Has Macquarie lost its magic?

27 May 2008

1 minute read

Is the world's love affair with Macquarie Group about to come to a bitter and twisted end?

The pin-up boy of Aussie finance, which is currently on a hiring spree in the US and Europe, seems to be taking on the role of spoiled brat as its profits and share price tumble, and worries grow as to whether its 'millionaire factory' banking model is fair dinkum after all.

Macquarie announced its results last week, with new chief executive Nicholas Moore warning that its 16-year run of profit growth is about to hit the buffers.

With most of its eggs in the infrastructure basket, the bank is facing fierce competition for infrastructure assets and higher financing costs. Eyebrows have also been raised over its tendency to take from one area of the business to pay dividends in another.

The difficulties could hit Mac bankers firm in the pocket as the firm's bonus pool starts to shrink. Moore, for example, must make do with a mere AU$24.8m this year, down from AU$32.9m in 2007.

Is Big Mac about to be fried? Let us know below.

AUTHOReFinancialCareers Australia

Insider Comment

co
countrybpy
31 May 2008
Jason, I'm not convinced. Sure the current economic climate does the MQG model no favours, but unless you believe that credit will always be tight from now till eternity or that inflation will always be high from now till enternity, then I don't think you can say the model is dead.
Like any company facing change, MQG will have to adopt. I can't see why they would roll and die rather than work at inventing new business models. Everything that is new eventually becomes old as the pack catches up, that's life - but the firms that can adopt to change are those that survive and prosper. Nothing in MQG's history suggests that they won't be able to do it this time if they need too.
Reply
Ja
Jason
29 May 2008
Whilst a record profits, growing FUM the model is dead in light of out of control inflation and higher funding costs.
Investors will think twice when it comes to this financial engineered layered approach to investing in infrastructure assets. Have a look at the MQG satellites performance - shockers!!
Unfortunately, this model, like all models at some point becomes a commodity, and unfortunately for MQG as a leader, the rest of the pack has caught up which makes it harder to pull off the same tricks.
MQG is just a another name for Private Equity and that has hit the wall.
As for comments re "bullied employees", yes I have heard that and from my experience there model through testing attracts "like minded" for all the wrong or right reasons.
Agreed, get out and look around and see what is about .. there's better.
Reply
mc
mchann man
29 May 2008
I would like to get the MA Headhunter's contact details who like the Bullied Macquarie Talent. I know of one who would love to make a change
Reply
mc
mchann man
29 May 2008
I would love to speak with you about a Bullied MacQ employee who would be a real asset to any operation and would relocate for the right oppotunity. Please forward your contact details to larry@mchann.net
Reply
HO
HOANG STEVEN THANH NGUYEN
29 May 2008
Is the world's love affair with Macquarie Group about to come to a bitter and twisted end?
Compare Macquarie with other banks, itwould be silly to think that Macquarie Group is doom or end. If you look at the US banks, EUR banks, and Aussie Banks, which Bank has more successful during mortgage subprime or financial crisis. Macquarie is posted 23% profit*, which Bank does actually deliver those kind of profit during this time of crisis?
Ask yourself this question.
Reply