Has Donald Trump been kind to M&A bankers or hasn't he?
It's a moot point: for all the froth about record banking deals in the first 100 days of his presidency, Goldman Sachs, J.P. Morgan and Morgan Stanley all saw their revenues decline year-on-year in the first quarter. Only Bank of America, with its Q1 record fees and 28% revenue uplift seemed to blow the lights out. The big U.S. banks can therefore be forgiven for hesitating before stocking up on new M&A talent.
International banks, who are still struggling to get a foot in the market, are a different matter.
Headhunters say second tier banks - mostly the European and Japanese houses who lack a solid presence in the U.S. market - are competing for senior advisory talent on Wall Street, and bidding up rainmakers in the process.
"They're looking for people who can get the deal," says Jeannie Branthover, managing partner in DHR International’s global financial services practice. "For some of these firms - which have had regulatory issues, they're having to pay 30% to 40% more to get people on board."
Deutsche Bank has said it wants to "deepen" its penetration of the U.S. market. The German bank hired three senior healthcare bankers since the start of the year, based both in New York and San Francisco as it makes revival of its U.S. business a priority. Nomura is also going for M&A growth in the Americas (again) and has said explicitly that it wants some more bankers to facilitate that. Mitsubishi UFJ is also said to be hiring on Wall Street, as is Jefferies and UBS and Cantor Fitzgerald. The list goes on.
"The second tier banks and the boutiques are active in M&A hiring," says Michael Karp, CEO of search firm Options Group. "They can be attractive because their base salaries are pretty high."
The U.S. M&A market is owned by the big U.S. banks. Dealogic says Goldman Sachs, J.P. Morgan, Morgan Stanley and Bank of America accounted for a combined 38% of the market by revenue in the first quarter, with European banks and international banks (and Citi) vying for the remainder. Deutsche Bank and UBS ranked outside the top 10.
As senior banker hiring picks up, recruitment of juniors is sure to follow. Junior ranks are already depleted by exits to tech firms and private equity, and Branthover says banks are less well to "flex" existing young staff than they used to be. "There's a lot of pressure not to overwork these young people now," she says. Because of this, banks may need a bigger-than-usual infusion of new blood into their associate classes later this summer: "You're going to see more hiring out of MBA programs this year," Branthover predicts.