As we observed last week, something seems to be afoot in M&A at Bank of America Merrill Lynch. Last year, in seeming anticipation of a great revival in M&A activity in 2012, BAML hired up to 30 MDs in M&A in Europe. It couldn’t have got it more wrong. This year, global M&A has slumped to a three year low and European M&A is the worst it’s been since 2003.
Nevertheless, BAML appears to be steadfast in its determination to retain last year’s senior and expensive M&A hires. In light of the M&A slump, it’s apparently dispensed with 20% of its junior investment bankers instead.
Today, we are offered an insight into why this: M&A rainmakers cannot be rushed. Christian Meissner, head of M&A at BAML, tells the Financial Times that the bank now has, “the right people.” However, he cautions against expecting anything from them too soon: “M&A is a long-term relationship game and it takes three to five years to build that.”
The long-term-relationship argument against M&A redundancies is nothing new – it was being voiced by recruiters back in April. However, it doesn’t appear to have made much much difference over at Deutsche Bank, which is disproportionately cutting its investment banking MDs. Corporate finance and M&A have patchy revenue streams and a high cost base, explained Anshu Jain, Deutsche’s former fixed income trading CEO. Now that M&A businesses can no longer be subsidised by fixed income, Jain said costs in M&A will have to come down. And cutting MDs is the quickest way to achieve that. Meissner had better hope that Brian Moynihan doesn’t reach the same conclusion.
Equity sales and trading redundancies coming soon to Bank of America Merrill Lynch. (Dealbreaker)
Brevan Howard has hired Gerald Lucas, formerly a senior investment advisor at Deutsche Bank. (Bloomberg)
Kareem Serageldin, ex-global head of the CDO business at Credit Suisse, was arrested outside the US consulate in London as he tried to negotiate his surrender. (Bloomberg)
UBS’s global head of collateralised loan obligation trading has left the bank. (Bloomberg)
Nomura is dispensing with 30 people in its US equities division. (Businessweek)
You may not want to work in the interdealer broking industry: the market is shrinking and ICAP’s Michael Spencer thinks consolidation is coming. (The Times)
Daiwa is cutting jobs in Hong Kong. (Bloomberg)
HSBC is rumoured to be appointing Simon William Alexander, from Citigroup, as head of its corporate broking unit. (Financial News)
BAML has cut staff in Australia. Fewer than 10 people have been trimmed. (WSJ)
Morgan Stanley bank analyst Betsy Graseck says investment banks will be cutting bonuses rather than jobs as they endeavour to reduce costs this year. (Bloomberg)
Why it makes sense to hire duffers. (Stumbling and mumbling)
Bulldog on a trampoline. (Kid Dynamite)