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Has Macquarie lost its magic?

Is the world’s love affair with Macquarie Group about to come to a bitter and twisted end?

The pin-up boy of Aussie finance, which is currently on a hiring spree in the US and Europe, seems to be taking on the role of spoiled brat as its profits and share price tumble, and worries grow as to whether its ‘millionaire factory’ banking model is fair dinkum after all.

Macquarie announced its results last week, with new chief executive Nicholas Moore warning that its 16-year run of profit growth is about to hit the buffers.

With most of its eggs in the infrastructure basket, the bank is facing fierce competition for infrastructure assets and higher financing costs. Eyebrows have also been raised over its tendency to take from one area of the business to pay dividends in another.

The difficulties could hit Mac bankers firm in the pocket as the firm’s bonus pool starts to shrink. Moore, for example, must make do with a mere AU$24.8m this year, down from AU$32.9m in 2007.

Is Big Mac about to be fried? Let us know below.

Comments (12)

  1. I’d prefer to be working for Macquarie right now than almost any other bank you care to mention. It’s been only lightly burned in the credit crunch and is in the one business that’s showing good long term growth – infrastructure. Ok you might not make as much as last year, but you’ll make a hell of a lot more than at Merrill or UBS.

  2. Honestly – who writes this rubbish? The mere fact bonuses are going to be down this year is hardly evidence of a bank in crisis – Macquarie has shown far less falibility than some of the major international houses such as UBS. The industry is in a down cycle; it’s happened before and it will happen again. Making big statements in a short article with no analysis whatsover does the author no credit.

  3. All banks go through blips and that’s all this is

  4. Rob, ohhhh, sorrrrrrry, can we not say a bad word against the untouchable Macquarie!? Facts are facts – they results were down – they share price has gone down too.

  5. Their result is probably the best of any large investment bank in the world and that is testimony to their risk management and like it or not ability to see the credit crunch earlier than just about everybody else….a write down of less than $300 million – the other global banks and many of their staff would give their jobs for that!!!!

  6. “The pin-up boy of Aussie finance, which is currently on a hiring spree in the US and Europe, seems to be taking on the role of spoiled brat as its profits and share price tumble”

    Jeez, what drivel. Profits tumble? Didn’t Macquarie just announce a record profit? Hello? How is that tumbling? What rubbish.

    Yes they did acknowledge that it may be tough to repeat that performance next year, but hey, who has handled the past 12 months better – UBS, Bear Sterns, HSBC, RBS, Fannie Mae, AMBIAC or Macquarie? huh?

  7. ‘the world’s love affair with Macquarie Group’ = Obviously written by an Australian without a passport…. Step outside of this island and Mac are hardly known; and not even in the top 40 IB’s globally!
    Walk the streets in the major finance capitals in the world and ask a random about Macquarie – they’ll probably direct you to Mcdonalds. Ergo they are going to fall over when first expanding in new markets. As a headhunter I love Macquarie – they provide me with frustrated / bullied candidates for my Global clients.

    Headhunter – Finance Reply
  8. Is the world’s love affair with Macquarie Group about to come to a bitter and twisted end?
    Compare Macquarie with other banks, itwould be silly to think that Macquarie Group is doom or end. If you look at the US banks, EUR banks, and Aussie Banks, which Bank has more successful during mortgage subprime or financial crisis. Macquarie is posted 23% profit*, which Bank does actually deliver those kind of profit during this time of crisis?

    Ask yourself this question.

  9. I would like to get the MA Headhunter’s contact details who like the Bullied Macquarie Talent. I know of one who would love to make a change

  10. I would love to speak with you about a Bullied MacQ employee who would be a real asset to any operation and would relocate for the right oppotunity. Please forward your contact details to larry@mchann.net

  11. Whilst a record profits, growing FUM the model is dead in light of out of control inflation and higher funding costs.

    Investors will think twice when it comes to this financial engineered layered approach to investing in infrastructure assets. Have a look at the MQG satellites performance – shockers!!

    Unfortunately, this model, like all models at some point becomes a commodity, and unfortunately for MQG as a leader, the rest of the pack has caught up which makes it harder to pull off the same tricks.

    MQG is just a another name for Private Equity and that has hit the wall.

    As for comments re “bullied employees”, yes I have heard that and from my experience there model through testing attracts “like minded” for all the wrong or right reasons.

    Agreed, get out and look around and see what is about .. there’s better.

  12. Jason, I’m not convinced. Sure the current economic climate does the MQG model no favours, but unless you believe that credit will always be tight from now till eternity or that inflation will always be high from now till enternity, then I don’t think you can say the model is dead.

    Like any company facing change, MQG will have to adopt. I can’t see why they would roll and die rather than work at inventing new business models. Everything that is new eventually becomes old as the pack catches up, that’s life – but the firms that can adopt to change are those that survive and prosper. Nothing in MQG’s history suggests that they won’t be able to do it this time if they need too.

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