When big investment banks start to curb compensation, it’s worth considering alternatives. The smaller, independent firms have had a good first half. The latest such bank to report is Canaccord Genuity, which has succeeded in hiring some senior bankers from larger rivals in recent months.
Its investment banking revenues increased by $55.5m year on year, or a rather ridiculous 174.5%. Much of this can be pinned on a 162% rise in its home country of Canada, but its UK and US operations also to at least double revenues.
Even in these circumstances, its share price tumbled as it missed analyst estimates and profits slipped on the previous quarter. In such circumstances, you might think it was being prudent with pay – but it’s not really. While salaries have remained largely flat, it’s incentive compensation (namely bonuses) have increased by nearly 42%, which means its compensation to revenue ratio stands at a not ungenerous 58.4%.
Separately, Andrew Brogden and Robert Reid were two Investec traders who happily received multi-million pound bonuses for three years under an informal arrangement before the golden goose started laying mere six-figure eggs in 2011. Then they decided the formulae used to calculate their bonuses was unfair and have been trying to sue the South African bank for £6.75m in lost earnings.
Yesterday their epic court case was finally tossed out and Investec emerged victorious. Unusually for a financial institution, its statement was somewhat aggressive and self-congratulatory: “Investec had to take a stand in this matter, we had to do the right thing by our shareholders and our dedicated employees. This was a baseless claim, and an unwarranted attack on our institution, our culture and values,” said its chief executive David Van Der Walt.
The judge described their claim as “fanciful”.
Like rock stars hitting middle-age, hedge funds are no longer edgy, but have reached respectability. They are attracting ever-more institutional money. (Dealbook)
Evercore poaches former Barclays MD Mark Hanson as senior managing director in healthcare. Another US banker heads for the door. (Press release)
Meanwhile, Greenhill has hired healthcare banker Ken Anderson from UBS as a senior advisor (Reuters)
The fickle nature of M&A deals: Bankers have lost out on $420m in fees thanks to the collapse of 21st Century Fox’s bid for Time Warner. Centreview, Goldman Sachs and Citigroup are the big losers. (Financial Times)
So far this year, $482bn worth of M&A deals have been withdrawn, the highest figure since 2007. (Dealbook)
Graham Capital has laid of 10% of its employees as macro hedge funds continue to struggle (Wall Street Journal)
Goldman Sachs promotes senior female partner from sales role to overarching job of ‘head of client relationship management strategy'. (Bloomberg)
Wall Street professionals are only the fourth most unpopular figures in America (Wall Street Journal)
The new business model for “industrialised investment banking”, targeting lots of smaller trades from more clients (or what Deutsche Bank does in Birmingham) and offshoring back office functions. (Genpact)
Jefferies CEO sends memo to staff disguising life lessons as fake reading list. One example: “Misguided Brand Envy: Why bad things happen to investment banks who covet the business models, success or compensation levels at competing investment banks.” (Business Insider)
Deutsche and Goldman to decide on high-living banker, how to sell a job when it’s been automated
Goldman’s hedge fund purge, where one bank now employs over 24,000 people
Fare-dodging fund manager unlikely to work in finance again, Goldman’s new challenge to Bloomberg IM