"Bank of America Hires More Junior Bankers" - Thoughts?
Our increased hiring reflects our desire to invest in our people in light of our growing activity levels and the need to provide more support to our junior bankers to have a better experience, Christian Meissner, the head of global corporate and investment banking, said in an internal memorandum sent last week. The memo provided a review of the first half of the year, including updates on mergers and acquisitions and initial public offerings, according to the spokesman.
I wonder how this translates in terms of:
A. Deal experience - a big part of what makes analysts attractive for other jobs is the fact that they get lots of reps in 2 short years. I wonder if they are going to start staffing multiple analysts on each deal or if they are going to just have fewer deals per analyst.
B. Bonus pool (although I don't really care about this, just curious, as it's not like number of junior resources are going to change the level of revenue).
A. Banks have been very lean post-crisis, my impression was pre-crisis this was much less true and nobody had an issue with the skill level of that vintage of analysts, also volume is up, so it'll likely net-net remain similar.
B. Junior comp is small potatoes an MD will get a bonus of 500K to potentially several million dollars at a BB, they likely won't move too far away from street.
Let the wage compression begin.
not necessarily. could be like this as well: more juniors hired -> less rough for the analyst stint -> attracts better talent instead of them going to startups, phds, mbb or whatsoever -> can't lower pay, cause that would in a way undo above inversion.
assumption being that banks want/need better talent, which is obviously tbd
Where are they going to get better talent? They already get hundreds if not thousands of applications per vacancy and typically only recruit the cream of the crop of the Ivy League (or peer schools). The reality is they can afford to pay less in this competitive job market, especially if they reduce hours. Besides, industry headwinds continue to stack up in the distance.
maybe they just have more deals in the pipeline...
Deal activity is picking up 2014 ytd. In a conversation with a regional JPM ecm VP few months back I was told that IBD will inevitably consolidate over the next few years and only the middle market will grow if anything
Hmm... No wonder he works in a regional ECM group.
I am surprised nobody mentions the obvious...there is a massive M&A boom going on right now...it would be surprising if people werent hiring.
Biggest year since 2007. Year-to-date this year has also seen the most ECM deals in the US since 1998. I'm not sure all these new hires will have much to work on two years from now however.
I don't think people realize how big frothy this m&a market is right now. It's absolutely booming.
There is a fundamental change happening in IB right now. Although the traditional path for analysts has been two years in IB and then off to private equity or some other high finance career, banks are looking to keep more analysts around to fill their senior banker spots. Also, the PE space of today isn't what it was pre GFC. The reality is at BAML and other large banks there is a shortage of Associates and VPs. Because these banks are so big, they are managed by ratios i.e. senior bankers to junior bankers, etc. Thus, in order to get the ratios right, big banks, specifically BAML are hiring more junior bankers in hopes that some will make the A to A jump and onto VP. You may think that what's happening at Barclay's would contradict this; however, if you dig deep in the news you'll see that the cuts happening at Barclays and other big banks are happening in the trading divisions, which still seem to have too much capacity.
The posts earlier about the M&A boom are spot on. The space is frothy with deals, specifically healthcare and TMT. Furthermore, DCM is having experiencing mad deal flow because rates are low and companies are looking to borrow. ECM is also doing well because many companies are looking to IPO because of how much money investors are putting into the market i.e., the valuations are favorable. Also, if you take into consideration this past weeks earnings reports from the big banks, you'll see that the IBD for these banks had a significant influence on earnings.
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