brokerage firms vs universal bank
just curious about the prospects of working in ibd at ibank - would it be better off to go with a brokerage firm (your MS/ML) with strong distribution abilities or universal bank (your JPM etc) that can use their balance sheets and get deals. I'm only talking about their deal flows etc and hold all the other stuff like comps etc constant. thx
IMO, the universal banks will win out. they can lend at LIBOR minus.
Once this liquidity sloshing around dries up, MLS, LEH, BCS, GS, and MS won't be able to offer compelling financing. and the boutique IBs like EVR and GHL will capture the purely advisory business.
but that's the long run. you need to be concerned with the next 5 years.
This kid doesn't even know his ticker symbols. Its MER and BSC genius. Seriously, this justification has been making the rounds, its the standard pitch the Universals give to recruits but it's really just crap. The big monoline banks are NOT going to loose all their advisory business to Greenhill etc.
They are able to arrange financing with Commercial/Universal banks should the clients need it. Clients still need the monolines on account of their extensive client lists, debt and equity platforms.
Not to mention the inherent conflict of interest that arises when a universal bank lends money to and advises a client at the same time. The bank's main goal is to get its loan back, and this could lend a conservative bias to the advice it offers clients (to ensure that the client can make the interest and principal payments, as opposed to investing in further growth, etc.)
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