For more than 15 years, William has been writing about the changes in the investment banking and securities industry.
Here is a selection of some of his recent columns for Financial News on individual banks:
- how Goldman Sachs has bounced back with a vengeance over the past year
- how UBS has taken a giant leap of faith with its radical new strategy for investment banking – and why activist investor Knight Vinke is not convinced
- why it is so hard to make the numbers add up at Morgan Stanley?
- how the investment bank at RBS has been going round in ever decreasing circles
- how the great investment banking reshuffle will affect individual banks
And here is a selection of some of his most read columns on the big issues facing the industry:
A crisis of culture and complexity in investment banking
The report by the Parliamentary Commission on Banking Standards got a lot right – but little will ultimately change without more fundamental and radical reform
You can’t touch it, taste it, see it or hear it. But you can smell it. When it comes to business, culture – as Lou Gerstner of IBM once said – is everything.
In that respect, the report last week into the professional standards and culture of the UK banking industry by the Parliamentary Commission on Banking Standards hit the nail on the head.
By zooming in on the absence of individual responsibility for the failures in the banking industry, the breakdown of accountability, and ethical failures encouraged by huge but asymmetric bonuses, the commission has produced an important record of the role played by cultural decay in the financial crisis.
Yet for all of the report’s merits, something doesn’t quite add up. Its excellence on the dysfunctional culture in banking is matched by its lack of focus in other areas, particularly when it trespasses beyond its brief. The net result is a report that in parts lacks clarity and coherence, that is probably too long, and that leaves the reader with an overall sense of mild confusion…
Putting the fun back into investment banking
Something needs to happen to snap the industry out of its gradual circle of decline
‘Most of the time, I don’t have much fun. And the rest of the time, I don’t have any fun at all’. Woody Allen might just as well have been talking about investment banking, which, if truth be told, just isn’t very much fun any more.
Over the past few years, investment banks have been struggling to come to terms with their fall from grace. In the face of stuttering economic growth, increased regulation and their new found status as social and political outcasts, investment banks have found that the economics of their business don’t really add up anymore.
This malaise was reflected in a strangely subdued set of first quarter results for investment banks…
The great transatlantic investment banking divide
The precipitous decline in European investment banking suggests that the European capital markets may be fundamentally broken.
A decade is a long time in investment banking. Ten years ago, the Iraq War had just got under way, a respiratory disease called Sars was sweeping across Asia, and markets around the world were bottoming out in the wake of the dotcom crash.
If that all sounds like ancient history, it might alarm you to hear this: European investment banking fees in the first quarter of 2013 were the lowest they’ve been since the first quarter of 2003. For all the recent talk of the recovery in investment banking on a global level, someone forgot to tell Europe.
Whichever way you cut the numbers, investment banking in Europe is stuck in neutral if not reverse. Paralysed by the economic uncertainty and the inability of European governments to come up with a convincing and permanent solution to the sovereign debt crisis, European capital markets slipped backwards in the first quarter of this year, falling further behind the booming US markets in both absolute and relative terms…
How to break out of the regulatory impasse
As the regulatory reform process grinds to a halt, it’s time to shift the burden of proof on to the banks
The 19th-century British statesman Lord Palmerston said: “Only three people have ever really understood the Schleswig-Holstein business. One of them is dead, the other is mad, and the third has forgotten all about it.” He could as easily have been talking about financial regulation.
Palmerston was actually referring to an intractable diplomatic conundrum over part of what is now Germany and Denmark that challenged the best brains in Europe at the time. It was the sort of issue for which the World Economic Forum in Davos, had it already been around, would have run a break-out session.
No less intractable today is the debate over the reform of financial regulation and the future structure of the international financial system. And it is clear that, as the fifth anniversary of the financial crisis fast approaches, the problem has become more complex, more political and more uncertain…
Proprietary trading is dead. Long live proprietary trading?
Whatever else you might say about investment banks, please don’t mention the “p” word. Not “p” for pay, but “p” for proprietary trading.
As the debate over the future of the “p” word rumbles on, you might have thought that the new, low-fat, slimline Wall Street had already moved on. Investment banks have been falling over themselves over the past few years to explain that they don’t do the “p” word any more. But if that’s true, why do they still get so worked up about it?
The proposed ban on the “p” word is otherwise known as the Volcker Rule, named after former Federal Reserve chairman Paul Volcker, for whom the banks no doubt reserve another “p” word altogether.
The reason why investment banks are still so jittery about the “p” word is that they do an awful lot of stuff that looks remarkably “p”-like and for which neither they nor US regulators have yet to come up with a clear and simple definition…
The decline and fall of the investment banking empire
How can the industry break out of what looks like a cycle of atrophy and long term decline?
Substitute “investment banks” for “Rome” in the following quote from Edward Gibbon’s History of the Decline and Fall of the Roman Empire and it gives you a pretty good analysis of what has gone wrong with the industry.
“The decline of Rome was the natural and inevitable effect of immoderate greatness. Prosperity ripened the principle of decay; the causes of destruction multiplied with the extent of conquest; and as soon as time or accident had removed the artificial supports, the stupendous fabric yielded to the pressure of its own weight.”
It nails the hubris, wealth, over-expansion and moral and ethical decline. It took several hundred years for the Roman Empire to collapse. And the question for investment banks is whether they too are ultimately doomed, or whether the problems of the past few years are merely a temporary blip.