As the investment banking world reels from the turmoil in the credit and equity markets, an e-mail lands in the in-boxes of employees at a global investment bank, outlining how management plans to maintain its strong recent profitability.

From: Harry Huge-Fees and Jonathan Never-Here, co-heads of global investment banking.

Dear Colleagues,

Thank you for all your hard work so far this year.

As you know, over the past two years, we have witnessed one of the most exciting periods ever for mergers and acquisitions, with volumes reaching a record $3 trillion at the end of Q4 O6.

Globally, Bulge-Bank and its peers have generated more than $14bn in advisory revenue alone, and we have won a big chunk of this due to your unstinting efforts. Further, Bulge-Bank has consistently ranked in the top three positions in the all-important advisory league tables.

However, the recent turmoil in the credit markets means that we are struggling to provide our key private equity clients with financing for their deals.

As a result, Bulge-Bank is holding an enormous amount of debt on its own balance sheet which we are unable to syndicate for the time being.

Unfortunately this means that profits will be greatly reduced this year, and, as a result, we will be unable to meet your characteristically high expectations for year-end bonuses. Aside from top performers, we are predicting these will be flat on last year’s increase of 10 per cent — 15 per cent.

Employees in leveraged finance are likely to bear the brunt of these reductions.

I realise that this must be incredibly disappointing, particularly after such a frenetic period of activity.

But we are very keen to reward all your efforts this year and, consequently, the bonus committee has come up with a novel suggestion which may mitigate your disappointment.

Bulge-Bank would like to offer you the opportunity to buy a slice of the leveraged buy-out debt we are sitting on. Once the credit market returns to normal, we will help you sell down your portion — for a discounted fee — and hopefully you will make a profit.

We realise this is highly unconventional, but we hope you will see it as a unique investment opportunity and a chance to help the firm.

As is usual when markets become less favourable, we will adopt our standard practice of asking you to reduce expenses, including night-taxis and colour photocopying. Fresh fruit baskets will no longer be provided in client meetings, and we ask you to limit travel and entertainment for the time being.

This should help improve our cost: income ratio enormously.

Thank you for your understanding and let’s get through these hard times together!

Harry and Jonathan
Co-heads global investment banking
Bulge-Bank