I interned over the summer in a FIG coverage group at a BB and people mentioned how FIG is both cyclical and countercyclical - busy in good times and very busy in tough times. I know the theory in general but is that true just to an extend? I am curious to hear junior and senior perspectives on this point.
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I hear Financial Institutions, subprime lenders especially, really outperformed during the '07-'08 recession.
wow what a clever comment...and it's hardly even true
with the number of banks that merged/acquired their competitors, I'm sure cov FIG was actually one of the more profitable industries in terms of fees
Good point. I forgot that counter-cyclical is defined according to the amount of transaction fees paid to bankers and has nothing to do with actual performance of the company. Suck on this MS lil boy.
Hahaha, I get your point. I guess I did not frame the question properly. I meant as in deal flow and activity for groups that cover financial institutions because for instance you have FinTech or Specialty Finance companies that follow the "traditional" balance sheets and in theory they are not countercyclical.
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Done FIG. There’s no money for merger when banks underperform as they are the most cyclical sector. 07-08 was different as banks were going down and had to be rescued.
Within FIG you have banks (cyclical), AM and specialty finance (cyclical) and insurance (somewhat counter cyclical). FinTech is sometimes covered by FIG too but depends.
Most banks have a FIG team only to have an excuse to pitch for DCM trades which are large (but don’t generate much P&L). Haven’t seen a bank merger in a while (Europe). Wouldn’t say FIG is safe from layoffs if that’s the purpose of the post.
Done FIG. There’s no money for merger when banks underperform as they are the most cyclical sector. 07-08 was different as banks were going down and had to be rescued.
Within FIG you have banks (cyclical), AM and specialty finance (cyclical) and insurance (somewhat counter cyclical). FinTech is sometimes covered by FIG too but depends.
Most banks have a FIG team only to have an excuse to pitch for DCM trades which are large (but don’t generate much P&L). Haven’t seen a bank merger in a while (Europe). Wouldn’t say FIG is safe from layoffs if that’s the purpose of the post.
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