Deutsche Bank has had a busy week. After poaching an entire deal team from Merrill Lynch, the German bank posted its first quarterly loss since World War II. Unlike their American counterparts, D-Bank officials also had the stones to tell the German government what they could do with their bailout package.
http://www.breitbart.com/article.php?id=CNG.c3b86…
The Merrill move is pretty solid strategy on their part. D-Bank grabbed a bunch of guys who were probably getting happy feet anyway, and positioned themselves to benefit from all the inevitable bank carnage over the next couple years.
Now that the $500,000 cap is in place, don't be surprised to see a lot of top guys going to foreign banks. Talent will always follow the money, and even the hint of a limited payout is enough to send a lot of guys toward the door. The whole corporate culture over at B of A isn't helping the Merrill situation either. The Merrill guys already looked down their noses at the philistines from B of A, and that was before Thain made a laughingstock out of Ken Lewis.
Hahahaha.... Merrill=dead.
Lewis's venture into banking failed the first time and looks like it will again. He needs to stick to serving Joe Six Pack.
Not that trying to predict the future is particularly useful, but what kind of carnage are you expecting Edmundo?
Here are a couple predictions I feel pretty comfortable making:
Enormous amount of consolidation in banking over the next 24 months. I'm not talking about mega-mergers like Chase-WaMu, but a large volume of strong banks absorbing weak ones. By carnage, I'm referring to banks going under or being acquired.
Increased voluntary attrition in American banks. As more and more banks toke on the crack pipe that is TARP, draconian compensation measures will force the most talented out. We are already seeing this to some extent with Merrill, though I'll grant that the majority of hitters leaving the firm now are doing so for cultural reasons more than limited comp. Expect to see more and more top American bankers defecting to foreign banks that aren't under Obama's thumb.
Salary caps in place at TARP banks will make non-TARP banks less competitive, punishing the banks that did business properly and rewarding the buffoons. This is more of a theory of mine than a prediction, but I really think the effects of TARP will bear this out. In either case, it will be interesting to watch. Especially since I'm safely outside the U.S.
This makes sense, but aren't foreign governments throwing around compensation caps as well? They haven't put anything in place, but listening to the news I've heard inklings that we won't be the only ones.
Valid theory, I think that will happen though the ability to give out deferred options and repay the TARP may make that less so, although I certainly see firms cannibalizing their core business to pay back TARP so their options will fully vest.
its like playing jenga!
There was an article about this on the WSJ. Apparently top boutiques receive about one resume every day from a senior banker from the BBs for a position. Makes you wonder whether we should be aiming for a BB as our primary goal when senior bankers are jumping ship.
I was just going to say the same thing, read it today. MD's moving from BB's to boutiques, etc. Makes sense to me. Seems like the smaller firms are where the big bucks are going to be. I think the article even said Lazard (I believe) just hired a bunch of previous BB employees. I would assume those guys are trying to get into PE/VC as well (which is the spot to be in my opinion).
The war for talent is gonna get ugly for the BB's.
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