Senior leadership at investment banks has become more important than ever following the fallout from the financial crisis. Changes to management teams typically coincide with dramatic strategic adjustments, including job cuts, the exiting of business areas and cultural overhauls. Credit Suisse began prioritizing wealth management over traditional investment banking under CEO Tidjane Thiam, while Goldman Sachs somewhat neutered the voice of its once all-powerful securities division following the appointment of David Solomon. Deutsche Bank has had four CEOs since 2012, and seemingly launches a new strategy under every regime, just to give a few examples.
These changes tend to have a material effect on rank-and-file bankers, whose compensation is strongly correlated with a bank’s share price. So which bankers are currently most pleased with the work of their bosses? A new survey from Wall Street Oasis lays out a few narratives quite clearly.
As you can see from the chart below, bankers from Evercore and Goldman Sachs have quite a bit of faith in the competence of senior management. The two firms finished first and second a year ago as well. Run by CEO Ralph Schlosstein since 2009, Evercore has seen its revenue double over the last four years. With a compensation-to-revenue ratio of around 60%, employees at Evercore have no reason to complain. Pay-per-head could near $600k in 2018.
Meanwhile, Goldman’s ranking comes with a bit of a caveat. The survey collects data throughout the year, making it rather unclear if bankers are complimenting former CEO Lloyd Blankfein and his leadership team or that of new Chief Executive David Solomon, who was officially announced as Blankfein’s successor in July. However, Goldman bankers we talked to don’t see the leadership change as much of a hurdle considering Solomon has been with the bank since 1999.
“They are different people, but the one commonality is that they are both obsessed with Goldman Sachs,” said one managing director. “That singular focus creates stability. You know what you are getting [from each].” The MD downplayed any ramifications from the shakeup of the bank’s securities unit, noting that most senior employees were waiting for the other shoe to fall for some time.
Rounding out the top five are two other generous boutiques – Moelis and Paul Taubman’s PJT Partners – followed by J.P. Morgan, which employs the longest tenured CEO of a major bank in Jamie Dimon. Once dubbed “America’s least hated banker” by the New York Times, Dimon is a major recruiting chip, according to one VP. “He’s got a backbone. We all walk a little taller every time he stands up for [the bank].” Dimon famously got into a verbal sparring match with President Trump over immigration issues and has never been afraid to let his personal opinions be known.
Rothschild made the biggest leap of any firm over the last year – jumping 17 spots to eighth – as the Paris-based firm has opened its purse strings by adding pricey senior M&A bankers throughout the year. Staff costs across the bank were up 17% globally during the first half despite a 12% increase in revenue.
Issues with morale
The two banks that took the biggest tumble down the leadership rankings aren’t too surprising. Scandal-plagued Wells Fargo dropped six spots to 17th, though it still finished ahead of U.S. rivals Bank of America and Citi. Then there is Deutsche Bank, which plummeted 15 spots to 28th. Former CEO John Cryan was ousted in April and replaced by retail banker Christian Sewing, who has taken a knife to the German lender’s commercial and investment bank as its share price continues to hit new lows.
"Morale has completely collapsed," one U.S. equity derivatives trader told us earlier this summer. In fairness to Sewing and his management team, it’s hard to earn great reviews from employees when you are actively shedding thousands of jobs globally.
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