I worked in equity capital markets (ECM). It was fun while it lasted and it lasted 15 years in Europe and in Asia, so you could say I was lucky. Except, my time in ECM also fundamentally rewired my brain. When I stopped being an ECM banker I was a different person to the 22 year-old who joined from university. And that wasn’t just because I was older.
The thing with ECM is that you need to be 100% positive at all times. First, you need to be 100% positive to win the deal from the issuer: you need to convince them that you and your team are the best and that you will be able to execute a flawless IPO at $200 a share, even though the chance of doing this is no more than 50%. Then you need to be 100% positive to persuade the ECM syndicate desk that the stock has positive momentum, so that they can communicate this enthusiasm to clients – and persuade the clients to pay $200 even though they only want to pay $50.
More than any other job, therefore, ECM is about maintaining an attitude of utmost optimism and confidence in oneself and in one’s team, even when this is unwarranted. Admittedly, this is a feature of all sales jobs, but in ECM it’s worse. If you screw up in ECM, the bank is left with millions (or maybe billions) of unwanted securities on its books and you’re toast. In ECM you’re playing god, even though you know it’s a farce. You’re promising clients big things and persuading the syndicate desk that everything is going to be fine, even though you know you’re ultimately at the mercy of the markets and none of what you say matters.
This takes its toll. The people who come out worse are those who start to believe the lie. Who start to think that all the over-confidence is valid and to make it a fundamental part of their personality. You get ECM bankers who behave like everything is wonderful all the time. You most often see this among new joiners who suffer a kind of Stockholm Syndrome. They tried hard to get the job and when they arrive the reality is far tougher than they ever expected, but instead of complaining they fall straight into line and start praising everything in a kind of total subjugation of the self.
If this sounds harsh, it’s because I know what I’m talking about. I was one of those young people. I spent two years clapping along with the corporate wagon convinced that all the deals I was working on were great and that I was doing the best job in the world. Unless you were like that too, I was exhausting to be around.
And then I got a grip. The only way to reassert my individualism was to convince clients that I could pull off their IPO even when I wasn’t sure; to insist to the syndicate desk the price was great even when I knew it wasn’t. It required a new personality trait and that trait was…cynicism. I left banking over five years ago and it’s stayed with me ever since.
Philippe Ersatz is the pseudonym of a senior equity capital markets banker, now retired
Photo credit: Crazy business – Weedingl by decapital is licensed under CC BY 2.0.