The investment-banking reformation is picking up steam, with converts joining its ranks by the day. And like the Protestant Reformation in the 16th century, it promises to be tumultuous and far-reaching, while leaving the promise of heaven just as uncertain.
Martin Luther: Inspiration for investment banks?
Since our post last week about the reshaping of the investment banking sector, Credit Suisse announced it is planning to restructure around two core units, investment banking and asset management, fueling speculation that a formal separation could follow. Barclays seems headed on a similar course, as part of a wide-ranging business review under its new chief executive Antony Jenkins that has yet to be unveiled. Barclays is reportedly under pressure to cut the size of the investment bank drastically.
But these moves are more than the seasonal cull ahead of bonus payouts. They reflect a fundamental rethinking of the business and the balance of people, capital and technology needed to support it. Slow economic growth, tougher regulations and a reduced appetite for risk are forcing the institutions to adapt.
What continues to fascinate is how little these firms are saying about such sweeping transformations. The Credit Suisse announcement, for example, says plenty about new reporting lines, business structures and executive responsibilities. But there’s no discussion about clients or how the changes will enable the bank to better serve them. Clients must shake their heads and wonder where it’s all going to lead.