GUEST COMMENT: Behind the scenes of the investment banking redundancy programmes

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Meanwhile, backstage

Meanwhile, backstage (Photo credit: Wikipedia)

Banking layoff programs are deliberately cloaked in mystery. It serves the managers who practice the dark arts of mass firings to keep it this way. The less the populace know about decisions being made by the senate, the better.

Now, however, I am able to lift the petticoat for your benefit. Having spoken to friends in banks and strategy consultancies and dispensed quantities of alcohol, I am now privy to some of the machinations that take place in the executive suites.

At their simplest, investment banking redundancy programmes are a battle between investment bankers and strategy consultants. This is a rivalry which goes back to university. At my own elite institution the most ambitious and intelligent headed straight for a career in investment banking. The less ambitious “second quartile” students settled for strategy consulting.

Now, the B-team is getting its own back.

Some banks (HSBC, Lloyds and RBS, for example) will hire in external strategy consultants to direct the knife. Others simply have their own “internal corporate strategy groups.” These groups decide how management should allocate resources. And they tend to be ex-management consultants.

The internal strategists read reports, crunch numbers on global banking markets, regulation and business trends. And then - like good little strategy consultants - they churn out decks full of PowerPoint slides with ideas about how to meet the obscure targets set by the Board, like the ever- malleable "return on equity." Wielding these figures and flow charts, the internal strategists propose the closure of entire desks and divisions.

The consultants would like it to end there. But they’re up against the A team and things aren’t that simple. Managing directors in investment banks have turned massaging figures into an art, as anyone who has seen a pitchbook can confirm. This is how they win deals after all. So they always play with a loaded hand against the bean counters and analytical nerds.

As a result, the sharpest top bankers will almost always find a way to re-write the script in a way which ensures that their team, and the colleagues upon whom they rely, will never get cut.

In conclusion, therefore, you are advised to seek out those rainmakers and align yourselves with them as soon as possible.

Ralph Smith is the pseudonym of a banker who has worked across a number of roles.