When Goldman Sachs made its managing director promotions this week, 101 of its new MDs were in the investment banking division (IBD). That's not bad: 96 of Goldman's MD promotions were in IBD last time the bank made promotions (in 2015) and this was feted as a great success. But while Goldman is elevating its next generation of investment banking talent, there are reportedly fears that executive directors elsewhere won't be so lucky.
Bank of America, Citi, UBS and Goldman aside, it hasn't been a great year for banks' M&A revenues. While these four firms achieved increases of 25%, 13%, 10.3% and 9% respectively in the first nine months of this year compared to last, the likes of J.P. Morgan, Morgan Stanley, Deutsche Bank and Credit Suisse saw their M&A revenues increase by a lot less or even shrink (in the case of Credit Suisse and Morgan Stanley).
M&A headhunters say this is causing some consternation among executive directors (EDs) in M&A who were hoping to get promoted to MD, but suspect that spaces at the top will be limited. "A lot of banks are too full at executive director level," says one, speaking off the record. "There's a classic need to thin down at the top."
At J.P. Morgan, headhunters say some executive directors have left of their own accord. Christopher Dickinson, for example, left in September to go to Jefferies, where he is now a managing director in UK investment banking. Why wait for uncertain promotion when you can become MD in an instant in a new role?
At the same time - and despite a recent claim by J.P.'s head of M&A Carlos Henandez to the effect that deals are only "getting bigger", headhunters say that J.P. Morgan has been gently encouraging some M&A EDs out the door. "It's nothing too harsh, more a conversation along the lines of 'Your future probably isn't with this firm,'" says another London headhunter, also speaking anonymously. "I know of five or six who've left J.P. under these conditions in the past two months," he adds, declining to give names.
J.P. Morgan declined to comment on the alleged exits. However, headhunters said it's not the only bank where M&A staff are unlikely to be unhappy in the coming round of MD promotions. "Deutsche Bank is massively over-clubbed in some teams at director and senior VP level," says one headhunter. The German bank increased M&A revenues by just 2.2% in the first nine months of this year, and is likely to focus promotions on the U.S., where it's trying to build its business, rather than London.
If some banks aren't promoting, which banks are hiring and promoting in the process? Jefferies is clearly one. Recruiters suggest Macquarie and Citi as others. Citi looks like the best bet: revenues in its M&A business are up 13% this year, and it has the balance sheet to help win deals.
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