From the monthly archives:

August 2010

There are a few bright spots for investment banking job hiring, reports the Wall Street Journal. Even amid the fears that Wall Street may reverse its recent hiring spree.

Some firms, such as Barclays Capital, the investment banking unit of Barclays PLC, have eliminated jobs. But others say they will continue to hire for important positions and expand the businesses they entered as the markets recovered last year.

Nomura Securities, for example, has hired more than 600 people since March 2009 and is continuing its plans to hire 300 more by March 2011. French bank BNP Parabas SA plans to continue its hiring in the U.S. for capital markets professionals as well.

According to Bureau of Labor statistics quoted in the article, U.S. securities-industry employment in June 2010 was up 1.2% since March, but still short 57,500 jobs or 6.7% since the peak in 2007. New York area securities industry jobs have been rising too, but are still well below their peak.

Wall Street is adjusting to new pay structures, which could impact hiring decisions. The trend is toward an increase in salary and less in bonuses. Base salaries on Wall Street are up as much as 40% this year, according to Jeff Visithpanich at Johnson Associates Consulting. Cash bonuses are down, with more incentive pay coming in the form of stock which can be clawed back, if necessary.

Nevertheless, many employers are playing a waiting game to see if the economy will regain momentum or drift back into recession, before committing to major hiring moves.

What’s your opinion? Has the investment banking hiring surge ground to a halt or are there pockets of opportunity? Add your comments below.

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Investment banking stars will frequently switch firms for higher compensation. And the firms trying to lure these stars often get into a “bidding war” for talent, just like top sports teams.

That’s the theme behind a new book from Harvard Business School Professor Boris Groysberg called Chasing Stars. Groysberg bases his book on an in-depth study of investment banking analysts because they are the ultimate “free-agent” knowledge workers, according a review in The Globe and Mail.

The best analysts are almost like celebrities, appearing regularly in the media. Their expertise will well known and completely portable. An investment banking analyst who switches firms usually follows the same industries, so the job and network needed stays the same. Plus they don’t have to uproot their families. Most continue to work in the New York area. In addition, their performance is carefully tracked by respected trade journals, such as Institutional Investor, which compiles an annual ranking of the best analysts. So it’s easy to compare the “players.”

Groysberg’s main premise: There is often an auction for a star’s services, and the winning bidder, who most liberally estimates the analyst’s worth, will most almost certainly overpay.

This would be fine if the analyst increased his or her output or value to the firm, but that’s not usually the case. Groysberg’s study found that the most mobile stars experienced an immediate degradation in performance. For instance, an analyst who made Institutional Investor’s top rankings and stayed put usually stayed in the top rankings 83.9 percent of the time. Whereas a top-ranked analyst who jumped shipped remained in the top ranks only 69.4 percent of the time. Even after years at a new firm, star analysts who changed employers more frequently underperformed the star analysts who stayed put.

One reason, according to the review, was the impact of the firm’s culture on their performance. Yes, analysts can take their experience and contacts with them. But they sometimes underestimate the special culture or unique economic models which their previous firm provided, or the support provided by other members of the firm. “What they left behind, in short, were the capabilities of the old firm and the practiced, seamless fit between their own skill and the resources of the company,” Groysberg says.

What’s your opinion? Is the grass always greener at a new firm? When is it smarter to stay put at your current firm and when is it absolutely time to move on? Add your comments below.

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It’s no secret that some star traders at big Wall Street investment banks may be looking for greener pastures in the wake of the new Volcker rule. The Volcker rule is part of the Dodd-Frank financial reform bill signed by President Obama last month. The rule stipulates that big banks can’t invest more than 3% of their Tier 1 capital into private equity and hedge funds.

The rule mostly affects the big firms with proprietary desks such as Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup and Bank of America. An article in TheStreet.com says Goldman, for instance, is considering moving its two large proprietary trading desks, which manage about $9 billion, into its asset management arm.

But working in asset management may be a downgrade for these top guns. Apparently there’s a belief on the street that proprietary traders get better information than their counterparts in asset management. And it’s not without some quantitative support. Goldman’s proprietary results in areas such as fixed income currencies and commodities have tended to be better than their asset management cousins.

If proprietary traders are forced into the asset management division, it could mean they’ll be even more willing to entertain offers from hedge funds looking to lure away top talent. The assumption is that hedge funds could match the information resources to which they’ve grown accustomed.

What’s your take? Do you think the big firms give their own desks an edge? Add your comments below.

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Investment Banking Jobs at Wells Fargo

August 9, 2010

After cutting back on hiring just a year ago, Wells Fargo has been adding to its investment banking and capital markets ranks. The San Francisco-based bank added about 30 associates and about 50 analysts this summer, recruited primarily from business school graduates and undergraduates. The bank is also looking to add a handful of senior […]

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Candidates with Chutzpah Find Investment Banking Jobs

August 2, 2010

Candidates with Chutzpah find investment banking jobs, or any other job, for that matter, says Jeremy Hazlehurst in an article for CityAM online, London’s free daily business paper. There are plenty of opportunities, if you’re willing to put in that extra bit of effort. Hazlehurst says if you are job-hunting, then you are likely to […]

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