Wall Street banks make opportunistic play for talent at rival firms

There’s reports that Wall Street firm could be getting active again in the Australia and New Zealand market when it comes to hiring bankers. Picture: Michael M. Santiago,Getty Images/AFP

After spending the past year paring back their workforces, Wall Street banks are about to start flexing their muscles again in the battle for talent by targeting top performing staff from their locally-based rivals that are feeling the heat from the tougher market conditions.

Speculation suggests at least one of the US investment banking groups is planning to make strategic hires that will hopefully come at more reasonable prices than in past years, and fingers have been pointing to Goldman Sachs.

Goldman Sachs has experienced a changing of the guard in recent years with chairman for Australia and New Zealand Christian Johnston and corporate advisory chair for the region Bruce MacDiarmid, a top infrastructure banker, both retiring last year.

It’s not being ruled out from tapping some of the more well known operatives on the shoulder for roles, although expectations are that it would be bankers more at the Associate or Vice President/Executive Director level that would be targeted.

Such bankers were costly to retain in 2020, becoming the battleground when Jarden and Barrenjoey launched as investment banking start-ups in Australia and taking staff from Wall Street firms with them.

But last year, investment banking activity throughout the globe was down after mergers and acquisitions as well as initial public offering activity boomed in 2021 and 2022 amid a low interest rate environment.

Jarden last year deferred some of its bonus payments as some jobs were cut, while Barrenjoey has been paying its banker bonuses in monthly instalments instead of quarterly, say sources.

But until now, it’s been the big Wall Street names that have been making staff cuts while local investment banks have largely refrained.

Perhaps this year the reverse could be true.

The Wall Street Journal reported in 2021 that Goldman Sachs had increased pay for its more junior ranks by 30 per cent, making it the highest paying of all the banks on Wall Street, with third-year associates pay moving to $US150,000 from $US125,000.

At this time it was topping the league tables for investment banking revenue with JPMorgan.

But in January 2022, the WSJ reported that the $US4.4bn it paid in additional compensation in 2021 caused a fall in its fourth quarter profit.

Now the WSJ’s sister publication, MarketWatch, is reporting that Wall Street’s biggest banks are beating investment-banking revenue estimates, with a surge in equity capital markets and debt market activity globally at the big five banks, including Bank of America, Citi, JPMorgan, Morgan Stanley and Goldman Sachs.

Leading the trend is Bank of America, with total investment banking revenue up more than 25 per cent in the first quarter, compared with the year-ago period, followed by a 15 per cent jump for JPMorgan Chase, 10 per cent for Citigroup, about 7 per cent for Morgan Stanley and 3 per cent for Goldman Sachs Group.

The banks are on track to collectively deliver 13 per cent revenue growth compared to the previous corresponding period.

In Australia and New Zealand, ECM activity remains constrained, although bankers have been busy with mergers and acquisitions work with a raft of deal announced since the start of this year.