If you want to work for a large global investment bank that will still be in the game in six years' time, which should you go for? Try Goldman Sachs, or JPMorgan, or Deutsche Bank.
These three will be the last big players in the investment banking industry globally, predicts Steven Davidoff, a professor at Ohio State University. While U.S. rivals like Morgan Stanley, Citi and BofA retrench and most European banks struggle, GS, JPM and DB will be left standing.
Goldman Sachs in particular has determinedly kept ploughing the investment banking furrow. In 2013 trading accounted for 33% of revenues at Goldman, says Davidoff - almost three times what it was at Morgan Stanley. And Goldman's advisory revenues of $8bn are more than 33% higher than JPMorgan's and Morgan Stanley's. The downside is that this leaves Goldman highly vulnerable to market movements and to the economic cycle. The firm is like an accordion: "When the markets are down, Goldman slims down. Goldman has cut 10 percent of staff since 2010 and moved many employees to lower-cost locations like Salt Lake City. But when the markets heat up, Goldman’s plan is to expand," says Davidoff.
JPMorgan's endurance is posited on the basis that "it's so big and good at what it does." And Deutsche's preeminence is predicted because, "it's the leader in Europe and Europe is still a big market." Weak as these justifications sound, Davidoff may still have a point. During yesterday's presentation at the Morgan Stanley investor conference, JPMorgan's CFO Marianne Lake pointed out that the bank is number one in nearly all areas of investment banking. Meanwhile, Deutsche Bank is going for growth globally even while European rivals like Barclays pull back. Sure, there are short term issues - Lake said that JPMorgan will be making redundancies in the investment bank and Deutsche Bank's trading revenues reportedly haven't been so hot in the second quarter, but long term they have set a course. If they stick to it JPMorgan, Deutsche and Goldman could be the triumvirate of banks to work for in the next decade.
Separately, there are some types of psychological deviance that will stand you in good stead in a banking career. Lloyd Blankfein said yesterday that he is a "highly functional paranoid." “When the phone rings too late at night or too early in the morning I’m going, “Oh my God, what happened?” and “if it stopped ringing I’d call everybody I knew at work to find out what I missed," he added.
JPMorgan might cut pay for its investment bankers. (Wall Street Journal)
Morgan Stanley and Santander have been hiring people from the Financial Conduct Authority into top compliance jobs. (Bloomberg)
Alvise Munari, the global head of equity derivatives at Morgan Stanley, is leaving the bank. (Financial News)
Noble Group hired Dean Hunt, Morgan Stanley’s former head of European natural gas trading. (Bloomberg)
74% of junior bankers with less than two years' experience in the industry were unhappy with their bonuses this year. (The Tally)
George Osborne plans to introduced criminal sanctions for traders who rig exchange rates. (Telegraph)
CFA Institute chief compelled to step down after inappropriate relationship. (Dealbreaker)
Man quits Pimco to run food truck. (Fortune)
4,000 black cabs brought traffic in London to a standstill yesterday as taxis protested against the Uber app, which allows people to book unlicensed cars. Uber achieved an 850% increase in downloads as a result. (CityAm)
Gridlock strikes Goldman's London office. (Twitter)
How long geniuses sleep. (NYMag)