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Late Lunchtime Links: A finance job where extremely high pay for individuals is completely justified

Bankers are overpaid. After months of study, the UK’s Parliamentary Commission for Banking Standards said as much this week. It also said that banks are incapable of remedying this realty themselves and must therefore somehow be compelled to pay less – or simply to defer bonuses over a ten year period.  

This may all be true. Individual bankers are notoriously dependent on their so-called ‘seat’ or ‘franchise’ to make money – in the era of cross-selling and economies of scale, how much value does one M&A banker or salesperson really add?

While bankers have reason to question their worth, the same can’t be said for venture capitalists. New research by academics at Harvard and Carnegie Mellon and published on the site PEHUB has found that individual venture capitalists are five times more important at generating value than the firms they work for.

The study looked at a database of venture-backed startups that were founded between 1987 and 2005. It found that regardless of whether they moved firms, some senior venture capitalists always outperformed. This, it attributed to, “persistence” – people who get big exits, can get big exits no matter where they’re employed.

“Some investors can just look at 10 strong possibilities and say, ‘That one.’ Some can just smell it a little better,” said Matthew Rhodes-Kropf, an associate professor at Harvard Business School.

Equally, the study found that venture capital duffers are duffers no matter where they work. Someone may want to perform similar research for investment bankers.

Meanwhile:

Morgan Stanley is making ‘significant’ redundancies in its commodities business. (Financial Times) 

Morgan Stanley is actually making 30 commodity traders redundant and exiting power and natural gas trading in Bulgaria, the Czech Republic and Poland. (Bloomberg) 

Barclays, RBS and Lloyds are having to raise an additional £27bn. Jobs may go as a result. (eFinancialCareersUS) 

Did George Osborne intimate that RBS will be closing its investment bank altogether? (Telegraph) 

It is now possibly to increase brain plasticity with a self-administered electric shock. (Nature)  

Women prefer men with masculine faces for short term relationships only. (Science Daily) 

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