The stampede of investment bankers leaving bulge bracket firms isn’t just from those being let go. Many of the big firms’ top rainmakers have been looking for greener pastures among banks that do not face tighter regulations, or at foreign banks and small start-up firms, according to a recent report in the New York Times online.
Other senior execs are leaving to avoid the culture clash that often occurs when behemoths like Bank of America and Merrill Lynch suddenly merge. Some experts think this should be a cause for concern among the big banks. Others think that the industry has been dominated for too long by a handful of major players, and this diversification could serve to reduce overall risk.
Either way, there’s a new crop of young, small, aggressive start-up boutique banks that are aiming to grow into the next major player on the Street. They include firms such as Aladdin, Broadpoint, Pinetum Capital and BTIG which, according to the article, have been snapping up scores of top bankers since 2007.
The article quotes Michael O’Hare of LaBranche Financial Services as saying, “We are attracting people from Merrill, from JPMorgan, from Bear. I’m not talking the second tier. We have the cream of the crop.”
Some of the new start-ups are aiming to replicate the investment banking model that fell apart after the demise of Lehman Brothers and Bear Stearns. Others are trying to upgrade their talent and status on Wall Street, luring top bankers who previously would have never considered moving from a Morgan Stanley or a Goldman Sachs.