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发表于 2003-10-28 09:25:00
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From: NJUK2003 6:18 pm
To: ALL (1 of 1)
48998.1
Here's an idea - the economy is starting to swing back and that means less people are out there unhappy in present positions and therefore willing to take the bschool plunge. Word on the Street is that things are very very much on the upswing. I hope -- in fact almost expect -- that this should translate into an MBA admissions cycle that is more like 1999 or 2000 than 2001 or 2002.
Wall Street will have a record year this year, making more money than even in 2000 -- and is spreading it much thinner over a smaller workforce. (Seems like the $10K referrals are back as well -- at least at Lehman!)
Lehman, Merrill Show Good Times Ahead for Bankers: Matthew Lynn
Oct. 27 (Bloomberg) -- Casual extravagance has always been the one thing investment bankers like most. But for the last two years, every natural instinct they possess has had to be ruthlessly suppressed.
Thousand-dollar bottles of wine were left unordered. Glittering towers of chrome and glass were left unoccupied. Million-dollar bonuses were left unpaid.
But now there are the first faint signs they can get back to being their natural selves -- like small children equipped with a Toys `R' Us Inc. store card with unlimited credit.
In investment banking, the good times seem to be coming back. The only odd thing is that no one wants to talk about it.
Earlier this month, Lehman Brothers Holdings Inc. said it was offering employees as much as $10,000 to refer new workers to the firm. You need to find a vice president in order to collect the top reward, but smaller amounts are being paid right down the line. (Memo to Lehman's personnel department: For a couple of grand, I can give you our babysitter's phone number.)
Merrill Lynch & Co. also said this month that the salary freeze it announced almost two years ago was being lifted. ``We are a premium employer and we want to ensure that we continue to pay at premium levels for the best talent we have,'' Merrill Chief Financial Officer Ahmass Fakahany said in a conference call with analysts and investors.
Last week, J.P. Morgan Chase & Co. reported a $1.63 billion profit for the third quarter, after struggling to break even in the year-earlier period. More interestingly, expenses increased, ``primarily driven by higher incentives resulting from improved financial performance.'' That sounds like it's a better time to be working at J.P. Morgan.
Record Profits
The Securities Industry Association, which represents most of the big Wall Street firms, predicted this month that the U.S. securities industry would make record profits in 2003. It expects the firms to make a collective $22.45 billion this year, more than the $21 billion in profits earned in the previous record year, 2000. In London, the Centre for Economics & Business Research Ltd. said last month that banks, insurance companies and fund managers may hire about 3,000 people next year as stock markets recover.
Suddenly, the only kind of news coming out of the banking industry is good news.
There are two points to be made about the recovery in investment banking.
First, it reminds us just how extraordinarily profitable the capital markets are. Think of what the world has been through in recent years: the bursting of the greatest stock-market bubble in history, a global decline with a full-scale recession in much of Europe, a war in the Middle East, and a series of financial scandals, exposing the banks as frequently cynical and manipulative.
A Golden Year
And what happens? The investment banks shrug it all off and come up with one of their best years ever.
Just how much money would these people make if the economy were in good shape?
There is no great mystery about why the recovery is so swift. Headline-grabbing work in mergers and acquisitions may be in the doldrums, and equity markets have only staged a tepid comeback. To the casual observer, banking may still look like an industry in crisis.
Yet underneath, the real engines of profitability have been quietly purring. Selling and trading bonds can still be described as hugely lucrative. Fund management makes money. Private equity divisions have bounced back. An investment bank remains a moneymaking machine in bad times as well as good.
Bright Future
From now on, it's only likely to get better. Governments in the U.S. and Europe are issuing record amounts of debt. Someone will have to find investors for all that paper.
The market for initial public offerings, which has been virtually frozen for two years, may be about to thaw. An IPO by Google Inc., which the Financial Times said last week is considering a share sale, would be the event to set the ball rolling again. If it does go public, lots of other companies may follow suit.
Even the M&A market could start to recover as the money and confidence returns to shake up industries again. For the bankers, that would put the icing back on what is already a very rich- looking cake.
But, the boom also reminds us just what an odd industry investment banking is. Chief executive officers are avoiding any talk about what a good year they are having. Why? Because if they discuss it, their employees will start asking for more money -- and then it won't be a good year anymore.
Sweet Spot
Right now, banking CEOs are in a rare sweet spot. Revenue figures are improving, but the workers are quiet. There are still lots of unemployed bankers out there and that is keeping wages under control. The cuts of the last two years have made banks leaner, and few have had the chance yet to put on any flab. For the moment, revenue is growing a lot faster than costs -- making for record profits.
That can't last. Once the bankers realize that the good times have already started for their employers, they will demand bigger salaries and bonuses for themselves.
Bonuses for recruiting at Lehman will just be the start. Sommeliers can dust off the wine cellars, and developers can start fitting out their towers. Casual extravagance will soon be back.
Last Updated: October 27, 2003 03:35 EST
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发表于 2003-10-28 09:12:00
