Some ex-Lehman bankers have gone on to become Olympic cyclists. Far more are employed at one of two banks: Barclays or Nomura. Neither are looking great right now.
Barclays' investment bank had a good second quarter, outperforming most US banks and increasing revenues 14% year on year in the second quarter. In last week's conference call, Rich Ricci said the investment bank has been taking market share, that the pipeline is strong, that there are no planned job cuts and that the money that's been invested in expanding the bank is paying off. Similarly, Marcus Agius said there's no plan to jettison the universal banking model - implying Barclays won't be spinning off or slimming down its investment bank under the new CEO when he or she arrives.
However, there are doubters.
The Sunday Times reported that some of Barclays' biggest shareholders, including Schroders, have written to Agius urging him to seize the moment and change the strategy at Barclays. In particular, they're said to want him to reduce the banks' size and to cut pay. The Guardian also points out that it's not really for Agius to make assurances about the bank's strategy - it's for the new CEO to decide. Who's to say that whoever replaces Bob Diamond won't decide to cut headcount in areas like equities and ECM?
Ex-Lehman bankers in the US already appear to be losing patience. They were said to be keen to get rid of Bob Diamond if he didn't go voluntarily and are incredulous about Rich Ricci's attempts to restore Barclays' reputation.
Lehman bankers who went to Nomura can't be feeling any much more secure. As was widely reported last week, Kenichi Watanabe, the chief executive who has overseen its expansion since 2008, including the purchase of some of Lehman's European and Asian operations, is gone. Watanabe leaves an investment bank which ranks 15th globally in terms of revenues according to the Financial Times (17th in the EU, 48th in the US). He also leaves an investment bank which was unprofitable in the past quarter. Depressingly, Nomura's going for a 5% return on equity for its investment bank - in two years' time.
Worst of all, Watanabe leaves US and EMEA operations which the new head of wholesale, Atsushi Yoshikawa, says will need further restructuring. Analysts at Creditsights say this restructring is likely to involve 'further resource allocation away from EMEA' towards the US and Asia. In other words, it doesn't look good for Nomura's investment bankers in London. As a double blow, ex-Lehman bankers at Nomura have also lost the support of senior Lehman executive Philip Lynch, who's leaving as head of the Asian business.
The amount accrued per head for bonuses across Barclays is down 9% this year.
Nomura seems likely to cut bonuses substantially for 2012. For the moment, however, its senior bankers are simply being forced to tolerate 5 year deferrals.
Given that neither bank looks appealing, which would you choose, assuming you had the choice?