I've read on the forums that the banking economy is terrible right now. It seems like every bulge bracket is cutting down on jobs and slashing salaries. This may seem like a really ignorant question, but why is this? I understand the economy as a whole is terrible right now, but why is banking in particular so effected? Especially compared to other professions like consulting, in which some firms are actually growing?
Any help/links would be much appreciated. Thanks.
i personally believe that banking skills are getting commoditized, driving margins down, but have not done the research to back it up. complete guess on my part.
On the S&T side of things trading volumes are way down and prop trading is being regulated out. On the investment banking advisory and financing side you have to realize that banking is a cyclical industry. When the economy does well investment bankers do REALLY well but when the economy is poor as it is currently investment bankers do REALLY poorly. No one wants to acquire a company, be acquired, or raise capital right now because economic fundamentals are pointing toward continued sluggish demand, growth, uncertainty, and low asset values.
M&A volume has been average or a little better than average as well as companies can raise capital cheaply to make acquisitions.
Your statement that bankers do better in a strong economy is correct, but they don't exactly do poorly in a weak economy.
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