Morning Coffee: Goldman Sachs, Morgan Stanley wrestle over bragging rights. Bank hiring evades Wall Street
Investment bankers at Goldman Sachs and Morgan Stanley booked impressive revenue totals during the second quarter, particularly in merger and acquisitions and equity capital markets. The two banks were so successful that they each ranked first globally in both M&A and ECM. Wait, what?
No, they didn’t tie. Or lie, even. Goldman and Morgan Stanley simply used selective annotations to crown themselves king of the same two mountains. As Bloomberg was first to point out, both banks announced in their earnings reports that they were the top global advisor for M&A deals and IPOs over the first half of the year. The apparent contradiction is due to the fact that Goldman Sachs relied on figures from Dealogic while Morgan Stanley cited numbers compiled by Thomson Reuters.
This isn’t the first occasion that multiple banks claimed the same top-ranking, and likely won’t be the last. Creating accurate league tables is an extremely difficult task. Data providers need to account for announced and completed transactions and allocate credit between banks that co-advised on deals and firms that essentially just had their name in a press release. Some rankings are based off deal volume while others estimate revenue.
Back in 2016, three banks – the two in question along with J.P. Morgan – each claimed the title as the top dealmaker for the first quarter, according to Bloomberg. Oddly enough, Goldman Sachs and Morgan Stanley both cited Thomson Reuters in their respective press releases.
As for who actually won this time around, the titles may have been split. Data compiled by Bloomberg suggests that Morgan Stanley took the M&A crown while Goldman ranked first in ECM. The picture becomes even more muddled if you use earnings as a secondary indicator. Advisory revenue for the first six months of the year was greater at Goldman while Morgan Stanley earned more in equity underwriting. So who really knows?
Elsewhere, banks in the U.S. are healthy and are back to adding headcount. Just not on Wall Street. Financial firms added 17,000 jobs during the first five months of the year, according to Crain’s. During the same period, the number of people working in the securities business in New York fell by 3,000. While banks have been actively moving jobs to lower-cost cities for a while now, a drop in headcount of such size over just five months is eye-opening considering banks are growing again. The good news: if you still work in New York, you’re likely getting paid handsomely. Securities professionals in New York City account for less than 5% of private sector jobs but generate more than 20% of wages.
Analysts are outright fawning over Morgan Stanley’s second quarter earnings. “It is very hard to find anything to criticize,” said one. “If only all results could be this easy,” added another. (Bloomberg)
Struggling London macro fund MarkhamRae has lost at least three top staffers, leaving the firm with only eight employees who are registered with the FCA. (Reuters)
Former Barclays chief executive Bob Diamond tried to set the record straight on his short tenure, exclaiming that he “didn’t think it was fair” that he took such blame for the Libor scandal and that the board’s request for him to resign was “not the right decision.” (ITV News)
Not a single portfolio manager at Citadel has recommended buying bitcoin or other cryptocurrencies, according to founder Ken Griffin. (CNBC)
Lloyds Banking Group is now planning to operate three subsidiaries in continental Europe as part of its post-Brexit plans. Offices will be located in Berlin, Frankfurt and a third undecided location. (Reuters)
President Trump’s former head of infrastructure has joined investment firm Stonepeak Infrastructure Partners, which just closed a $7.2 billion fund. DJ Gribbin worked with the founders of Stonepeak during his time at Macquarie Group. (Bloomberg)
The nephew of a former Goldman Sachs M&A banker launched a hedge fund out of his bedroom at age 17. (CNBC)
Danske Bank is hiring a chief compliance officer as it continues to deal with the fallout from a massive money laundering scandal. Philippe Vollot, who is coming over from Deutsche Bank, will start on Dec. 1. (Bloomberg)
Tech leaders from across the globe have signed a pledge to not create autonomous killer robots, so that’s good. Important to get that in writing. (Business Insider)
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