Q&A: Australian IB (+ life, etc.)

Been a long time lurker and thought I'd weigh in on this thread being a Sydney local.

In terms of individual firms, OP has pretty much nailed it but here's an alternate, slightly more expanded view:

• Top 3 (UBS, GS, Mac): UBS: Have been number one across most products for the last ~15 years and probably still are. Their undoubted sweet spot is ECM. M&A easily top 2/3 yearly and DCM, research & trading the same. As the OP mentioned their rainmakers are protected by the compensation ring fencing, so this is unlikely to change any time soon. GS: Since they bought out of their JV, GS has been growing their market share pretty substantially year on year and have had a VERY good year in ECM and M&A but still lack any material presence in DCM. They've got a substantial amount of deals in the pipeline which will probably see them at the top of M&A next year. GS are definitely the preeminent takeover defence / sell side guys. Mac: Historically the darlings of Aus IB however their star is fading. Their advisory business is shrinking fast as a percentage of revenue and this is seeing them basically transition into a huge fund manager. Mac has one of, if not the biggest IBD team although their deal flow of late has been on the wane which should suppress bonuses. Big questions as to their relevance going forward given their inability to land deals sourced from overseas.

• Other BB's (MS, CS, DB, Citi, JPM, BAML, Barc): CS: One of the better shops and pays a very high base if the rumours are true. Their team is almost exclusively male which could be good or bad depending on your view. Comfortably in the 3-6 range in M&A and their ECM team is a bit weaker. MS: MS has a pretty small team although constantly is at the top of the pile in terms of revenue per banker. They continually rank around 7-8th in M&A and ~5th in ECM, however continually provide the best exit opps (in terms of PE) in line with UBS. Their infra team is undoubtedly number 1 and a lot of their deal flow comes from that space. DB/Citi: Historically have been two of the poorer performing BB's, and if the rumours are true Citi was very close to closing it's doors here shortly after the GFC. This year however it's a different story with both banks performing very well and nabbing a number of large mandates, although there's speculation as to why that's the case but I won't mention that here. JPM/BAML: Both these are two of the worst BB's locally. JPM has the best DCM team here although that is still behind the big 4 banks which command most of the market. JPM always manages to land a few sizeable mandates that fly in from Asia or elsewhere overseas each year which generally makes up the majority of their fees. Barc: Pretty horrendous outfit TBH. Non-existent in the league tables across any product.

• EB's GHL: Has been experiencing a significant decline in deal flow and relevance recently. After acquiring Caliburn, GHL worked on some of the most iconic deals in Australia and performed very well. Next year (I believe?) their top 2 M&A guys are spinning out to do their own thing so this will have huge effects on their operations here. LAZ: Very small team here (hires 1-2 analysts per year) although has very strong deal flow for their numbers. Widely known as having some of the worst hours along with GHL and their interviews would be the toughest of all banks. HLHZ: Have announced that they are entering the Aus market as of 2015. Poached basically all of the senior guys from CIMB. Moelis: Services the lower end of the MM space here and hasn't really managed to work on any deals of note as yet. Poached the local CEO of JPM and a few from UBS to build their firm however this hasn't yet translated into success. As far as I'm aware they only have 2-3 analysts in total.

In 2012 MS, DB, Citi, BAML and a few others (memory fails me at the minute - I believe the only profitable banks were GS/UBS/CS/JPM) made pretty large losses which just gives an indication of how different the Australian IB market is versus NYC/London in terms of volume, magnitude and market share. 2013 was similar and I believe DB/Citi also lost money that year. Nomura has made a loss every year of it's operations in Australia. The consensus is that for the size of the market and volume of deals, Australia is incredibly over-banked.

Recruitment / Exits

As OP mentioned the number of SA/full time analyst positions are relatively low compared to the US. Generally the top 3 will hire around 8-10 SA's depending on deal flow (this year GS hired 13 SA's however). Other BB's aim for 5-10 as a rule of thumb. Lazard 1-2 and GHL similar. Some banks are more focused than others with respect to conversion rates. CS and DB place significant emphasis on not having to enter the graduate market and prefer to lock up all of their SA's, whereas UBS/GS/Mac seem to prefer to shop around (for instance, UBS converted 3 of 8 SA's this year). note these are Sydney numbers only

As for the process, all banks are relatively similar and will have some combination of psychometric testing, first/second round interviews followed by an assessment centre. First round interviews are almost exclusively non-technical, the exceptions being GHL and LAZ which are very technical from the outset. Assessment centres can vary in terms of structure and length - MS has multiple rounds of interviews on the final day; UBS does on-site testing, 2 case studies (individual and group) as well as further interviews for a cool 7 hours in total; JPM has interviews and 2 case studies also); LAZ has an epic 3 hour modelling test where you have to build a DCF and present your findings. If you do well at the final day you will generally get a call with an offer with a few hours.

Exits: As mentioned in another thread, in Australia you generally become a career banker rather than seek out exits, go to business school or transition to corp dev. The PE market here is incredibly small however is growing (for example, Blackstone had a team of 7 here a few years ago). UBS and MS have the highest representation amongst the PE firms followed by GS. There is a decent local PE scene happening at the minute with firms like Archer Capital, Pacific Equity Partners harvesting their investments very successfully and building their war chests. There's also talk of a few other big MF PE firms that are contemplating setting up a local shop, which should see a few more avenues open up for PE exits.