Future of Investment Banking | Outlook Beyond 2021
Recently, JPM published a report talking about the investment banking industry and where it is headed.
Some of the key points made in the research are:
- Wall Street banks are taking significant amounts of market share from European banks, and that is expected to continue
- GS / MS will remain the top two investment banks
- JPM and Citi's retail banking presence will continue to help its IB business thrive
- Among European banks, Barclays is "the most complete player due to its strength in the US"
- CS is at the bottom of the "pecking order" of global investment banks according to the report
While most of the points made by the report are not surprising, it is interesting to see how bearish they are on the outlook of European investment banks. With the implosion at Archegos recently as well, we are seeing massive defects from the senior ranks at CS, which will be hurtful to a business once seen as traditionally dominant in Lev Fin / Financial Sponsors, leaving Barclays as the last challenger to Wall Street hegemony.
The report doesn't dive deep into M&A specifically, but here are some of the key trends that will likely play out in the next few years:
- EBs will continue to take market share as they have conclusively proven that the independent advisory model is effective and beneficial for clients
- Companies such as Evercore, Centerview, PWP who's presence in Europe is more nascent, will start to become a larger player in the M&A market there to match the strength of their US franchises
- Large BB's (especially GS) will start to lose out on talent due to issues on culture, health, bureaucracy, pay etc. Clearly, the report does not see this as a problem, but how this manifests into their ability to attract the best rainmakers in the future is yet to be seen
For anyone interested in reading more about the article: https://www.fnlondon.com/articles/goldman-and-bar…
Interested to hear what everyone else thinks
Think CS is implementing retention bonuses for their most important rainmakers to stem attrition, so the impact should not be as big as most ppl imagine
https://www.cityam.com/exodus-at-credit-suisse-as-senior-bankers-flee-t… it seems like a good number of rainmakers has left?
Turnover at the senior ranks are quite common among banks (albeit not at this level). They will struggle in the short term, but it's unlikely they will perform as poorly as ppl think (i.e. Not necessarily at the the bottom of the pile). Don't forget they have a massive wealth management business which helps them bring in clients to IB
can you post a link to the PDF report pls?
Think the only way to read the full report is if you have access to JPM broker research
If you have a competing offer from an EB and a mid / low tier BB, there's a very low chance you will not choose the EB. Much better pay, career progression, variety of deals makes it an easy decision. As long as they are able to retain their talent and groom them to be future rainmakers, EBs will remain dominant
I initially decided on mid-tier BB over EB because I wasn't 100% sure about the IB -> PE track, but if I could go back in time I would take the EB offer for the reasons you mentioned. Another factor in my decision was that this was one of those sweatshop EBs and the BB was known to have "good culture". The reality is that IB is pretty much a similar environment across BB/EB. You may get lucky and have a great experience, but it's hard to predict those things due to the level of attrition at groups. I would take any EB over mid-tier BB and would take EVR/PJT/CVP over any top BB, except maybe GS given you get offered in specific groups vs. going through placement.
Kinda unrelated but what other BBs are group-specific interviews+offers?
What does Rothschild's North American outlook look like? From what I can tell, they are the only European bank trying to aggressively expand in North America, but most of their deals are still in the MM space and they don't really do mega deals at all outside of RX
Think in terms of general trends there will be a shift away from cities like NYC/SF/LA towards Chicago in the north and Texas/Florida/Charlotte in the south
JEF will be above CS, UBS and DB in league tables this year, worth noting
Yes, but not CS. If anything Barclays.
http://graphics.wsj.com/investment-banking-scorecard/
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