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Morning Coffee: The most competitive sector in finance now. Is it finally getting better for investment banks?

hedge funds MBA

Private equity is fast-becoming the destination of choice for anyone wanting to work in the financial sector. More people apply for jobs on the buy-side than anywhere else, junior investment bankers are jostling for places and now its appeal has increased for MBAs.

The number of MBAs listing private equity as their career choice has increased by 6% this year, according to analysis by Training the Street cited in Bloomberg. Despite the job cuts and diminished recruitment of MBAs, the appeal of large investment banks has also increased – both boutiques and bulge brackets – and MBAs are also keen on working for a start-up, it says.

Hedge funds, however, are now considered too much of a risky bet for MBAs carrying huge amounts of student debt. Private equity firms – by contrast – rarely fire people and are considered a safe option.

This chimes with this year’s London Business School MBA employment report – for the first time ever the same number of students from the school ended up in private equity as investment banking – despite the fact that PE offered £5k ($7.3k) less on average. Over time, of course, private equity can be much more lucrative. Pay can increase rapidly after a few years, particularly when carried interest comes into play.

Separately, mid-sized investment bank Jefferies always reports its quarterly results slightly before its larger U.S rivals and is therefore viewed as something of a bellwether for the industry.

If this is the case there’s reason for (some) optimism. Its fixed income business, which typically focuses on high yield bonds, was up sharply year on year and QoQ to $238.5m, equities were also up and investment banking revenues improved on a relative dismal first quarter.

Is it getting better? Not really. “You can’t say it’s all clear and the worst is over, but you can say there’s more stability and more natural client flow,” CEO Richard Handler told Bloomberg.

Meanwhile:

Credit Suisse has hired Nomura’s star banking analyst Jon Peace and two others. (Financial Times)

Credit Suisse uses its stock for employee bonuses more than most other investment banks. It’s tanking, and investment bankers are not happy. (New York Times)

“Hung-over after a night out with strippers, Kerviel had made a mistake and lost €100,000. His boss tells him to relax,” no stereotypes at all in L’Outsider. (Financial Times)

Sanjay Valvani, the hedge fund manager accused of a $32m insider trading scheme, has been found dead in an apparent suicide (NY Post)

“I did not exceed myself”, “I did not co-ordinate with my team”, “I lacked courage”. Chinese bankers were spanked and then had their heads shaved for underperforming during a training day. (BBC)

UBS has warned clients that it may have trouble executing trades after Brexit vote. (WSJ)

“London is one of the best financial centres in the world due to the people, so the people can move. [The] skills will move from London to the European Union and the eurozone, and therefore they can improve the financial sector of the eurozone.” (BBC)

RBS is firing 900 back office and IT employees. 100 roles will be going to India. (Reuters)

Lori Beer replaces Mark Ashton-Rigby as CIO of J.P. Morgan’s corporate and investment bank. She will oversee 10,000 employees. (WSJ)

Hedge fund fight nights are alive and well in Hong Kong. (Bloomberg)

Crackberry addicts remain: IT consultant refuses to communicate with his wife on anything but Blackberry Messenger. (Bloomberg)

Photo: Robert Daly/Getty Images

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