Investment Banking

Andrew Hill

There are plenty of interesting ironies raised by the news that investment banks are charging asset managers up to $20,000 an hour for access to chief executives, often unbeknown to the executives themselves.

One is that chief executives themselves are no strangers to “cash for access”. It’s a perennial political “scandal” that big corporate donors to political parties get to rub shoulders with the prime minister or his cabinet at private parties and dinners. The last time such a hoo-ha erupted, in 2012, the FT wrote that prominent City figures were “bemused at the outrage” surrounding the affair, describing it as “a healthy part of the democratic process”. One said: 

John Gapper

How many eager young bankers is too many?

The question is raised by an FT report that the number of MBA recruits to banking is falling, less as a result of the job being unpopular than the possibility it won’t last.

Tom Braithwaite notes that the former enthusiasm for investment banking has eased among MBA graduates:

“The Wharton school at the University of Pennsylvania, which bankers consider the “conveyor belt of Wall Street”, sent 16.6 per cent of its class to investment banks in 2011 compared with more than one in four in 2008. The pattern is similar at other large business schools.”

 

Andrew Hill

Jeremy Irons as the bank boss in 'Margin Call'

To those who think all bankers are villains – or heroes, for that matter – let me commend Margin Call, the excellent and balanced film about a Lehman-like bank’s implosion, released last autumn in the US and out this week in the UK.

When the movie first came out, the FT invited two real-life bankers to the screening. One of them said:

I don’t think any banker will want to go, because they lived this, and traders will just point up the stuff that wasn’t right.

It was a film “made for outsiders who want to be smart about the inside”, he added.

But, speaking as an outsider, I think it’s much better than that. 

John Gapper

The move by ConocoPhillips of the US to split its upstream and downstream operations and become a “super-independent” oil company focussed on exploration feels like one of those turning points beloved by investment bankers.

Industry mergers and demergers tend to progress on a supercycle, in which investment bankers first persuade companies to merge in order to achieve scale and then later tell them they need to demerge to gain focus.