Ever since the bulge bracket banking order was toppled by the banking crisis, it’s been less easy to determine what constitutes a top tier bank and what doesn’t. Is Bank of America a top tier bank? Is J.P. Morgan? How about Deutsche Bank or Citigroup or Credit Suisse?
Now two US academics have attempted to get to grips with the problem. Writing in Financial News, Roy Smith and Brad Hintz, finance professor and adjunct finance professor respectively at the NYU Stern School of Business, is return on equity. The higher the returns on a bank’s capital markets business, the greater its share price in relation to its book value. Successful banks today are therefore those which pursue a strategy which will produce reasonable returns in the medium term.
In Smith and Hintz’s chart below, the top banks to work for now are therefore in the A quadrant (Goldman Sachs and J.P. Morgan). The acceptable banks to work for are in the B quadrant (UBS, HSBC, Credit Suisse and Morgan Stanley). The banks in the C quadrant are in need of a strategic overhaul. Barclays looks particularly parlous here.
Bank of America may not match the dominance of J.P. Morgan in its investment bank, but there are still positives to take from its Q2 results.
An AVP role at Barclays’ investment bank may not be all it seems.
Cutting out the Middle Man (Bloomberg)
Horror as Blackrock circumvents banks, goes straight for interdealer brokers in the fixed income market.
Quant trader Peter Hartley returns to Goldman Sachs after the all star quant hedge fund he joined folded.
How to refer to Goldman MDs if you want to get ahead: “These intelligent, thoughtful and innovative leaders.”
“A monkey could do the job” of a junior banker, said one Ivy League student who’s currently interning at a hedge fund.
“When the MD talked, he never made any eye contact with me while he made eye contact very often with the other two candidates. It was like he was talking to them and not to me at all.”
What kind of choice is it when your career as an attorney or investment banker demands that you stay at the office 60 hours a week or opt out of the workforce altogether?
Quote of the Day:
“The idea of using young salesgirls as effectively tethered goats to get business from hedge funds, it’s a very common practice,” outrageous claims from the man behind @GSElevator.