Academic

What Do Investment Bankers Do?

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

During the financial crisis, the last administration, staffed by investment bankers, tried to furiously deal its way out of the mess.  TED has a post up that suggests that perhaps we should not be surprised, given the business model, and ultimately the culture, of investment banking:

a senior banker in a revenue generating role at a large investment bank is often expected to deliver $25 million or more in transaction-related revenues to the bank each and every year. Below that, senior management just doesn't think he's producing enough. (Among other things, there's a hell of a lot of infrastructure to pay for in a big bank.) But you can't do that unless you are doing deals: mergers and acquisitions, stock and bond underwritings, derivatives. Do you see the problem? It just doesn't pay to offer good advice. A banker could and should be doing deals instead.

Full post as published by Conglomerate on March 12, 2010 (boomark / email).