Careers in investment banks have always had points of commonality with Stalinist Russia: there are the bearded men at the top, the occasional purges, and the perpetual pushes for modernisation. Now, though, there is something else too: the long term plan.
As banks navigate a world where returns are dangerously close to the cost of capital, the old way of chasing revenues and opportunities one year only to ditch them the next is disappearing. The new way is one of deliberation, planning, and stolidly faithful execution.
The discrepancy is illustrated by recent events at Nomura and by today's results at Credit Suisse. The Japanese bank, which has been culling staff in London after luring them in with promises high pay, stands accused of fickleness and of the myopic pursuit of whatever was shiny at the time. - Nomura was being run like a "hedge fund", insiders told the Financial Times: business were grown and shrunk according to the whims of the market. By comparison, the strong results from Credit Suisse's global markets business today are being heralded as the culmination of a three year restructuring plan and of its unwavering implementation.
The benefits of a slow and steady approach have not gone unnoticed by David Solomon, the new CEO at Goldman Sachs. When the U.S. bank announced its first quarter results last week, Solomon disappointed onlookers with the revelation that he won't be completing his 'front to back review' of Goldman's businesses this year after all. - It's been delayed until 2020, and when it comes, it will be accompanied by a new set of 'three year plans.' "No business, no revenue source, no capital or resources [will be] out of scope," said Goldman CFO Stephen Scherr of the proposed plans during last week's investor call.
Welcome to the age of deliberation.
As banks' success becomes more about the systematic pursuit of carefully articulated goals and less about reacting to markets, long term survival in a banking career has become a matter of due diligence. If you want to persist in banking until an age at which you earn $500k+, you need to look at banks' investor presentations and to familiarize yourself in detail with each one's stated intention for your area of expertise. Position yourself in the bank that favours your area. When the future is carefully signposted, there can be no excuse for falling off a cliff.
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