According to GS President Gary Cohn :
You’re seeing big international banks, outside of ourselves and JPMorgan, really taking a pretty substantial step back from the markets, and we hadn’t seen that in the entire history of banking.
Moreover, he insists that market-making and IB outside the main economies is progressively moving to banks in the emerging countries, i.e. not BBs. In GS' case, they want to focus a lot of resources on their Brazil branch. He also mentioned issues in problematic (European) countries such as France where, if a company wants to borrow half a billion, "there’s not a bank in France that would do that," hence a need to go see unconventional players and regional boutiques.
Do you, especially the monkeys who work at the "retreating" BBs see this happening ? Any input from foreign ibankers would be great !
Source : Bloomberg
If what you mean is that there's an increase in IB boutique presence, I'd say yes. The MM market is gaining market share (or at least has been since the crisis). I guess high-profile bankers leaving BB to create their own firm (think Qatalyst) is driving this trend.
Executive banter ... MS will land another huge underwriting and Cohn will eat his tie
Insert any other major BB if it makes you happy. They're saying this but there are still groups at other banks that they'd love to have
But seriously I think Cohn's point is really more about risk taking activities. Other than reputation, underwriting (in the 'best efforts' sense of the word as it is with IPOs and bonds) isn't really a risky activity. I think Cohn is referencing market making, bridge commitments, structuring, warehousing - all the shit that a lot of banks are really pulling back from because it is prohibitively capital intensive.
I know that Gary is tooting his horn a little bit here but I think it makes sense. These are hard things to do, and you have to be good at doing them, and risk managing them AND have the scale and expertise to do it all in an environment where it is capital intensive and reputationally risky. This means you're inevitably going to see fewer and fewer folks doing them. The banking world is shrinking, and when it comes to some of these activities the economics probably only make sense for a handful of guys to do it. Of course you can bring up issues about concentrated risk centers and TBTF blah blah blah - but at the end of the day the regulators brought this on themselves. They made it so expensive to conduct certain businesses (businesses that need to be done apparently) that only the biggest, most resourceful, most expert, and (most importantly) most scaled up banks are going to have the capital and the wherewithal to do them.
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