GUEST COMMENT: Tell me another industry that has had as close a shave as this one and bounced back as fast

14 October 2010

2 minute read

GUEST COMMENT: Tell me another industry that has had as close a shave as this one and bounced back as fast

Two years is a long time in investment banking, and the last two years have seemed particularly so. We haven't just lost a lot of familiar faces in the industry, but whole firms aren't around any more. It was worse than anything anyone had ever planned for, and it made veterans of us all. And yet, just two years after the collapse of Lehman and the start of the worst financial crisis any of us has known, the investment banking industry is back on its feet and prospering.

Of course times are still hard. Business is tough, and despite the field thinning out, the competition for corporate finance mandates is at least as intense as it ever was.

In the lower reaches of the investment banking food chain, pay is down, and headcount is down almost everywhere.

But profitability is still there, not quite at the levels of the good old days, partly because the capital tied up in the business is greater now than before, but at the top of most firms people are trying hard to suppress big wide grins.

All that noise about banking reform, all the huffing and puffing and posturing by politicians and regulators...well, it isn't over yet - the Europeans could yet come charging over the hill, imposing business stifling new regulations, and they certainly never lose an opportunity to take a shot at London, but it looks as if the phoney war on the City was just a little phoney.

And as for the rest of the banking industry, who do they turn to when they are seeking people to head up large commercial banking groups? Their chief investment bankers of course.

Tell me another industry that has had as close a shave as this one and bounced back as fast. We stared into the abyss and saw...dollar signs. But we always do. The investment banking industry has to be the most resilient, fastest evolving industry in town.

The massive cost of the bail-out will be borne by future generations. But investment banking is back and prospering. For the moment.

AUTHORDavid Charters

Insider Comment

do
doppel
16 October 2010
You make me embarrassed to to be an investment banker.
Reply
An
Anonymous
16 October 2010
The financial sector does seem to have an intrinsic quality to adapt more quickly than other industries, especially those with fixed plant and equipment, unions, etc. But a bail-out was necessary. Bailing out the system of money transmission is like unplugging a stopped-up plumbing system at your home: disagreeable, expensive but required. You don't have to like it. You just have to hold your nose, hope you can foot the bill and pray that it bounces back quickly.
Reply
An
Anonymous
16 October 2010
.BTW, I have some trouble coming to grips with the bile that some people throw around in their comments on discussions on this website. Can we not raise the quality of debate to be a bit more civilised? One can make additional or contrarian points of view without resorting to sarcasm or just plain spiteful and insulting remarks about an author's character. David Charters (whom I have never met) doesn't hide behind a pseudonym - his books are witty and articulate - so he doesn't have to. It would be interesting to hear what some people would be brave enough to say without a psuedonym. On the other hand, some contributors have really interesting and articulate contrarian insights, like the comments that the cost of bank bailouts would have revived entire sets of other industries or have deprived our children of time machines (I especially liked that one). I recommend that these contributors continue to keep their identities obscure. "The trouble ain't that there is too many fools, but that the lightning ain't distributed right. ~Mark Twain".
Reply
Al
Alex
15 October 2010
Tell me another industry that wouldn't bounce back with a similar taxpayer backup? That amount would revive ship-building, coal mining, Rover and cotton mills.
Reply
Ec
Economist 1
15 October 2010
You surely can't be serious...........if all failing industries were given billions in bailouts they would have grown over the short term. Fool.
Reply