Posts Tagged ‘Investment banking’

Crying all the way to the bank

In Banks on 12/11/2015 at 2:17 pm

Despite a bad yr with losses mounting.

Or should this be “Laughing all the way to the bank with the investors’ money”?

From NYT’s Dealbook

BONUS PAY ON WALL STREET LIKELY TO FALL Bonuses in the financial industry this year are expected to fall 5 to 10 percent, Nathaniel Popper reports in DealBook. It will also be the first year since 2011 thatcompensation for the whole industry is expected to drop, according to a report by the compensation consulting firm Johnson Associates.

There are still some bright spots in private equity and mergers-and-acquisition work, but most of the industry is struggling. The report expects end-of-year compensation in investment and commercial banking to be down 30 percent from 2009 levels.

Business lines requiring less capital, often because they are considered less risky, are seeing better returns and bonuses. For bankers advising on mergers and acquisitions, incentive payments are expected to be 15 to 20 percent higher.

Asset management requires less capital but will experience a 5 percent drop in bonuses this year as the business struggles with tepid markets and economy. The sharpest decline is expected in fixed income, where bonuses are predicted to drop 10 to 20 percent this year.

Finance remains one of the most generously paid industries in the world. The average securities industry bonus was $172,860, according to the New York State comptroller’s office.

But it is facing challenges from new regulation, slow economic growth and competition from new, technologically oriented competitors.

European banks have had to cut back and make changes to management.American banks have fared better, but companies like Goldman Sachs and Morgan Stanley have been turning in disappointing results. Alan Johnson, founder of Johnson Associates, said companies would have to cut costs significantly in the months ahead.

He noted that the ripple effects mean that Wall Street is losing its allure for the most talented young potential recruits who receive better offers from tech companies in Silicon Valley.

“In the last few years, it’s become a real issue,” he added.

A TOUGH YEAR FOR HEDGE FUNDS, BUT NOT REAL ESTATE Hedge funds have had a tough year with volatile markets, but hedge fund managers remain incredibly wealthy, Alexandra Stevenson and Matthew Goldstein report in DealBook. Larry Robbins, the hedge fund manager who founded Glenview Capital Management, bought a Manhattan penthouse on the Upper East Side with sweeping views of both the Hudson River and the East River for $37.9 million this summer.

Mr. Robbins’ real estate deal comes at a trying time for his $8.8 billion hedge fund. Last week, he apologized to investors for losing 15 percent of their money so far this year.

“I’ve failed to protect your capital,” he wrote in the seven-page mea culpa. He promised to forfeit his pay for this year.

Mr. Robbins has still managed to profit handsomely over the years from his firm’s performance and has a net worth of $2.3 billion.

His new apartment in the Charles condominium on First Avenue will be used as a second home. His primary residence is a sprawling estate on over four acres of land in Alpine, N.J.

Mr. Robbins is neither the only one splashing out on property, nor the only one whose hedge fund is struggling.

William A. Ackman, the founder of Pershing Square Capital Management, is part of a group of investors that this year closed a deal to pay $91.5 million for a six-bedroom apartment at One57, a luxury residential tower in Manhattan. Pershing Square is down 19 percent so far this year.


Investment banking horror stories

In Financial competency on 05/03/2013 at 4:42 am

In the end, an adviser would say the client, no matter how foolish, is in charge. And that was the problem. The Bakers, who had built a $600 million business from scratch, appear to think that their advisers should have saved them from themselves and that they could negotiate a better deal than Goldman Sachs. That was a mistake.

The charges against … should put Wall Street on notice that the government will try to police markets that require trust among the participants in the absence of transparent price information. The defense of caveat emptor, or let the buyer beware, will not necessarily protect against criminal charges for fraud.


So why not, for example, put a ceiling on salaries and let clients reward good service, just as they do in restaurants? That could allow banker pay to shrink to a more realistic level.

The U.S. restaurant business even provides a model of sorts. The Fair Labor Standards Act lets an employer pay waiters below minimum wage as long as they earn a certain amount a month in tips. If the combined total remains below the minimum wage, the restaurant has to make up the difference.

Serious money

In Banks on 17/07/2012 at 9:52 am

Will never hear of this in our MSM, only why the Swiss bankers are rushing to Asia (and S’pore).

Geneva, which became a refuge in the 1960s for Egyptian cotton merchants fleeing President Gamal Abdel Nasser, developed as a Middle East banking center after King Fahd constructed a palace in the lakeside suburb of Collonge-Bellerive, where he held councils on summer evenings

Middle East has an estimated US$4.5 trillion of private wealth.

Too bad abt the investment banks though

Base Metal into Gold: no not Alchemy. It’s all in the Accounting

In Accounting, Corporate governance, Investment banking on 13/12/2009 at 9:58 am

Here’s an explanation of how accounting turned an investment banking loss of £160m into a profit of £3.65bn. And so made “hundreds, and possibly even thousands, of staff at the state supported Royal Bank of Scotland group (RBS)” eligible “for bonuses totalling about £1.5bn”.


The moral of the story: be sceptical, very sceptical of the headline financial numbers. And read the footnotes cynically.