Local firms versus international investment banks. This topic certainly polarises banking enthusiasts. Historically, the global banks have been perceived as a more prestigious, glamorous career choice, with higher earnings potential than the big four domestics – ANZ, CBA, NAB and Westpac.
However, during the last five to 10 years I have seen an increasing number of bulge-bracket executives and jobseekers making the switch to the domestics. And the current crisis on Wall Street will make some jobseekers think twice before joining a large US or European outfit.
It is true that i-banks offer higher total remuneration, attributed mainly to the bonus component, but base salaries are comparable. In respect to other factors, such as culture, work/life balance and job security, the domestics are actually leading the charge.
Are you addicted to i-banking?
Many of the people I’ve spoken to recently on this topic say they are addicted to the competitive, fast paced, highly resourced environment offered by the global investment banks. They would never even consider a career in an Australian firm. Ultimately, the comparison really depends on your role, your stage in life and the type of working environment you desire.
Obviously the large IBs, such as Deutsche, Merrill, JPMorgan and Goldman, are part of global networks and offer the opportunity to be involved in correspondingly large and interesting international deals. The pace of change and the volume of activity in these institutions is phenomenal. Their culture is one of taking calculated risks and chasing margins, and their investment in IT systems and support resources is massive. The ease with which one can transfer to an overseas office of an i-bank, especially for those in their 20s or 30s, is very attractive. The domestics do have offices abroad but not on the same scale.
But there’s more to it than money
On the flipside, many find the pace of the investment banking world unsustainable. It impacts too much on family life and non-work commitments. I am aware of some highly respected ex-international investment bankers who have defected to an Australian bank for this reason. This has created a snowball effect where the legacy of these individuals attracts more mid-level staff. The teams that previously worked together in the global IB are recreated in the likes of NAB and CBA.
One of the most interesting differences between global and local firms is the focus on behaviour as a component of performance assessments in the domestic banks. Generally speaking, in the international firms, behavioural aspects are insignificant in comparison to revenue generation.
However, behaviour forms 50% of an employee’s performance assessment at CBA, for example, and directly impacts profit share. For some, this is an attractive culture. A number of female bankers I spoke to say this focus, combined with greater work/life balance, is very attractive. Westpac in particular seems to have a positive reputation in this area.
Forced to go local
Irrespective of a banker’s personal view on this topic, the reality is that events such as the Lehman Brothers bankruptcy and the Merrill Lynch takeover have meant jobseekers and returning expats have been forced to consider a role in the domestic banks.
There is a ‘no vacancy’ sign posted on the door of a number of international banks and many have been forced to cut numbers. Managers from two domestic banks confirmed to me that they are being inundated with résumés from expat bankers returning from offshore. Many who have taken this path are grateful for a job opportunity and pleasantly surprised by the career offering.
There are sectors of banking where the client base, culture, resources, technology and global operating platforms of global IBs cannot be matched. However, for other roles the domestic banks provide a better option and life balance.
I challenge you to keep an open mind when you make the comparison.
Edwina Hodgkinson is an independent training consultant specialising in financial markets. Her previous roles have included head of recruitment and careers at Macquarie Bank and head of human resources at Zurich Capital Markets.