ESCP-EAP Mag - n°123 - Mars 2009 - 54

Évolution professionnelle The death of the investment banker ? Par Stéphane RAMBOSSON [MSF 93] hough stars like Marc VINCENT (80), Marc PANDRAUD (81) or Frank PETITGAS (83) should consider themselves well alive, for many others the investment banking dream has vanished. Indeed, over 60 000 jobs were lost in 2008 in financial services in London and RIFs are continuing globally. T D.R. With cuts continuing and no visibility on activity, what will be the new corporate and investment banking model? Goldman Sachs has made cuts every month since September, whilst Citi is reducing by about a third its investment banking staff. BoA is absorbing ML and in the process of reducing over 40% of combined workforces in North America and 30% in Europe according to sources within. Financial services activity, which had peaked in 2007, is expected to be reduced by more than half in 2009 vs. 2008, though it is impossible to forecast, even more so than historically, given the state of banks and of the « real » economy. It is therefore impossible to adapt headcount rationally. Banks are used to such behaviours having done large cuts in every cycle (I counted 13 RIFs at Citigroup between 2001 and 2004) ; then, once the activity picks up, bankers are generally re-hired into institutions. However, this time the crisis is much deeper, the circumstances very different and therefore the prospect of re-hire very uncertain. Indeed, how many of the 23 MDs currently being fired at a large US bank out of a pool of 93 in Europe will stay in the industry vs. retire or reinvent themselves? Indeed, key is to make choices anticipating how the economic model for corporate and investment banks will evolve? In the future, how will banking revenues evolve and how will they be distributed going forward between the various stakeholders, including the employees? Will the industry reward activities with limited capital allocation, i.e. advisory businesses, and limit the rewards in activities with high capital requirements? Though many leaders within the financial services industry have decided not to receive their bonuses, could this be the case ultimately across all levels? Uncertainty on model and rewards should lead the way to leadership and shareholder changes If banks become state-owned, it is not unthinkable that bonuses could disappear in their current form and quantum. One current example is BoA, which according to sources within capped bonuses for bankers at 25 kUSD, whilst firing ex chief of Merrill Lynch John Thain in relation to bonuses paid to ML bankers ahead of the merger. Other institutions such as Citi and UBS are due to introduce deferral payments systems, which are partly devised to limit excesses of the past and promote loyalty. Nevertheless, other banks, which have already reported so far, have given out bonuses at attractive levels given the environment, with total compensation only dropping on average by 2030% for junior bankers though over 50% for senior bankers but off a very high base. The business model is indeed expected to evolve with the help of professionals from outside the industry so as to have a fresher look. As an example, the new chairman of Citi, Richard Parsons, is a non-banker, having managed lastly Time Warner (though he has been on the Citi board for a while); it is now also the case for RBS with the nomination of Sir Philip Hampton, ex-chief of UK retailer Sainsbury’s, as Chairman of the British banking group now 70% owned by 54 ESCP-EAP MAGAZINE N° 123 - Mars 2009

Table des matières de la publication ESCP-EAP Mag - n°123 - Mars 2009

Couverture
Sommaire
Éditorial
Business : - Personnalité du mois
- Focus
- Zoom
- Itinéraires
- Entretiens
News : - Vie du réseau
- Évolution professionnelle
- Voyages
- À lire
Campus : - École
- Fondation
- Vie étudiante

ESCP-EAP Mag - n°123 - Mars 2009