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Further indications that investment bankers are overpaid

CNBC has produced a handy ranking of the S&P’s leanest companies based on revenue and profit per employee. It shows, as we have stated before, that investment banking is nothing special.

Ranked against the best in class from other industries, investment banking’s finest – Goldman Sachs – didn’t do too well last year.

As the graphs below show, it was beaten by the best performers in the leisure, food beverage and tobacco, energy, insurance, healthcare and materials sectors in terms of revenue per employee, and by even more sector leaders on profit per head.

Admittedly, 2008 wasn’t the best year for investment banks. But although Goldman’s 2006 figures ($2.6m revenue per head, $355k profit per head) show the industry in a better light, it still lagged many others even then.

Revenue per head in the most efficient S&P 500 companies, 2008

Revenue per head 2008

Source: CNBC

Profit per head in the most efficient S&P 500 companies, 2008

Profit per head 2008

Source: CNBC

(Incidentally, the figures quoted for Goldman above are different to those in a previous article. Those were derived from Wolfram Alpha and appear to understate the reality).

Comments (26)

Comments
  1. this is a very bold statement. you cant compare firms across industries just like that. e.g. investment banks dont have to invest heavily in fixed assets as hotels do. ROCE could have been better metrics (consultants will explain better), but again i think markets are more or less efficient. adjusted for risk returns in every industry should be in line in the long run. otherwise ibanks wouldnt have existed.

  2. Interesting analysis you have here.

    Of course these metrics are highly subjective. You can have a very small company (say 20 people) which is generating a lot of revenue…hence you get a large revenue per head. In fact this is exactly what is happening Host Hotels & Resorts. They are an asset management company!

    Nice try, Sarah.

  3. Investment bankers are NOT overpaid. If you consider how hard we worked at school and at university to get the job, how extra high quality and talented we are, what we get paid vs ordinary people is certainly not obscene, if anything I think we should be paid more.

  4. Is Goldman the next Host Hotels & Resorts?

  5. Ravinder cracks me up. That explains why we should be paid more than a doctor or even a nurse for that matter. I don’t think so – we’re overpaid monkeys. Some of us realise that though and don’t allow our egos to fool us into thinking we’re of a higher quality and more talented than non-bankers.

  6. I’m an overpaid Investment Banker – Sarah will you marry me:)

  7. @Ravinder

    Are they underpaid? Do they deserve a payrise due to their rare and in demand skills?

    It’s hugely overpaid, thats why we all work so hard to get into it.

  8. Ravinder cracks me up. Henry-wannabe.

  9. Pipe down, Ravinder. Investment Bankers aren’t the only people in the world who have had to work hard. And who actually refers to themself as “extra high quality and talented”? Were you able to keep a straight face when you wrote that? It sounds like something a needy little prom queen might write!

  10. Ravinder – lots of people went to University and have far more responsibility then you – e.g. Doctors.

    Most of you have far bigger ego’s then capability.

  11. Ravinder’s some wannabee whose dad worked the night-shift as a security guard and now can’t get over the fact he works in the same buildings his dad kept guard over!!
    Henry does a lot better. At least he’s for real.

    Merchant Banker Reply
     
  12. Ravinder is my king.

  13. I think you guys are too harsh. Even a pheasant needs birdseed.

  14. Guys, doctors are NOT higher quality than bankers. All that doctors have is their degree, that’s it. Whereas to get into front office banking you need to show excellence outside your degree – being the king of sports, arts, debating, student union or something similar on top, and to have shown initiative to have the perfect CV with vacations packed with good jobs. Only banking and high end consultancy (McKinsey) have consistently the best quality of people. Why anyone good enough would want to work for McKinsey instead for 50k is beyond me.

  15. ravinder, i am quality doctor, making good health in peoples since come to UK, thinking you are not remember hard work at lagos medical school many years spent. Please must be reconsidering of your views.

  16. From his comments it seems Ravinder is probably quite young. Give him a break: in years to come, he will look back on his remarks and cringe. Ravinder, go and get me a coffee…

  17. Ravinder – can you please learn to write in grammatically correct English?

  18. A rather pointless comparison, these measures do not indicate anything (1. the wrong matrices 2. comparing different sectors). COGS (for discussion purposes only; lets not get into the specifics about the bank’s cost structure) at banks will mostly be made up of people as “raw materials”.

  19. “ravinder, i am quality doctor, making good health in peoples since come to UK, thinking you are not remember hard work at lagos medical school many years spent. Please must be reconsidering of your views.

    NHS doc 1 hour ago”

    HAHAHAHAHAHAHA!!

  20. so ravinder is the king in arts and won the spelling bee at age 7 … which bank pays for that skills?

    hey, i saw how banking had consistently the best people last year and how great mckinsey’s asset light strategy worked for enron …

  21. Who knows who should be paid what?
    If you are not happy with your salary try to become an IB.
    If you are an IB take the money and run.

    Those complaining about the others making more money are losers.
    I’m not earning a lot and I’m not complaining.

  22. well said Froggy. absolutely spot on!!

  23. Is Ravinder the new Henry?

    Pythagoras Head Reply
     
  24. Ravinder – when did you last get laid?

  25. Banka, the question is: when did Ravinder get laid and not have to pay for it?

  26. Ravinder is still a virgin …
    what a loser
    And btw – the guy that said bankers are monkies and was spot on!

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