ML writedown affect i banking?
What do people think about how the recent writedown / ousting of CEO in ML would affect its investment banking business and compensations?
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ML's set aside enough compensation in Q1 and Q2 for the junior team to be paid street. The senior guys, not so sure.
That's for this year though - junior bonuses won't be paid out until next summer, at least for analysts. Also, who knows what "street" will be - many banks facing same writedowns as ML.
The IB business won't be affected. Record revenues for the past 2 years, although credibility is clearly hurt and it has yet to be seen whether this will affect client relationships with the IBK.
Don't know if credibility will be hurt that much; people said MS would be hurt with the ousting of Purcell.
Fair point. Although I still think it's yet to be seen. We'll see as the next few quarters play out WRT to write downs. Wouldn't be surprised if some senior bankers decided to leave after getting shafted on their bonuses after all having record years.
well goldman will still set the tone for street payouts, though without pressure from other banks to raise bonuses i doubt they will jump as much as in the past
no, gs always pays just after everyone else
You're expecting bonuses to "jump" at all? I'm thinking they'll be down, possibly substantially...
gs is famous for paying below street, so while they may set the tone - i wouldn't know - the general comp is governed by other firms.
in the context of ML, i don't think there will be a material change. it is still a very solid platform. any change in comp is likely to be street wide.
obviously, if this is ml v. gs/ms take the latter. all else, go with the best fit.
Ibanking separate from credit
Yeah.. IB is differant than credit, but to say it is separate from it.. well you've never done an M&A transaction.
You can't loose 20% of your capital base in one quarter and be okay. ML has lost a lot of street cred - maybe not specifically at banking but firm as whole. Expect another huge write-down 4q. These guys took tons of risk in CDOs (thanks Chris Riccardi)just to be number one in the league table. Other firms are not taking "similar" write-downs, as a percentage of their business and as an absolulte number MLs was BY FAR the worst. You'll have to cut lots of staff to clear up enough bonus pool to match street competitors pay.
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