To lose one investment banker might be regarded as a misfortune; to lose dozens looks like carelessness, to paraphrase Oscar Wilde.
In the case of Australia’s endlessly ambitious Macquarie Bank, however, it might look more like a second successive weak bonus season.
News on Thursday that the bank once known as the “millionaire factory” has just lost a swag of US-based equity analysts and its US head of equity capital markets made the FT’s report last week seem particularly timely.
And sure enough, as Bloomberg reports on Thursday, Macquarie’s US operation, which last year took over Fox-Pitt Kelton Cochran Caronia Waller, this week lost US equity capital markets head Jim Rossman and at least four stock-market analysts to rival groups.
They could be the first of many, in light of that earlier FT report, which quoted analysts and people close to Macquarie saying that “dozens of senior bankers” were assessing whether to jump ship after being told recently that their bonuses would be six-figure sums rather than the hoped-for seven figures.
Macquarie’s bonuses, as the FT explained, are linked to the group’s return on equity, which has fallen to 10 per cent, partly because the group has kept A$4bn of excess capital on its balance sheet beyond its regulatory requirements. The difficulty for Macquarie is that most of its competitors still allocate bonus awards based on individual employees’ performance, rather than ROE, the report added.
Recently Macquarie, which weathered the global financial crisis in 2008-09 but saw a rare slide in profits last year, has bounced back. But weak bonuses are not what its bankers are used to.
That said, Macquarie has also been busy beefing up staff in its US equities business, hiring more than 30 so far this year in areas including research and sales and trading, according to Bloomberg.
That push is a continuation of what the FT described late last year as an international hiring spree to “turn itself into a global player in banking services to financial institutions”.
Indeed, Macquarie, as the FT reminds us, is far from the only bank that faces losing senior bankers as rival groups compete for talent and regulators crack down on cushy bonuses and other awards.
But Macquarie’s chief executive, Nicholas Moore, is sanguine, telling the FT last week that bankers remain attracted to the group for a “variety of reasons”, including its strong position in Asia and the opportunity to access the group’s balance sheet to grow their individual businesses.
Moore, concluded the report: “Likes to under-promise and over-deliver, but is upbeat about the future. ‘In this business, there’s nothing like a successful series of transactions to set up greater success going forward’, he says.”
Related links:
Macquarie eyes deal to expand in Europe - FT
Another day, another Mac Bank deal – FT Alphaville
Teflon Mac Bank: Ever onwards and outwards - FT Alphaville
‘Teflon’ Mac bank sails on – FT Alphaville