bring in no revenue – or even a loss – simply to gain credit and move up the rankings. Or, they choose to present whichever of the many league tables available that cuts the data in such a way that puts them in a favourable light.

Clients are losing faith. They’re “sick” of league tables being used in pitches that invariably show the investment bank as being top, or near the top, of the pile. Some, are bypassing banks’ advice altogether.

So far, investment banks themselves have kept silent.

Separately, following on from the UK hedge fund manager rich list, Institutional Investor’s Alpha has unveiled its ranking for the U.S industry. The usual suspects – Citadel’s Ken Griffin, Bridgewater’s Ray Dalio, Renaissance Technology’s James Simon, Millennium’s Izzy Englander and Appaloosa’s David Tepper – make up the top five, all hauling in over $1bn last year.

But the computer’s are taking over. Hedge fund managers are predicting the inevitable demise of human traders, and this seems to be under way – half of this year’s rich list run quantitatively-driven hedge funds.

What’s more, while these are obviously the guys doing well amidst the hedge fund bloodbath – they’re not bullet proof – and are still earning hundreds of millions of dollars. “Among 2015’s top hedge fund earners are five men who actually lost money for some investors last year but still made handsome profits because their firms are so big,” said the rankings.

Meanwhile: 

Credit Suisse has fired 20 traders a day since March (Financial News)

An ugly quarter, but more cost-cutting to come at Credit Suisse (Bloomberg Gadfly)

Cost-cutting has boosted Credit Suisse’s share price (Financial Times)

The head of financial technology investment banking at UBS is going into private equity (Bloomberg)

Deutsche Bank re-hires Patrick Campion to lead U.S. wealth management (Deutsche Bank)

“In the office of the future, people will get to work, sit down, and pop a pill to help them focus,” sugary caffeine pills or the secret to focus at work? (Bloomberg)

Eric Varvel, the former head of investment banking at Credit Suisse, will now lead its asset management division (Reuters)

HSBC has promoted its head of equity trading to lead EMEA equities. The job has been open since the summer (WSJ)

Wells Fargo has poached Shaun Dreyer from BAML to lead loan syndications (Reuters)

Cargill’s leadership team moving out of ‘executive chateau’ (Quartz)

Revolving door at Goldman Sachs in Australia: David Acton, its head of equities, has left (AFR)

“Think that slavery — it took 25 years to defeat slavery. That is a lot longer than four years,” Heidi Cruz, who took time out from Goldman Sachs to help with her husband Ted’s failed presidential campaign, chooses her words.

Six-hour work days coming to the U.S? (Bloomberg)

Comments (1)

Comments
  1. The article describes “all we knew” about investment banking… no surprises here, no insight. OK for people unfamiliar with IB but please stop using titles that are lies! You just lost one reader

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