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TOP50 BANK EMPLO VAULT GUIDE TO
THE TOP 5O BANKING EMPLOYERS
DEREK LOOSVELT AND THE STAFF OF VAULT
© 2004 Vault Inc.
Copyright © 2004 by Vault Inc. All rights reserved. All information in this book is subject to change without notice. Vault makes no claims as to the accuracy and reliability of the information contained within and disclaims all warranties. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Vault Inc. Vault, the Vault logo, and “the most trusted name in career informationTM” are trademarks of Vault Inc. For information about permission to reproduce selections from this book, contact Vault Inc., 150 West 22nd St, New York, New York 10011, (212) 366-4212. Library of Congress CIP Data is available. ISBN 1-58131-294-6 Printed in the United States of America
ACKNOWLEDGEMENTS This book could not have been written without the extraordinary efforts of Raphael Garfield, Elena Boldeskou, Keith Kirkpatrick, Marcy Lerner, Laurie Pasiuk, Chris Prior, Ed Shen, Kelly Shore and Tyya Turner. Thanks also to Mike Baker, Hussam Hamadeh, Samer Hamadeh, Danielle Koza, Todd Kuhlman, Joseph Naggiar, Mark Oldman, and Kristy Sisko. Special thanks to all of the recruiting coordinators and corporate communications representatives who helped with the book. We appreciate your patience with our repeated requests and tight deadlines. The Vault Guide to the Top 50 Banking Employers is dedicated to the banking professionals who took time out of their busy schedules to be interviewed or complete our survey.
Table of Contents A GUIDE TO THIS GUIDE
1
OVERVIEW OF THE BANKING INDUSTRY
3
What's What? Industry Overviews . . . . . . . . . . .5
Investment Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Commercial Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 The Year in Review . . . . . . . . . . . . . . . . . . .9
THE VAULT PRESTIGE RANKINGS
17
Ranking Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 The Vault 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Quality of Life Rankings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
THE VAULT 5O: 1-25
31
1. Goldman Sachs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 2. Morgan Stanley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46 3. The Blackstone Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 4. Citigroup’s Global Corporate and Investment Bank . . . . . . .70 5. JPMorgan Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82 6. Merrill Lynch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92 7. Lehman Brothers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104 8. Citigroup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118 9. Credit Suisse First Boston . . . . . . . . . . . . . . . . . . . . . . . . . .132 10. Lazard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146 Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers Table of Contents
11. UBS Investment Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156 12. Deutsche Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .168 13. Bear, Stearns & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .178 14. Banc of America Securities . . . . . . . . . . . . . . . . . . . . . . . . .186 15. Bank of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196 16. Dresdner Kleinwort Wasserstein . . . . . . . . . . . . . . . . . . . . . .206 17. Rothschild . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .212 18. Thomas Weisel Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . .218 19. Barclays Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .228 20. HSBC Holdings plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .234 21. Wachovia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .242 22. Houlihan Lokey Howard & Zukin . . . . . . . . . . . . . . . . . . . .252 23. Greenhill & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262 24. Jefferies & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .268 25. CIBC World Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .274
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26. Wells Fargo & Company . . . . . . . . . . . . . . . . . . . . . . . . . . .282 27. SG Cowen & Co., LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . .292 28. FleetBoston Financial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .300 29. Piper Jaffray & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .306 30. Bank One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .314 31. Legg Mason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322 32. BNP Paribas Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .328 33. RBC Capital Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .332 34. Gleacher Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .338 35. Brown Brothers Harriman . . . . . . . . . . . . . . . . . . . . . . . . . .342 36. The Bank of New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . .348 37. Allen & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .356 38. U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .360 39. William Blair & Company . . . . . . . . . . . . . . . . . . . . . . . . . .366 Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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40. Raymond James Financial . . . . . . . . . . . . . . . . . . . . . . . . . .372 41. Nomura Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .378 42. WR Hambrecht + Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .382 43. Friedman, Billings, Ramsey Group . . . . . . . . . . . . . . . . . . .388 44. Peter J. Solomon Company . . . . . . . . . . . . . . . . . . . . . . . . . .392 45. Calyon Securities (USA) Inc. . . . . . . . . . . . . . . . . . . . . . . . .398 46. Keefe, Bruyette & Woods . . . . . . . . . . . . . . . . . . . . . . . . . . .402 47. Robert W. Baird & Co. (Baird) . . . . . . . . . . . . . . . . . . . . . . .406 48. ABN AMRO Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .412 49. Harris Nesbitt/BMO Nesbitt Burns . . . . . . . . . . . . . . . . . . .418 50. MBNA Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .422
THE BEST OF THE REST
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A.G. Edwards & Sons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .428 AmSouth Bancorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .433 BB&T Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .439 Chanin Capital Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .445 Comerica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .448 Commerce Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .453 Fifth Third Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .457 First Albany Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .461 First Horizon National Corporation . . . . . . . . . . . . . . . . . . . . . .465 KeyCorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .470 Morgan Keegan & Company . . . . . . . . . . . . . . . . . . . . . . . . . . .476 National City Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .480 The PNC Financial Services Group . . . . . . . . . . . . . . . . . . . . . .486 Putnam Lovell NBF Securities Inc. . . . . . . . . . . . . . . . . . . . . . .490 Regions Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . .493 Ryan Beck & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .497 Sandler O’Neill & Partners, L.P. . . . . . . . . . . . . . . . . . . . . . . . . .501 SouthTrust Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .504 Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers Table of Contents
Stephens Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .508 SunTrust Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .513 Susquehanna International Group . . . . . . . . . . . . . . . . . . . . . . . .522 TD Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .526 Veronis Suhler Stevenson Partners LLC . . . . . . . . . . . . . . . . . . .532 Webster Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . .536
APPENDIX
541
Alphabetical Listing of Companies . . . . . . . . . . . . . . . . . . . . . . .543 Banking Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .545 Recommended Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .551 About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .553
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A Guide to this Guide All of our profiles follow the same basic format. Here’s a guide to each entry.
Firm facts • Departments: The firm’s major divisions. • The Stats: Basic information about the firm, usually information that’s available to the general public. This includes the firm’s leadership (generally, the person responsible for day-to-day operations, though it can include the chairman and relevant department heads), employer type (e.g., public, private or subisdiary), ticker symbol and exchange (if public), 2003 revenue and net income (usually only for public companies; we do have some estimates from third-party sources for private companies and, in some cases, the firm has confirmed that information), number of employees and number of offices. • Key Competitors: The firm’s main business rivals. Size, business lines, geography and reputation are taken into account when evaluating rivals. • Uppers and Downers: The best and worst things, respectively, about working at the firm. Uppers and downers are taken from the opinions of insiders based on our surveys and interviews. • Employment Contact: The person (or people) that the firm identifies as its contact(s) for submitting resumes or employment inquiries. We’ve supplied as much information as possible, including names, titles, mailing addresses, phone or fax numbers, e-mail addresses and web sites. Because companies process resumes differently, the amount of information may vary. For example, some firms ask that all employment-related inquiries be sent to a central processing office, while other firms mandate that all job applications be submitted through the company web site. • The Buzz: When conducting our prestige survey, we asked respondents to include comments about the firms they were rating. Survey respondents were not able to comment on their own firm. We collected a sampling of these comments in The Buzz. We tried to include quotes that represented the common outside perceptions of a given firm. The quotes may not always reflect what insiders say in our surveys and interviews. We think The Buzz is a way of gauging outside opinion of a company.
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Vault Guide to the Top 50 Banking Employers A Guide to this Guide
The profiles Most profiles are divided into three sections: The Scoop, Getting Hired and Our Survey Says; (some profiles have only Scoop and Getting Hired sections). • The Scoop: The company’s history, a description of the business, recent clients or deals and other significant developments. • Getting Hired: An overview of the company’s hiring process, including a description of campus recruiting procedures, the number of interviews, questions asked and other tips on getting hired. • Our Survey Says: Quotes from surveys and interviews done with employees or recent employees at the company. This includes information on culture, pay, hours, training, diversity, offices, dress code and other important company insights.
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TOP50 BANK EMPLO OVERVIEW OF THE
BANKING INDUSTRY
What’s What? Industry Overviews Investment Banking Investment banking is the business of raising money for companies. Companies need capital in order to grow their business; they turn to investment banks to sell securities to investors — either public or private — to raise this capital. These securities come in the form of stocks or bonds. Generally, an investment bank is comprised of the following areas:
Corporate finance The bread and butter of a traditional investment bank, corporate finance generally performs two different functions: 1) mergers and acquisitions advisory and 2) underwriting. On the mergers and acquisitions (M&A) advising side of corporate finance, bankers assist in negotiating and structuring a merger between two companies. If, for example, a company wants to buy another firm, then an investment bank will help finalize the purchase price, structure the deal and generally ensure a smooth transaction. The underwriting function within corporate finance involves raising capital for a client. In the investment banking world, capital can be raised by selling either stocks or bonds to investors.
Sales Sales is another core component of the investment bank. Salespeople take the form of: 1) the classic retail broker, 2) the institutional salesperson or 3) the private client service representative. Brokers develop relationships with individual investors and sell stocks and stock advice to the average Joe. Institutional salespeople develop business relationships with large institutional investors. Institutional investors are those who manage large groups of assets, like pension funds or mutual funds. Private Client Service (PCS) representatives lie somewhere between retail brokers and institutional salespeople, providing brokerage and money management services for extremely wealthy individuals. Salespeople make money through commissions on trades made through their firms.
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Vault Guide to the Top 50 Banking Employers Industry Overviews
Trading Traders also provide a vital role for the investment bank. Traders facilitate the buying and selling of stock, bonds or other securities, either by carrying an inventory of securities for sale or by executing a given trade for a client. Traders deal with transactions large and small and provide liquidity (the ability to buy and sell securities) for the market. (This is often called making a market.) Traders make money by purchasing securities and selling them at a slightly higher price. This price differential is called the “bid-ask spread.”
Research Research analysts follow stocks and bonds and make recommendations on whether to buy, sell or hold those securities. Stock analysts (known as equity analysts) typically focus on one industry and will cover up to 20 companies’ stocks at any given time. Some research analysts work on the fixed-income side and will cover a particular segment, such as high-yield bonds or U.S. Treasury bonds. Salespeople within the I-bank utilize research published by analysts to convince their clients to buy or sell securities through their firm. Corporate finance bankers rely on research analysts to be experts in the industry in which they are working. Reputable research analysts can generate substantial corporate finance business and substantial trading activity and thus are an integral part of any investment bank.
Syndicate The hub of the investment banking wheel, syndicate provides a vital link between salespeople and corporate finance. Syndicate exists to facilitate the placing of securities in a public offering, a knock-down, drag-out affair between and among buyers of offerings and the investment banks managing the process. In a corporate or municipal debt deal, syndicate also determines the allocation of bonds.
For a detailed look at careers in investment banking, including days in the life, career paths, lifestyle and more, get the Vault Career Guide to Investment Banking.
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Vault Guide to the Top 50 Banking Employers Industry Overviews
Commercial Banking “Neither a borrower nor a lender be,” Polonius advises Laertes in Hamlet. Good thing commercial banks haven’t taken Shakespearean bromides to heart. (It didn’t get Polonius anywhere, either.) Commercial banks, unlike investment banks, generally act as lenders, putting forth their own money to support businesses as opposed to investment advisors who rely on other folks – buyers of stocks and bonds – to pony up cash. This distinction, enshrined by fundamental banking laws in place since the 1930s, has led to noticeable cultural differences (exaggerated by stereotype) between commercial and investment bankers. Commercial bankers (deservedly or not) have a reputation for being less aggressive, more risk-averse and simply not as mean as investment bankers. Commercial bankers also don’t command the eye-popping salaries and elite prestige that I-bankers receive. There is a basis for the stereotype. Commercial banks carefully screen borrowers because the banks are investing huge sums of their own money in companies that must remain healthy enough to make regular loan payments for decades. Investment bankers, on the other hand, can make their fortunes in one day by skimming off some of the money raised in a stock offering or invested into an acquisition. While a borrower’s subsequent business decline can damage a commercial bank’s bottom line, a stock that plummets after an offering has no effect on the investment bank that managed its IPO.
We’ll take your money Commercial bankers make money by their legal charter to take deposits from businesses and consumers. To gain the confidence of these depositors, commercial banks offer government-sponsored guarantees on these deposits on amounts up to $100,000. But to get FDIC guarantees, commercial banks must follow a myriad of regulations (and hire regulators to manage them). Many of these guidelines were set up in the Glass-Steagall Act of 1933, which was meant to separate the activities of commercial and investment banks. Glass-Steagall included a restriction on the sale of stocks and bonds (investment banks, which could not take deposits, were exempt from banking laws and free to offer more speculative securities offerings). Deregulation – especially the Financial Services Modernization Act of 1999 – and consolidation in the banking industry over the past decade have weakened these traditional barriers.
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Vault Guide to the Top 50 Banking Employers Industry Overviews
The lending train The typical commercial banking process is fairly straightforward. The lending cycle starts with consumers depositing savings or businesses depositing sales proceeds at the bank. The bank, in turn, puts aside a relatively small portion of the money for withdrawals and to pay for possible loan defaults. The bank then loans the rest of the money to companies in need of capital to pay for, say, a new factory or an overseas venture. A commercial bank’s customers can range from the dry cleaner on the corner to a multinational conglomerate. For very large clients, several commercial banks may band together to issue “syndicated loans” of truly staggering size. Commercial banks lend money at interest rates that are largely determined by the Federal Reserve Board (currently governed by the bespectacled Alan Greenspan). Along with lending money that they have on deposit from clients, commercial banks lend out money that they have received from the Fed. The Fed loans out money to commercial banks, which in turn lend it to bank customers in a variety of forms – standard loans, mortgages and so on. Besides its ability to set a baseline interest rate for all loans, the Fed also uses its lending power to equalize the economy. To prevent inflation, the Fed raises the interest rate it charges for the money it loans to banks, slowing down the circulation of money and the growth of the economy. To encourage economic growth, the Fed will lower the interest rate it charges banks.
Making money by moving money Take a moment to consider how a bank makes its money. Commercial banks in the U.S. earn 5 to 14 percent interest on most of their loans. As commercial banks typically only pay depositors 1 percent – if anything – on checking accounts and 2 to 3 percent on savings accounts, they make a tremendous amount of money in the difference between the cost of their funds (1 percent for checking account deposits) and the return on the funds they loan (5 to 14 percent).
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The Year in Review Call it a comeback? Although accounting scandals continued to take up much of the U.S. financial headline space in 2003, they had to share ink with another, more uplifting news story: the rise of the stock market. Picking up where Enron and WorldCom left off, the year began with a $5 billion accounting scandal, as the country’s second-largest mortgage finance company Freddie Mac announced it would be restating earnings for the past two years. Later in 2003, Freddie Mac also announced it would be paying $125 million to settle civil damages relating to the restatement. The year ended in a similar fashion, with the massive Italian dairy firm Parmalat finding itself in an accounting mess as well. In December, the firm filed for bankruptcy after investigators discovered more than $10 billion in missing assets. Included in this amount were hundreds of millions that the former head of Parmalat embezzled from the dairy company to cover losses at family businesses. In between the Freddie Mac and Parmalat debacles came a host of other scandalous news, including two high-profile legal trials and another Elliott Spitzer-led securities investigation. Early in 2003, former chairman and CEO of Tyco Dennis Kozlowski went to trial to defend accusations that he looted his former employer of $600 million. Kozlowski’s session in court ended in a mistrial after a juror supposedly received a phone call and letter about the case during deliberations. Another trial has since been reset for the beginning of 2005. In the continuing saga of ex-Credit Suisse First Boston star Frank Quattrone, the former technology banker went to federal court in the fall of 2003 to fight obstruction of justice charges. Quattrone’s trial ended in a hung jury, but when he found himself back in court in the spring of 2004, he wasn’t as lucky. The outcome of the retrial was a guilty verdict on three accounts. Quattrone now faces up to three years in prison. His sentencing is set for September 2004. Following his high-profile investigation into the research practices of several Wall Street firms in 2002, New York State Attorney General Eliot Spitzer began another industry-wide probe in 2003. This time, he set his sights on the mutual fund industry, specifically looking into whether fund companies took advantage of inefficiencies in the stock market by quickly trading in and out of their funds to turn a fast buck, a practice hurting long-term fund Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers The Year in Review
investors. Spitzer found that many companies had indeed taken part. As a result of the investigation, several companies and employees have been charged with securities fraud. Scandals aside, 2003 might go down in history as the year the stock market bounced back. For the first year since 1999, the Dow Jones Industrial Index finished on an uptick, gaining 25.3 percent and surpassing the 25.2 percent climb it made in 1999. The Nasdaq composite index also ended 2003 in solid fashion, increasing 50 percent during the year. The S&P soared as well, rising 26.4 percent, and the Wilshire 5000, an index that includes 5,200 publicly traded stocks, saw its numbers rise 29 percent. Driving the gains in the market were low interest rates, a weaker dollar and low inventories. The only real downtick during the year, when stocks hit their lows, came in March during the outset of the war in Iraq. The first quarter of 2004, however, saw stocks flatten out, and all the major indexes ended the quarter virtually unchanged from the beginning of the year. The Dow finished down 0.9 percent, the Nasdaq fell 0.5 percent and the S&P 500 rose a mere 1.3 percent. According The Wall Street Journal, the reason for the market stall was twofold: “First, the political worries today are more treacherous than a year ago [when] people hoped for a quick resolution to the long-awaited war, and they got, at least in terms of actual fighting. Now the focus is the much murkier problem of terrorism…with no clear sign of resolution.” Sending stocks into a tailspin during the quarter was the March 11 Madrid train attacks, which killed 191 people. The second reason for the flat market, according to the Journal, was that the “outlook for corporate earnings simply [wasn’t] as robust as a year ago…Now the economic recovery is more mature and earnings pops are likely to become more modest.”
Don’t write off the underwriting With the stock market back on track in 2003, global underwriters rose to the occasion, setting an annual record of bringing to market $5.32 trillion in debt, equity and equity-related deals, according to Thomson Financial. The total also represented a 25 percent rise in volume over 2002’s $4.26 trillion. Taking the top spot again in global underwriting was Citigroup, which booked more than $542 billion in debt, equity and equity-related deals in 2003. Morgan Stanley, with approximately $395 billion, took second place, and Merrill Lynch was third, with $380 billion. In global equity and equity-related underwriting, which increased to $388 billion in total volume from $318 billion in 2002, Goldman Sachs kept its 10
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Vault Guide to the Top 50 Banking Employers The Year in Review
No. 1 position, working on $46 billion worth of transactions. Citigroup held on to No. 2 with $41 billion and Morgan Stanley jumped one spot to No. 3, with $25.3 billion. Global debt underwriting also increased in 2003, moving up 25 percent to a record-breaking $4.9 trillion from $3.9 trillion in 2002. At the top of this chart again was Citigroup, with $501.8 billion. Morgan Stanley boosted its ranking to No. 2 from No. 6, with $355 billion in proceeds, while Merrill Lynch fell one spot to No. 3 on $349 billion in total volume. Global disclosed fees, though, dropped a bit in 2003, sliding to $14.46 billion from $14.76 billion. The two highest fee bookers were the same as in 2002, with Citigroup taking the top spot in the category, with $1.76 billion, and Morgan Stanley placing second, with $1.19 billion. The third spot, though, went to JPMorgan Chase, which leaped from its No. 6 showing in 2002 on fees of $967.5 billion. The mild slide in fees was due to the continuing weakness in the highly profitable IPO segment and the prolonged soaring in debt issuance. In fact, the first six months of 2003, according to Thomson Financial, saw the least amount of initial public offerings go to market since the mid-1970s. And for the full year, total volume in IPO underwriting plunged to less than $14 billion from $22.6 billion in 2002. In global IPO issuance, Goldman Sachs, with $2.7 billion from 13 deals, captured the top spot from Citigroup, which dropped all the way to No. 6 in 2003. Credit Suisse First Boston jumped to No. 2 from No. 5, with $2.1 billion from 12 issues. And Friedman Billings Ramsey Group took a Superman-like bound from No. 30 to No. 3, booking $1.6 billion on eight issues. Although the IPO market did, overall, have an off year, it finished 2003 with a strong December, and the offering ball kept rolling in the first quarter of 2004. During the three months ended March 31, 2004, according to Thomson Financial, 42 global companies issued initial public offerings in the U.S. for a total volume of $8.26 billion. This represented quite an increase from the same period in 2003, when five IPOs went to market raising $644.2 million. In fact, the first quarter of 2004 saw the best start in IPO underwriting since 2000. And like the first year of the century, the tech sector shined, placing second only to health care as the most active in the IPO market, according to IPO Plus Aftermarket Fund. Tech stocks accounted for 28 percent of initial public offerings in the first quarter.
Google: a noun, a verb, an IPO The beginning of the second quarter of 2004 witnessed the filing of what might be the most highly anticipated IPO in history (or at least since eBay Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers The Year in Review
went public back in 1998), as the world’s top Internet search engine Google Inc. told the SEC it expects to raise as much $2.7 billion. No doubt causing investors to drool, Google revealed in its filing that it booked revenues of $389.6 million and net income of $64 million for the first quarter of 2004, up 118 percent and 148 percent, respectively, from the first quarter of 2003. The company also revealed it took in net income of $106.5 million on revenues of $961.9 million for the full year 2003, a rise of 6 percent and 177 percent over 2002 numbers. Scoring the big win of landing lead bookrunner duties on the proposed IPO were Morgan Stanley and Credit Suisse First Boston, both of which should pick up some hefty fees for their work. Some 30 other investment banking firms also inked deals with Google to co-manage the deal. Like Google itself, the structure of its initial offering will be an innovative one, as the company opted to go public through an auction system. As of June 2004, details of the system, as released by Google, were that investors will have to register with the banks underwriting the offering and indicate the number of shares they want to purchase and at what price they’re willing to pay for them. After that, Google, with the advice of its bankers, will determine a price at which all of the bids will be sold. Bidders below this price, called a “clearing price,” will be left out of the action. The reasoning behind the auction system as opposed to the traditional offering process, wrote Google co-founders Larry Page and Sergey Brin in the firm’s SEC filing, is “to have a fair process” that is “inclusive of both small and large investors.” The two also wrote that the firm’s “goal is to have a share price that reflects a fair market valuation of Google and that moves rationally based on changes in our business and the stock market.” Google is expected to begin its roadshow (marketing the offering) in July 2004.
What’s the big deal? The past year also saw the return of the big bank merger. First came the October 2003 announcement that Bank of America would be acquiring FleetBoston for approximately $49 billion. In accepting the offer to merge, FleetBoston’s chairman and CEO Charles “Chad” Gifford said that “it became increasingly clear to us that scale is a tremendous advantage, if properly managed,” adding that “Bank of America was the one bank that was taking advantage of this scale.” At the time, it looked like the large-scale merger would create the second-biggest U.S. banking firm behind Citigroup and JPMorgan Chase. But to the chagrin of BofA, a couple of months later, in January 2004, JPMorgan Chase announced that it would be acquiring Bank
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Vault Guide to the Top 50 Banking Employers The Year In Review
One in a deal worth more than $58 billion, solidifying JPMorgan Chase’s spot as No. 2 in the U.S. The transaction will also give perennial No.1 Citigroup a run for its money, as the Bank One acquisition created a financial services giant with $1.1 trillion in assets, rivaling Citi’s $1.2 trillion. The Fleet acquisition, which is expected to result in 12,500 employees losing jobs, closed in April 2004. The Bank One acquisition, which could see as many as 10,000 positions lost, closed in July 2004. Determined not to be left out of the merger madness, Wachovia Corporation, the fourth-largest banking firm in the U.S., agreed to pay $14.3 billion to acquire SouthTrust Corporation in June 2004. The transaction, expected to close in the fourth quarter of 2004, would give the Charlotte, N.C.-based Wachovia a significantly stronger foothold in the Southeast. Wachovia estimates that 4,300 jobs will be eliminated as result of the acquisition.
Killer year for combos As well as working on their own mergers, banks had their hands full with other firms’ combinations in 2003. According to Thomson Financial, $523.7 billion worth of mergers and acquisitions were announced in 2003, a nice 19 percent bump from 2002 figures. And during the 2003 fourth quarter, deal value more than doubled over fourth quarter 2002 totals, as $209.4 billion in M&A transactions were announced. Of course, the return of the M&A market had a lot to do with the rise of the stock market and continued low interest rates, both of which made it easier and cheaper for purchasers to finance deals during the year. In an interview with the Journal in early January 2004, Jack Levy, global head of M&A at Goldman Sachs, summed up the merger market during the previous 12 months: “The year started on a very challenging note, but by December, it felt as though we were emerging from the three-year deal downturn.” Indeed, the largest U.S. M&A deals all came near the end of 2003. In addition to BofA’s acquisition of Fleet (the world’s largest deal inked during the year), other big deals in the second half of the year included Anthem’s $16.4 billion purchase of WellPoint Health Networks, and St. Paul Cos.’ $16 billion acquisition of Travelers Property Casualty. Thanks in large part to the Fleet deal, commercial banking was the top M&A sector for the year, comprising about $137 billion of the total volume. As for the 2003 league tables, the same three firms held the same three top spots for both global and U.S. M&A. According to Thomson Financial, Goldman Sachs led the field with 298 deals worth $392.7 billion, Morgan Stanley placed second with 239 transactions worth $239.5 billion, and Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers The Year In Review
Citigroup rounded out the top three with 307 deals worth $219.6 billion. In U.S. M&A, Goldman’s deal value outdistanced second-place Morgan Stanley and third-place Citigroup combined, as Goldman announced $239 billion worth of M&A transactions, compared to Morgan’s $117 billion and Citi’s $100 billion. Incidentally, both Goldman and Morgan, along with Banc of America Securities, advised Bank of America on its acquisition of Fleet. The M&A market continue its rise during the first three months of the 2004, with total deal volume hitting $530 billion, double the $265 billion announced in the first quarter of 2003. Both globally and in the U.S., first quarter 2004 volume was at its highest since the fourth quarter of 2000. However, by total number of transactions, deal volume slipped 10 percent on a global basis to about 7,000, compared to the fourth quarter of 2003. As they did in 2003, banking deals played more than a small part to make the first quarter of 2004 a strong one in M&A. Along with JPMorgan Chase’s announced acquisition of Bank One, Regions Financial agreed to buy Union Planters for $5.8 billion and North Fork Bancorp inked a $6.3 billion deal to swallow GreenPoint Financial. According to Thomson Financial, in the global M&A league tables for the quarter, Goldman Sachs and Morgan Stanley held on to the No. 1 and No. 2 spots, respectively, while JPMorgan Chase took the No. 3 spot, thanks to its work on its own acquisition of Bank One (without that mandate, JPMorgan Chase would’ve ended the quarter at No.4).
The banks formerly known as commercial In 2003, firms known more for their commercial lending activity than their investment banking prowess continued to show that they can play with the big boys on Wall Street. For the year, traditional lenders Citigroup, JPMorgan Chase and Bank of America combined to take a 22 percent market share in equity and equity-relating underwriting, according to Thomson Financial, up from the 12 percent the three held in 2000. Goldman, Morgan Stanley and Merrill, three of the top traditional investment banks, combined for 30 percent of the equity activity in 2003, down from 37 percent in 2000. In recent years, Citigroup and JPMorgan Chase have continually made strides in other league tables as well, thanks in large part to their acquisitions of investment banks. Other than big mergers, the reason for the climb in market share by traditional commercial lenders has a lot do with “tying” loans to other, more lucrative securities services. For example, if a corporation has just received a large
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Vault Guide to the Top 50 Banking Employers The Year In Review
loan from a bank, it might be prone (or convinced or enticed) to go to its creditor for its underwriting needs as well. Although investment banks have called the practice of tying illegal, the U.S. Justice Department disagrees, saying it’s good for competition. Despite investment banks’ complaints, they seem to be taking the if you can’t beat ‘em, join’ em route. In 2003, securities firms took part in 82 percent of large syndicated loans to its corporate clients, according to research firm Loan Pricing Corporation, a hefty increase from the 58 percent they participated in 2000.
Future’s bright, but doesn’t require shades With the economy recovering, employers are beefing up their hiring, which is certainly a good sign for recent as well as not-so-recent college graduates. But grads beware: Although U.S. employers are expected to hire 11.2 percent more college grads in 2004 than in 2003, according to the National Association of Colleges and Employers (NACE), there might be more competition, as the past few dismal years in the job market has left college grads dating back to 2001 still on the employment hunt. According to a survey by the NACE in early 2004, more than 50 percent of responding employers (mostly large corporations that do most of their recruiting on campuses) say they’re increasing hiring this year, while 29 percent say they’re cutting back. Companies in the Northeast indicated the largest hike, saying they expect to hire about 21 percent more grads than they did in 2003. Recent quantitative and qualitative data specific to banking and financial services job seekers point to a better year as well. In February 2004, BusinessWeek asked several staffing executives and career services employees at major MBA programs across the country what they thought of the job market in the coming year – and several said banking and finance would be hot hiring categories. The publication quoted Ted Martin, CEO of Chicago-based executive search firm Martin Partners, as saying, “The financial services industry is coming back, with a good deal flow in front for investment bankers.” Eric Mokover, associate dean of career initiatives at UCLA’s Anderson School of Management, agreed. “Investment banks are back in force and will be hiring quite a few more MBAs than last year,” he said, adding, “The hot areas are finance and marketing, in that order.” Indeed, investment banking, sales and trading, financial services and marketing are areas currently in greatest demand, said Karin Ash, director of the career management center at Cornell’s Johnson School of Management. Ash also told BusinessWeek that compared to 2003, “this year, twice as many students returned with offers from their summer internship.” Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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TOP50 BANK EMPLO THE VAULT
PRESTIGE RANKINGS
Vault Guide to the Top 50 Banking Employers The Vault Prestige Rankings
Ranking Methodology This year’s edition of the Vault Guide to the Top 50 Banking Employers rates 74 firms, all of which principally operate in either commercial banking or investment banking (or both). We’ve slightly expanded our banking reach, up from 70 banks in last year’s edition, to give you an even more thorough review of the largest investment and commercial banking firms, as well as the most prestigious investment banking boutiques, regional commercial banks and foreign-based banks with a significant U.S. presence. We chose the 74 investment and commercial banking firms, which were all invited to participate in our online survey, based on previous Vault surveys that gauged opinions of industry insiders, as well as on various factual data, including league table standing and size in terms of revenue or assets. These days, corporate structures, and especially corporate structures of finance firms, can be as complicated as deriving the Black-Scholes model. That said, you’ll notice that some of the 74 firms are holding companies (HSBC, ABN AMRO), others are subsidiaries (UBS Investment Bank, Morgan Keegan) and a few double as divisions of large institutions (Citigroup’s Global Corporate and Investment Bank, Banc of America Securities). In deciding whether to include all or part of a firm, we identified that part (or whole) of a firm most appropriate for banking-position seekers in the U.S., based on how the company conducts its recruiting efforts and what services the firm provides in the States. The 74 firms we identified were asked to distribute our online survey to relevant employees. The survey consisted of questions about life at the firm (or former firm) and a prestige rating. Participants were asked to rate companies with which they were familiar on a scale of 1 to 10, with 10 being the most prestigious. They were not allowed to rate their own employer. Thirteen companies – Banc of America Securities, Citigroup’s Global Corporate and Investment Bank, CIBC World Markets, Credit Suisse First Boston, Goldman Sachs, Houlihan Lokey Howard & Zukin, Lehman Brothers, SG Cowen & Co. LLC, SunTrust Banks, TD Securities, UBS Investment Bank, Wells Fargo and WR Hambrecht + Co. – agreed to participate. All surveys were completely anonymous. For those companies that refused our request, Vault sought contacts at the firm through other sources. Those finance professionals took the same survey as the employees at firms that participated.
Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers The Vault Prestige Rankings
All told, 603 finance professionals filled out Vault’s 2003 finance employee survey from February 2004 through May 2004. Vault averaged the prestige scores for each firm and ranked them in order, with the highest average score belonging to our No. 1 firm. That firm, for the fourth year in a row, was investment bank Goldman Sachs. New York-based Goldman received a score of 8.663, almost one-half of a point more than competitor Morgan Stanley (8.185), which also came in second last year. Rounding out the top five were The Blackstone Group, which made a nice leap to No. 3 from its fifth-place showing last year; Citigroup’s Global Corporate and Investment Bank (7.335), which slipped one spot to No. 4 this year; and JPMorgan Chase, which rocketed to No. 5 from the No. 9 spot it held in last year’s rankings. Eight out of the top 10 companies are considered investment banks (that is, most of their business falls under traditional investment-banking functions). One, Citigroup, is considered a commercial bank, as a majority of its operations come from traditionally commercial banking functions. Another, JPMorgan Chase, is considered a hybrid, as it has nearly equal operations in both investment banking and commercial banking.
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Decrease your T/NJ Ratio (Time to New Job) Use the Internet’s most targeted job search tools for finance professionals.
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The Vault 50 • 2005 [ The 50 most prestigious banking employers] RANK
FIRM
SCORE
RANK 2004
HEADQUARTERS
1
Goldman Sachs
8.663
1
New York, NY
2
Morgan Stanley
8.185
2
New York, NY
3
The Blackstone Group
7.837
5
New York, NY
4
Citigroup’s Global Corp. & Inv. Bank
7.335
3
New York, NY
5
J.P. Morgan Chase
7.308
9
New York, NY
6
Merrill Lynch
7.286
6
New York, NY
7
Lehman Brothers
7.213
4
New York, NY*
8
Citigroup
7.059
8
New York, NY
9
Credit Suisse First Boston
7.022
10
New York, NY*
10
Lazard
6.948
12
New York, NY*
11
UBS Investment Bank
6.698
7
New York, NY
12
Deutsche Bank
6.640
11
New York, NY*
13
Bear Stearns
6.449
13
New York, NY
14
Banc of America Securities
5.567
15
New York, NY
15
Bank of America
5.470
14
Charlotte, NC
16
Dresdner Kleinwort Wasserstein
5.398
17
New York, NY
17
Rothschild
5.349
16
New York, NY*
18
Thomas Weisel Partners
5.275
20
San Francisco, CA
19
Barclays Capital
5.156
19
New York, NY*
20
HSBC Holdings
5.047
18
New York, NY*
21
Wachovia
5.046
21
Charlotte, NC
22
Houlihan Lokey Howard & Zukin
4.910
26
Los Angeles, CA
23
Greenhill & Co. LLC
4.896
NR
New York, NY
24
Jefferies & Co.
4.710
28
New York, NY
25
CIBC World Markets
4.689
22
New York, NY
*U.S. Headquarters
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Vault Guide to the Top 50 Banking Firms The Vault Prestige Rankings
RANK
FIRM
SCORE
RANK 2004
HEADQUARTERS
26
Wells Fargo
4.618
23
San Francisco, CA
27
SG Cowen & Co. LLC
4.558
29
New York, NY
28
FleetBoston Financial
4.557
38
Boston, MA
29
Piper Jaffray Companies
4.519
25
Minneapolis, MN
30
Bank One
4.461
32
Chicago, IL
31
Legg Mason
4.390
33
Baltimore, MD
32
BNP Paribas
4.372
27
New York, NY*
33
RBC Capital Markets
4.308
44
New York, NY*
34
Gleacher & Co.
4.260
43
New York, NY
35
Brown Brothers Harriman
4.166
34
New York, NY
36
The Bank of New York
4.134
31
New York, NY
37
Allen & Co.
4.084
30
New York, NY
38
US Bancorp
4.007
25
Minneapolis, MN
39
William Blair
3.961
46
Chicago, IL
40
Raymond James Financial
3.945
37
St. Petersburg, FL
41
Nomura
3.917
36
New York, NY
42
WR Hambrecht + Co.
3.916
40
San Francisco, CA
43
Friedman, Billings, Ramsey Group
3.786
NR
Arlington, VA
44
Peter J. Solomon Company
3.777
NR
New York, NY
45
Calyon Securities (USA ) Inc.
3.752
NR
New York, NY
46
Keefe, Bruyette & Woods
3.715
39
New York, NY
47
Robert W. Baird & Co. (Baird)
3.684
NR
Milwaukee, WI
48
ABN AMRO
3.674
35
Chicago, IL*
49
BMO Nesbitt Burns/Harris Nesbitt
3.613
NR
New York, NY
50
MBNA
3.610
45
New York, NY
*U.S. Headquarters
Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers The Vault Prestige Rankings
Quality of Life: Top 10 Methodology In addition to ranking other firms in terms of prestige, survey respondents were asked to rate their own firms in a variety of categories. On a scale of 1 to 10, with 10 being the highest and 1 the lowest, respondents evaluated their firms in the following “quality of life” areas: overall satisfaction, treatment by managers, training, selectivity, offices, diversity with respect to women, diversity with respect to minorities, and diversity with respect to gays and lesbians. A firm’s score in each category is simply the average of these rankings. Only firms that distributed the Vault survey to their employees were ranked. Firms with fewer than 10 survey responses for any given question were excluded from that ranking category. A list of the firms that distributed the survey is available on p. 19.
Who’s getting a lot? “It’s good to be the king.” At least that’s what responses from Goldman Sachs employees prove, as Goldman grabbed the top spot in overall satisfaction, to go along with its first-place finish in the prestige rankings. “I’m proud to be a part of what I consider the preeminent investment banking firm in the world,” says a Goldman insider who gave his firm a 10 in the category. “The people and the culture make all the difference – and my experience has convinced me that Goldman Sachs is far superior to its competitors on these critical criteria.” Wells Fargo and Lehman Brothers employees are also very satisfied with the name on their paychecks; they took second and third in the category, respectively.
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Vault Guide to the Top 50 Banking Employers The Vault Prestige Rankings
Overall Satisfaction*
On a scale of 1 to 10, where 1 is not at all satisfied and 10 is very satisfied, my overall satisfaction with my firm is:
FIRM
SCORE
1
Goldman Sachs
8.708
2
Wells Fargo
8.391
3
Lehman Brothers
8.180
4
Citigroup’s Global Corporate & Investment Bank
8.167
5
Credit Suisse First Boston
8.038
6
SunTrust Banks
7.932
7
Houlihan Lokey Howard & Zukin
7.882
8
UBS Investment Bank
7.534
9
Banc of America Securities
7.207
10
CIBC World Markets
6.762
RANK
Compensation*
On a scale of 1 to 10, where 1 is far below average and 10 is far in excess of industry average, my total compensation is
FIRM
SCORE
1
Houlihan Lokey Howard & Zukin
6.647
2
Credit Suisse First Boston
6.120
3
Citigroup’s Global Corporate & Investment Bank
6.100
4
CIBC World Markets
5.955
5
Goldman Sachs
5.826
6
SG Cowen
5.790
7
Lehman Brothers
5.758
8
Banc of America Securities
5.607
9
SunTrust Banks
5.600
10
UBS Investment Bank
5.573
RANK
* Only firms with more than 10 responses for this question were eligible to be ranked. To read about our survey method, go to our “Ranking Methodology” on p. 19. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers The Vault Prestige Rankings
Hours*
On a scale of 1 to 10, where 1 means not at all satisfied and 10 means very satisfied, please rank your satisfaction with the number of hours you spend in the office.
FIRM
SCORE
1
SunTrust Banks
8.442
2
Credit Suisse First Boston
7.593
3
Wells Fargo
7.565
4
TD Securities
7.273
5
Citigroup’s Global Corporate & Investment Bank
6.750
6
Goldman Sachs
6.500
7
Banc of America Securities
6.310
8
Lehman Brothers
6.000
9
SG Cowen
5.263
10
Houlihan Lokey Howard & Zukin
5.118
RANK
Treatment by Managers*
On a scale of 1 to 10, where 1 means poorly and 10 means with great respect, how would you rank your treatment, on average, by managers?
FIRM
SCORE
1
Goldman Sachs
9.042
2
SunTrust Banks
8.682
3
Wells Fargo
8.391
4
Credit Suisse First Boston
8.333
5
Lehman Brothers
8.300
6
Houlihan Lokey Howard & Zukin
7.944
7
Citigroup’s Global Corporate & Investment Bank
7.500
8
UBS Investment Bank
7.496
9
TD Securities
7.455
10
Banc of America Securities
7.414
RANK
* Only firms with more than 10 responses for this question were eligible to be ranked. To read about our survey method, go to our “Ranking Methodology” on p. 19.
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Vault Guide to the Top 50 Banking Employers The Vault Prestige Rankings
Training*
On a scale of 1 to 10, where 1 is non-existent and 10 is superior, the training at my firm (both formal and informal) is:
RANK
FIRM
SCORE
1
SunTrust Banks
8.864
2
Wells Fargo
8.739
3
UBS Investment Bank
8.257
4
Citigroup’s Global Corporate & Investment Bank
8.250
5
Goldman Sachs
8.000
6
Lehman Brothers
7.821
7
Credit Suisse First Boston
7.359
8
Houlihan Lokey Howard & Zukin
6.778
9
SG Cowen
6.750
10
Banc of America Securities
6.103
Selectivity*
On a scale of 1 to 10, where 1 is very easy and 10 is nearly impossible, how easy is it to get hired at your firm?
FIRM
SCORE
1
Goldman Sachs
8.500
2
UBS Investment Bank
7.739
3
Lehman Brothers
7.725
4
Citigroup’s Global Corporate & Investment Bank
7.583
5
Houlihan Lokey Howard & Zukin
7.556
6
Wells Fargo
7.478
7
SunTrust Banks
7.163
8
SG Cowen
7.059
9
Banc of America Securities
7.031
10(tie)
Credit Suisse First Boston
7.000
10(tie)
TD Securities
7.000
RANK
* Only firms with more than 10 responses for this question were eligible to be ranked. To read about our survey method, go to our “Ranking Methodology” on p. 19. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers The Vault Prestige Rankings
Offices*
Where 1 is uncomfortable and 10 is ultra-luxurious, in terms of space, comfort, and decor, the offices I work in are:
FIRM
SCORE
1
Lehman Brothers
7.800
2
Citigroup’s Global Corporate & Investment Bank
7.417
3
SunTrust Banks
6.955
4
Credit Suisse First Boston
6.887
5
Banc of America Securities
6.448
6
Houlihan Lokey Howard & Zukin
6.353
7
SG Cowen
6.235
8
Wells Fargo
6.174
9
UBS Investment Bank
5.831
10
Goldman Sachs
5.652
RANK
Diversity Rankings Diversity with Respect to Women*
On a scale of 1 to 10, where 1 means needs a lot of improvement and 10 means exemplary, how receptive is your firm to women in terms of hiring, promoting, mentoring, and other programs?
FIRM
SCORE
1
Wells Fargo
8.476
2
SunTrust Banks
8.439
3
Goldman Sachs
8.304
4
Credit Suisse First Boston
8.173
5
Lehman Brothers
7.742
6
TD Securities
7.364
7
SG Cowen
7.286
8
UBS Investment Bank
6.943
9
Banc of America Securities
6.769
10
Citigroup’s Global Corporate & Investment Bank
6.667
RANK
* Only firms with more than 10 responses for this question were eligible to be ranked. To read about our survey method, go to our “Ranking Methodology” on p. 19.
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Vault Guide to the Top 50 Banking Employers The Vault Prestige Rankings
Diversity with Respect to Minorities*
On a scale of 1 to 10, where 1 means needs a lot of improvement and 10 means exemplary, how receptive is your firm to minorities in terms of hiring, promoting, mentoring, and other programs?
FIRM
SCORE
1
Credit Suisse First Boston
8.196
2
Goldman Sachs
8.174
3
Lehman Brothers
8.031
4
SunTrust Banks
7.625
5
TD Securities
7.364
6
Banc of America Securities
7.360
7
UBS Investment Bank
7.250
8
Wells Fargo
7.191
9
SG Cowen
7.000
10
Citigroup’s Global Corporate & Investment Bank
6.250
RANK
Diversity with Respect to Gays and Lesbians*
On a scale of 1 to 10, where 1 means needs a lot of improvement and 10 means exemplary, how receptive is your firm to gays and lesbians in terms of hiring, promoting, mentoring, and other programs?
FIRM
SCORE
1
Wells Fargo
8.667
2
Lehman Brothers
8.333
3
Credit Suisse First Boston
8.222
4
Goldman Sachs
8.105
5
SunTrust Banks
6.923
6
UBS Investment Bank
6.917
7
Banc of America Securities
6.375
8
Houlihan Lokey Howard & Zukin
5.833
RANK
* Only firms with more than 10 responses for this question were eligible to be ranked. To read about our survey method, go to our “Ranking Methodology” on p. 19. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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TOP50 BANK EMPLO THE VAULT 5O:
1-25
V A U L T
1
Goldman Sachs
PRESTIGE RANKING
85 Broad Street New York, NY 10004 Phone: (212) 902-1000 Fax: (212) 902-3000 www.gs.com
DEPARTMENTS Equities • Compliance • Finance • Financing Group • FICC • Global Investment Research • Human Capital Management • Investment Banking • Investment Management • Legal and Management Controls • Merchant Banking • Operations • Technology
THE STATS Chairman & CEO: Henry A. Paulson Employer Type: Public company Ticker Symbol: GS (NYSE) Revenue: $23.62 billion (FYE 11/03) Net Income: $3.0 billion No. of Employees: 20,000 (approx.) No. of Offices: 40+
KEY COMPETITORS Credit Suisse First Boston JPMorgan Chase Merrill Lynch Morgan Stanley
UPPERS • Can the name Goldman be beat? • “Team culture” • “Intelligent, helpful and down to earth” coworkers
DOWNERS • Long, unpredictable hours allow for “no such thing as a personal life” • “Always pressure to do better than the day before” • Prestige doesn’t equal higher compensation
EMPLOYMENT CONTACT For employment and application information, visit Goldman Sachs’ career site at www.gs.com/careers
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “The benchmark for investment banks” • “Bankers are in a league of their own” • “Resting on their laurels” • “Still has the best reputation, but slipping”
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THE SCOOP
The dominator As one of Wall Street’s preeminent white-shoe investment banking firms, Goldman Sachs has continually ruled the most prestigious investment banking league tables, outpacing other banks in the annual rankings of investment advisors and underwriters. Indeed, in 2003, Goldman held on to the top spot in worldwide M&A, completing 268 deals valued at $356.18 billion (the total value of the transactions, though, was down 18.5 percent compared with 2002 figures). Goldman also kept its hold as the No. 1 global common stock underwriter, working on 57 issues worth $12.76 billion. And despite operating in a year in which the fewest number of initial public offerings came to fruition since 1990, Goldman managed to regain the top spot in global IPO underwriting after slipping to second in 2002, working on 13 new issues worth a total of $2.65 billion.
Culture club Founded in 1869 by Marcus Goldman, the firm is also well known for promoting a culture where individual achievements are subordinate to the good of the firm, a rather unique environment, compared with the ego-driven industry as a whole. In recent years, Goldman has undergone several changes, a drastic comparison with its previous status as a privately held partnership, most notably its registration to become a public company in 1998. Goldman went public in May 1999, after a series of delays, due to weakened market conditions during the year leading up to the IPO. However, Goldman’s stock gained 141 percent in the year following its IPO, outperforming nearly all of its competitors. In January 2004, Investment Dealers’ Digest reported that approximately 40 to 45 percent of Goldman stock is held by employees or former employees of Goldman, a much higher percentage than other investment banks.
Several sacked In March 2002, The Wall Street Journal reported that Goldman might look to cut 4 to 6 percent of its global work force by year’s end, a prediction that was fulfilled. On New Year’s Eve 2002, Goldman had 13 percent fewer employees than it did at the beginning of the year, with cuts across the board in all units, for a total headcount of about 19,540. In April 2003, the firm laid off 100 stock traders, salespeople, and related staff, according to a Wall Street Journal report published early in the month. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers Goldman Sachs
Still, as of January 2004, the firm was said to have close to 20,000 employees, according to a profile of the firm published in Investment Dealers’ Digest.
Power brokers Goldman rebounded in 2003 from a disappointing 2002, posting net income in 2003 of $3 billion, a 42 percent increase over 2002. Net revenue from trading and principal investments was $10.44 billion, up 21 percent from $8.65 billion the year earlier. However, net revenue from investment banking was down 4 percent from 2002, to $2.71 billion in 2003. Nonetheless, the strong performance in Goldman’s trading division bolstered the firm’s position as a powerhouse, especially during a time when investment banking fees were down and the firm needed to rely on other areas to remain strong. According to CEO Henry Paulson, who spoke to Investment Dealers’ Digest in January 2004, Goldman is focusing on taking risks to ensure profits. In 2003, its fixed income, currency and commodities trading unit (FICC) posted record net revenues of $5.6 billion, accounting for a remarkable 35 percent of the firm’s total, while equities trading brought in another $1.74 billion – the second year in a row that trading kept the firm ahead of many of its peers. Along with several other banks, Goldman was involved in 2003’s largest equity deal, the $4.5 billion convertible debt issue from Tyco International. Goldman also worked on three large M&A deals in October 2003, worth a combined $52.6 billion, according to the Financial News. Goldman, along with Banc of America Securities, advised Bank of America on its $47 billion acquisition of FleetBoston Financial. The firm also advised United Health Group on its $3 billion takeover bid for Mid Atlantic Medical Services, and served as an advisor, along with Lazard and Cazenove, to British American Tobacco on the $2.6 billion merger of Brown & Williamson and RJ Reynolds.
Rules and regulations In April 2003, Goldman was one of 10 firms that paid varying amounts to settle charges that investment banking influenced research. Goldman paid $110 million, less than competitors Citigroup, Merrill Lynch, Credit Suisse First Boston and Morgan Stanley. In fact, Goldman’s candor in addressing some of the conflicts of interest might’ve helped reduce its settlement fees. The firm was quick to adapt to a new environment in which conflicts of interest must be addressed at every turn, and a year earlier, Paulson stood out from rivals by calling for reform in the U.S. financial 34
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system to restore public confidence while other securities firm leaders refused to admit conflicts were a widespread problem. Paulson’s aggressiveness likely also helped his firm going forward, as he played a key role in the ouster of then-NYSE Chairman Richard Grasso, leading the reform at the NYSE. This move will undoubtedly pay Goldman handsome dividends, now that John Thain, former co-COO with John Thornton at Goldman, has left the firm to head the NYSE. Goldman’s voice will undoubtedly be heard in the debate over changes at the exchange.
Hello…and goodbye Thain’s wasn’t the only major Goldman departure in 2003. Co-COO John Thornton also retired in July 2003 to teach in China. And more recently, Robert Steel, a vice chairman heading equities, retired in January 2004. While some stepped down, others stepped up. In January 2004, Lloyd Blankfein, a Goldman vice chairman who had previously run Goldman’s FICC unit, was named president and chief operating officer of the firm. The appointment of Blankfein, a former head of the fixed income department, is sure to strengthen and stabilize this side of the business, which Paulson believes is integral to the overall success of the firm. In addition, Goldman recruited Niccolo Ragnini, a UBS executive director in that firm’s European debt capital markets, to focus on public sector and corporate debt capital markets business in Europe, shoring up Goldman’s presence in that region, according to a November 2003 report published in eFinancialNews. The January 2004 IDD article noted that Goldman believes the changes in top management will ultimately make the firm stronger as it moves into a new world of stricter regulatory requirements, electronic trading and life as a publicly traded entity. Certain to help the transition is the firm’s 26-person management committee, made up of executives from each branch of the firm, which must approve every major decision, thus ensuring a unified company strategic direction, and a departure from the investment banking dominated management committee of years past, according to Goldman’s Paulson.
Goldman too humble? In April 2004, ex-Goldman broker Kwame Jackson fell just short of winning the hit reality-TV show “The Apprentice,” in which contestants compete to be hired by Donald Trump. Out of more than 200,000 contestants, Jackson came in second.
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Vault Guide to the Top 50 Banking Employers Goldman Sachs
“Trump said he passed over Jackson largely because of his laid-back style,” according to The Wall Street Journal. “Trump selected a more rah-rah manager to be his apprentice.” Jackson, who chose to leave Goldman to appear on the show, says the investment bank taught him how to do things “quietly, humbly and still be successful.” This management style couldn’t be more the opposite of Trump’s approach. According to Trump, “While Goldman’s approach to business is quite different than his, he actually likes the firm’s low-key approach to things: ‘It is not a bad idea, but it has never worked that way in my firm. I should try it.’” When Jackson asked Goldman for a leave of absence to appear on the show he “was told it was too much of a reputational risk” to appear while still a Goldman employee. In the past, many Goldman employees have requested leaves to appear on reality-TV programs – and all have been turned down because “being thrust into the limelight is the antithesis of the way we do business,” a Goldman spokesman told the Journal. “That said, Kwame had a lot of fans rooting for him here.”
GETTING HIRED
Selective service Goldman “takes recruiting very seriously,” administering a “highly selective” process where fit seems to matter just as much as academic achievement. For analysts, the firm recruits heavily at highly ranked undergraduate programs, including a select group of historically black colleges such as Morehouse, Spelman and Howard. Associates are routinely selected from top business schools, with some coming from elite law schools. As selective as Goldman has been in the past, some employees believe the barriers to entry are only getting higher. One analyst observes that “over the past couple of years, the number of schools where we recruit has been reduced.” Still, though, according to the firm, Goldman recruits at about 40 undergraduate schools. An associate says that at his level, “We hire only from [the] top 10 to 20 business schools.” Still, it’s possible to get a job at Goldman without a diploma from a toptier school. “We will interview people from schools that we don’t specifically recruit from,” says one associate. Other insiders point out that some schools have “strong networks” within the firm.
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Making the rounds Would-be full-time Goldman employees can expect multiple rounds of interviews, with the typical process involving a two-on-one interview in the first round, “followed by three two-on-one interviews in the second – and generally final – round,” reveals an investment banking associate. “Hence most people meet at least eight [Goldman] professionals before being hired.” A vice president who came to Goldman as a lateral hire says the firm’s careful scrutiny of prospective employees is a positive: “Although it’s arduous, I’m very happy that the firm takes the time to carefully select the people who are here, especially if they’ll be managing people.” Throughout the process, prospective hires are likely to meet professionals across the full range of seniority – from analysts to managing directors.
Fitting in Goldman tends to hire “intelligent team players” who are likely to do well in its strong, firm-comes-first culture. The firm expects applicants to be able to explain why they want to work in the industry and interviewees should be forewarned that “questions about why you want to work at Goldman are always asked.” While some interview questions are technically focused, many applicants found that “the biggest emphasis is placed on fit,” with each group seeking to “ensure the right personality fit with every recruit.” One contact cautions that the specific questions asked “largely depend on the personality of the interviewer,” but he acknowledges that there are some rules of thumb. “Brainteasers are generally discouraged, although technical – finance, economics and basic math – questions are common for people with finance or economics majors, or those who had financial internships.” The source adds, “It is also very important to know your resume very well, because anything written on your resume is fair game and could solicit a tough question.” An analyst faced “a lot of technical questions in the second round,” but he notes that he was also peppered with questions seeking to determine his interest in banking and in working at Goldman in particular. One associate called his interview questions “straight-forward, and related to my experience, motivation and knowledge of the firm and the industry.”
Experience counts, but it’s not easy to get “It can be difficult to get hired out of undergrad without having done an internship at a major bank… preferably [Goldman],” says an analyst. Of course, attempting to get Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers Goldman Sachs
that prized Goldman summer spot is no easy task, and interviewees are subjected to the same strict scrutiny as those trying to land a full-time gig. Summer recruiting typically begins on campus and continues with a “Super Day” where candidates meet multiple professionals at a Goldman office in a series of “back-to-back interviews.” Summer sources report answering questions similar to those asked of candidates for permanent positions. For MBA candidates looking for a summer slot, one contact says likely interview questions include, “Did you work in teams in your previous job?” and “Have you had a difficult experience with team members or management and, if so, how did you resolve it?” For those who did spend a summer at Goldman, getting a full-time position is generally an easier proposition than going through the formal recruiting process. “If you participated in the summer internship program, the process for full-time hiring is very simple,” explains one first-year analyst. “Only an additional day of interviews [might be required] after the program is over.” A first-year analyst working in a different group concurs: “I was lucky in that I was a summer intern. I had two very quick rounds, both of which were more conversational than confrontational.” According to the firm, many interns don’t have to go through full-time interviews at the end of the summer. But if interns are interested in joining an area other than the one in which they worked during the summer, they will be required to go through further interviews before landing the job.
OUR SURVEY SAYS
There’s no I in Goldman The atmosphere at Goldman Sachs is characterized as “competitive” but “collegial” with a large emphasis on teamwork without a “superstar focus.” It’s “truly a teamoriented environment where people are extremely supportive, collaborative and quick to share the credit for successes,” says one investment banking associate who likens Goldman to “a sports team of all-star caliber – employees are outstanding performers who are very driven and competitive, but who also pull together to work for the success of the team.” A coworker agrees: “The culture is one of camaraderie, respect, teamwork and a desire to achieve the highest standards of excellence.” Many current Goldman staffers believe the team-first approach is a “distinguishing factor,” making Goldman “unlike any other place on Wall Street.” “Teamwork is not 38
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just something senior people talk about but is practiced at all levels of the organization,” says a source. Another agrees, saying “it’s a very unique environment in that it is challenging, competitive and one can work very long hours, yet it is a very flat organization that has an extremely collaborative atmosphere.” Going hand-in-hand with the team-orientation is a disdain for “big egos, grandstanding or selfish behavior.” “People are very proud they work at Goldman,” says a contact, but “humility is appreciated.” Luckily, egos don’t seem to be a big problem; Goldman employees regularly laud each other as “extremely down to earth” in addition to being “extremely smart.” Still, individual work ethic is prized at Goldman, and one analyst points out that a downside of the firm’s atmosphere is the cultivation of “strong, type-A personalities.” The same source was quick to opine, however, that the high-achievement culture is “probably what makes it work, too.” Given the all-for-one spirit, Goldman employees generally find their coworkers to be supportive, with less “back-stabbing [than] at other firms.” “People challenge you in an effort to see you and the firm succeed, not to see you fail.” One source views his colleagues as “supportive and personally interested in helping me to advance my career.” Another says coworkers and managers “are willing to take the time to explain things to you or to answer questions.” Overall, Goldman is hailed as “a great place to work,” explains one insider. “In terms of day-to-day, it is always challenging. The infrastructure and firm commitment to its people almost ensures its employees [will] succeed.” “I am extremely satisfied in my job at Goldman Sachs and proud to [be] part of what I consider the preeminent investment banking firm in the world,” says an associate. “The people and the culture make all the difference, and my experiences have convinced me that Goldman Sachs is far superior to its competitors on these critical criteria.” Goldman guards its reputation closely, placing a big “emphasis on ethics.” While many employees view the firm as “conservative” with respect to decision making, Goldman’s dress code is business casual except for meetings with clients. “Many people voluntarily dress formally as they get more senior, usually starting at the vice president level,” observes one investment banking associate, who adds, “Formal attire is a must for interview candidates.”
Well-managed… Fueling the teamwork concept is the excellent rapport most junior Goldman staffers have with their superiors. Being “very well treated by senior people” is simply part of the “Goldman culture,” which “emphasizes respectfulness regardless of seniority,” Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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says an insider. “Treating junior bankers or support staff poorly is generally unacceptable.” An associate concurs that “respect – a rarely practiced idea on Wall Street – is embraced at Goldman Sachs. All bankers are treated with respect and this begins at the most senior levels and includes even most junior employees.” Even analysts are pleased with the “flat” organizational structure where most decisions are made by “consensus.” One source notes, “Goldman is a meritocracy where everyone has a say. Although I’m an analyst, my opinions matter.” One associate offers his theory on why Goldman management is “probably best in class: The managing director title is granted less often here than most places, so those who reach that level are generally very impressive.” Still, there are those that feel “being a ‘culture carrier’ or a ‘people person’ might get you a pat on the back, but it won’t get you a promotion unless you also make the firm a ton of cash.” (It’s necessary to note that this doesn’t hold for about 50 percent of Goldman’s staff, who are non-revenue generating employees – think operations, legal, IT, etc.) The contact’s “current boss is outstanding,” a fact he sees as little more than a “coincidence.” “Goldman makes it obvious that success is based on commercial ability first and foremost, and relationships second.” The source notes that some of his former bosses were “really dysfunctional managers.” Another insider feels that although her boss “is a great person, she lacks good management skills.”
… And well-trained Notwithstanding a complaint that “career development needs to be a greater focus for managers,” the general sense is that Goldman has “incredible leadership” that devotes “great time and effort” to train junior personnel. “Goldman is a very special firm that invests in its people. Education and mentoring [are] important in all divisions,” says one insider. The learning begins the first day on the job as new hires “participate in a mandatory training program.” The classroom training is hailed as “superior,” though one first-year employee who studied finance in school found it only “pretty good” and “a bit repetitive.” Once the formal training ends, the “even more effective” learning on the job begins. Goldman does offer supplementary training in finance and products “throughout the year and throughout your career,” but it receives mixed reviews. One source calls the continual training “outstanding” and says it “is emphasized for all levels of bankers.” Another disagrees, calling the initial training “fantastic,” but “other than that, the training is not that great.” One contact feels Goldman offers adequate ongoing learning opportunities, but they’re just hard to find. “It’s out there, you just have to go after it, like a lot at [Goldman].” 40
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Summertime and the livin’ ain’t easy Those who land a summer stint at Goldman can expect to work like full-time employees in what can be “in effect a 10-week interview.” A former summer associate says his “position was very much a trial run for the full-time position” with the “same tasks, demands on time, challenges, staffings, etc.” In addition to being staffed on live deals, summer employees also get to learn from “a lot of speakers” as well as participate in separate “group projects.” While there are summer social events and networking is encouraged, some find it tough to choose between work and networking. One former summer employee who was extended a full-time offer advises people who want to get hired permanently to “bust your hump” and to avoid spending too much time “attending networking events and dinners.” He says, “The best way to get hired is to spend the summer working like it’s your career, not an internship.” Another source realized that “the majority of full-time hires come through the summer program, so I viewed it as critical to getting hired to perform extremely well during the summer.” Notwithstanding the pressure, a lot of summer staffers found their time rewarding. “My summer internship was terrific,” beamed one former summer analyst. “I learned a ton and found a great spot for myself.” Summer personnel are generally encouraged to ask questions, but “you can’t do that 24 hours a day, five days a week for two months. You have to pick your spots and find little ways to add value.”
Powering through the hours From the looks of it, the lifestyle of a typical junior employee in the investment banking division at Goldman isn’t very balanced. “The job demands extreme dedication and very long hours,” declares one associate, who works 90 to 100 hours per week, including frequent weekend work. In general, analysts get hit hardest with associates not too far behind. “Analysts often spend 80 to 90 hours a week at the office, sometimes more,” explains an associate, who calls the hours “tough,” but remarks that “life gets a little bit better as you get more senior.” Still, one secondyear vice president admits that, notwithstanding his somewhat senior rank, his “hours are long and extremely unpredictable.” He reports working 90 to 100 hours per week with plenty of work done over the weekend. For many hardworking employees, impressive coworkers and the quality of deals make everything worthwhile. “It can be grueling, but the opportunity to work on more interesting, high-profile live transactions with extremely talented and motivated
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teammates outweighs the negatives,” says one associate. Another agrees that “the exciting nature of the work and the people you work with make it bearable.” Given that there is so much work to do, face time doesn’t seem to be a big issue at Goldman. “The push is not for more hours or pressure to bill a client – it is simply to provide superior advice and service to a client,” says one contact. Another source, who reports working between 85 and 100 hours per week, agrees, saying, “There is no pressure to bill, but there is pressure to perform.” And while long hours are the norm, it’s not as if every corporate finance professional has no time to socialize. One associate notes that she works 50 to 60 hours per week and “rarely” on Saturday and Sunday. Employees in groups such as sales and trading generally report better lifestyles than their corporate finance counterparts. A first-year analyst in sales reports “hard hours” during the week “but free weekends.” A second source works “generally about 12 hours, arriving at 6 a.m. and leaving around 5:30 or 6 p.m.” One analyst gratefully acknowledges, “I’m in trading, not banking, and I thank my lucky stars each night that I don’t have to work those kind of long, grueling hours.” And though the contact reveals that he clocks in for 70 to 80 hours per week and often works weekends, he notes that he comes “in at my own convenience and work at my own pace. No one expects it or forces it upon me, but people notice and do respect those who work hard.” An analyst in sales portrays a similar state of affairs. “When I come in on the weekends it is entirely on my own time and not because a senior member asks me to come in.” A second satisfied source who spends an occasional weekend in the office says, “I leave when everything is done. If that’s at 6 p.m., then I leave at 6 p.m. If I need to be here until 7 a.m. the next day I will. Our clients come first.” However, one junior sales professional does hint at dealing with a little bit of face time. The contact says, “Since I am the youngest, I need to be the first in and the last to leave.”
Gold at the end of the rainbow? Goldman Sachs “generally pays on par with its major competitors, but compensation can be below the peaks of the ‘hot’ firms,” explains one contact. Another source recognizes he “could get more elsewhere,” but “what I can say is I love the cache of working at the world’s premier investment bank. Don’t tell my boss, but that has great monetary-equivalent value to me.” Notwithstanding the value of prestige, some employees can’t ignore the feeling that they could be better compensated. “As is the case with many, I spend a lot of time here and dedicate myself to my work and the 42
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culture,” says one source. “I expect to be a bit better rewarded for it.” Overall, an individual’s compensation for any given year will depend on “profitability” and might be at the higher end of a range if the employee demonstrated “superior performance.” Summer employees are paid a pro-rata share of their full-time equivalent’s annual base salary. There is a feeling that “over the long term, a successful career at [Goldman] will be more lucrative than anyplace else.” Perhaps that’s because the “investment opportunities for well-compensated employees are awesome,” according to one contact, who notes that “access to private equity investments” depends on one’s “income level.” In addition, Goldman employees can take advantage of an “excellent” 401(k) package and are partially compensated with options and restricted stock units that vest over time. Complementing the firm’s compensation practices is Goldman’s “great” benefits program. Goldman has a “fantastic gym” that “costs a laddered amount of money depending” on seniority. “It’s a very good deal for junior employees,” raves one insider. The one improvement a beleaguered staffer would make is keeping the gym “open later, since I work all the time.” Employees can also make use of standard perks like meal allowances and paid-for car service during late nights and weekends. For those more charitably minded, Goldman “is a very philanthropic place” and matches non-profit donations of up to $2,000; the firm also provides free admission to various museums. As good as things are, some employees still yearn for a few benefits the firm no longer provides, including complimentary beverages and fruit for all employees, a practice at least one employee expects will return.
Broadly speaking Goldman’s headquarters at 85 Broad Street is one of six offices the firm has in New York’s financial district. Those housed at Broad Street offer differing opinions of their workspace. “We typically have several cubicles on each floor and offices lining the exteriors of the floors,” says one associate, who adds that “in general, our offices are nice.” While other reviewers label Goldman’s offices “very comfortable” and “very nice,” others find the digs “very average” and “sub par” when compared with “other top investment banks.” A particularly unimpressed staffer says, “Our office is outdated and not posh. Anyone who says otherwise is completely mistaken.” One contact rationalizes, “The office space in New York is not at all luxurious, but in some ways the understated environment is indicative of the humility that is as important a part of the culture as success.” Goldman does seem to be taking steps “to modernize,” but most of the planned improvements center on upgrading Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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technology rather than beautifying the decor. Finally, one sales professional finds the New York offices nice enough but worries about the possibility of Goldman moving personnel to the firm’s new state-of-the-art facility in Jersey City. “It seems we are always moving or planning a move, and not knowing who is going to New Jersey is really unsettling.”
Divergence on diversity Goldman’s record on female recruitment is mixed. “Although the firm does a good job at hiring women at junior levels, the firm is not as good at keeping these women and promoting them,” says one source. Another observes that women “are still underrepresented at senior levels,” but others say that “the firm is focused on this issue.” Overall, Goldman seems to take “diversity very seriously and has established a number of formal and informal processes and networks to encourage the recruiting, training and development of both women and minorities.” For example, Goldman has “a women’s network that works on promoting awareness among women about mentoring and other programs,” reports one female contact. Goldman’s ability to attract and retain minorities gets mixed reviews, with one contact feeling that Goldman’s attention to minority recruitment “definitely needs improvement.” Another says, “We have the programs, but there’s very little impact in terms of actual hiring and promoting.” Not everyone is dissatisfied with Goldman’s diversity policies, however. Some believe the firm “places a large emphasis on hiring and retaining minorities” and is attempting to create “a workforce that mirrors [its] diverse clients.” Another source says the firm is putting “an increasing emphasis on recruiting minority bankers, and does a very good job at the analyst level. Success at [the] associate level is more limited, but getting better, and the effort and focus to improve is there.”
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“It can be grueling, but the opportunity to work on more interesting, highprofile live transactions with extremely talented and motivated teammates outweighs the negatives.” — Goldman Sachs insider
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V A U L T
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Morgan Stanley
PRESTIGE RANKING
1585 Broadway New York, NY 10036 Phone: (212) 761-4000 www.morganstanley.com
DEPARTMENTS Credit Services Individual Investor Group Institutional Securities Institutional Sales and Trading Investment Banking Research Investment Management
KEY COMPETITORS Citigroup Credit Suisse First Boston Goldman Sachs JPMorgan Chase Merrill Lynch
UPPERS • Top-tier reputation hard to beat • Extremely intelligent and diverse coworkers
DOWNERS THE STATS Chairman and CEO: Philip J. Purcell Employer Type: Public company Ticker Symbol: MWD (NYSE) Revenue: $34.9 billion (FYE 11/03) Net Income: $3.8 billion No. of Employees: 51,196 No. of Offices: 600+
• Grueling hours • Reputation justifies less than leading compensation
EMPLOYMENT CONTACT www.morganstanley.com/careers
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “With Goldman, the all-around best” • “Too arrogant for their own good” • “Premier white-shoe firm” • “Prestigious, but having trouble defending the hill” 46
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Vault Guide to the Top 50 Banking Employers Morgan Stanley
THE SCOOP
Still fighting to be king of the mountain In the never-ending competition in the securities industry, Morgan Stanley has consistently ranked as one of the premier financial institutions in the world. The firm conducts business through four arms: Institutional Securities, Investment Management, Individual Investor Group, and Credit Services. The highly regarded Institutional Securities business provides advisory and capital raising services, including investment banking, sales and trading, principal investing, and aircraft leasing. Morgan Stanley’s Investment Management business is one of the world’s largest, with $462 billion in assets under management as of November 2003. The firm rounds out its offerings through the Individual Investor Group, which delivers financial advice to individual investors, and the Discover Financial Services arm, which provides consumer credit products. In the last few years, Morgan Stanley has seemed to focus as much on legal tangles as it has on league tables. In late 2002, Morgan Stanley agreed to pay $125 million as part of a larger securities industry settlement to end New York’s investigation into conflicts of interest between bankers and research analysts. In the middle of 2003, Morgan Stanley paid an additional $50 million to stop federal inquiries into its mutual fund sales and disclosure practices. And as 2004 began, Morgan Stanley was still not out of the mutual fund woods yet, and other ongoing investigations could lead to further payouts. Another 2004 to-do item for Morgan Stanley is appealing a French court ruling that would have the financial institution pay Moët Hennessy Louis Vuitton (LVMH) over $38 million for lost value due to allegedly biased research. Despite its many legal and regulatory issues in 2003, Morgan Stanley still managed to rake in the deals. The firm benefited from a strong showing in capital markets, and its No. 2 spot on the worldwide debt, equity and equity-linked securities issuance league table was a solid improvement over its fifth place showing in 2002. Morgan Stanley had mixed results in mergers and acquisitions in 2003, falling from No. 2 to No. 4 in worldwide completed M&A, but climbing from No. 3 to No. 2 in worldwide announced M&A. And while Goldman Sachs held the No. 1 spot on both league tables, Morgan Stanley did remain ahead of Goldman in global disclosed banking fees, ranking No. 2 to Goldman’s No. 4, and pulling in almost $200 million more than its arch-rival.
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Vault Guide to the Top 50 Banking Employers Morgan Stanley
Dodging Glass-Steagall Morgan Stanley Dean Witter (as it was once known) was created in 1997 by the merger of Morgan Stanley and Dean Witter, Discover & Co. Dean Witter was founded in 1924 in San Francisco. Milestones include the firm’s IPO in 1972, its 1978 merger with New York-based securities firm Reynolds & Co. (at the time, the largest securities industry merger), its purchase by Sears Roebuck in 1981, the 1986 launch of Discover Card and the 1992 spin-off of the Dean Witter, Discover Group. Morgan Stanley traces its roots to the former securities operations of J.P. Morgan. In 1933, after the passage of the Glass-Steagall Act, which prohibited firms from operating both commercial and investment banking businesses, two J.P. Morgan partners (Harold Stanley and Harry Morgan, son of J.P. Morgan) and several other employees split from the bank and formed Morgan Stanley. The new firm was created to concentrate on the securities business, while J.P. Morgan remained a commercial bank. Great moments in Morgan Stanley history include its admission to the New York Stock Exchange in 1941 and its 1986 IPO.
The major league tables The markets came back in 2003, resulting in improved earnings for Morgan Stanley. The firm’s 2003 net income of $3.8 billion was a 28 percent increase over 2002’s $3.0 billion. The strong results were due in large part to Morgan Stanley’s institutional securities business, which increased its net income by 48 percent to $2.46 billion. The firm was particularly strong in fixed income; the unit posted record results, garnering revenue of $5.4 billion, a 65 percent increase over 2002. On the competitive front, the firm’s investment banking business held its own in 2003, ranking No. 2 (up from No. 5 in 2002) in worldwide debt, equity and equityrelated issuance as well as in disclosed fee volume. Notwithstanding this league table success, Morgan Stanley’s 2003 disclosed fee volume was actually equal to its 2002 take, due to the low number of IPOs and high concentration of debt offerings (which yield lower fee spreads than their equity counterparts). The equity market was not totally dead, however, and Morgan Stanley was the sole lead manager on two of the top three secondary equity offerings in 2003 – the $1.98 billion Accenture transaction and the $1.3 billion issuance from Seagate. The firm also led First Energy Corp.’s $966 million secondary offering. Included in Morgan Stanley’s 2003 debt deal highlights was its inclusion as one of three bookrunners on Italy’s $7.8 billion sovereign debt issuance.
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Vault Guide to the Top 50 Banking Employers Morgan Stanley
The mergers and acquisitions market presented some tough conditions for Morgan Stanley. An overall decline in industry-wide completed M&A volume played a large role in the bank’s diminished advisory revenues, but the firm also struggled to maintain its share of the deals that did happen. Morgan Stanley’s fourth-place finish in completed M&A equated to a 19 percent market share, the firm’s lowest results in nearly a decade. Morgan Stanley did advise on four of the top 10 completed M&A deals of 2003, but the bank was hit hard by its absence on the year’s largest completed transaction, Pfizer’s $60.7 billion stock-swap acquisition of Pharmacia Corp. (a deal that included arch-rival Goldman Sachs). Morgan Stanley did do well in announced global M&A, though, ranking second with a market share of 21 percent. The firm’s results were bolstered by its advisory role on the largest announced transaction of 2003, Banc of America’s $49.3 billion agreement to merge with FleetBoston Financial. Other Morgan Stanley deals in 2003 included advising electric utility Iberdrola’s $29.7 billion response to a hostile tender offer from Spanish gas utility Gas Natural, and advising John Hancock on its $11.1 billion sale to Manulife Financial Corp.
Morgan glory Where Morgan Stanley goes, praise normally follows. Euromoney magazine named the firm 2003’s Best Global Investment Bank, the magazine’s top honor for a securities firm, as well as the year’s Best Global Equity-Linked House and the Most Improved Credit Derivatives House. Additionally, in the Reuters/Institutional Investor 2003 survey, Morgan Stanley was selected as the top investment bank for equity transactions. Morgan Stanley’s FX department also received high marks recently, ranking second overall in Global Investor’s 2003 FX Survey. Morgan Stanley’s research team received its fair share of accolades as well. Global Investor’s 2003 Fixed Income Survey ranked Morgan Stanley’s fixed income research team No. 2 in the overall category, and the firm received the Best High Grade Research Team award in Euromoney’s annual investor poll. In the prestigious 2003 Institutional Investor All-America poll, Morgan Stanley’s research analysts jumped from No. 5 to No. 2. While Morgan Stanley ranked a solid third overall on II’s 2003 Global Research Team rankings, the result was a disappointment compared with last year’s first-place finish. Morgan Stanley was also cited as a top provider of workplace satisfaction and diversity. In a survey of British employers, the U.K. Sunday Times ranked Morgan Stanley No. 27 on the newspaper’s list of the “Top 100 Companies to Work for Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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2003.” In addition, Family Digest magazine hailed the firm as one of the “Best Companies for African Americans.” Finally, BusinessWeek calculated that, overall, Morgan Stanley’s brand was worth approximately $10.7 billion in 2003, the 26th-largest amount on the magazine’s list of the 100 top global brands. The firm’s position bested rivals Merrill Lynch (No. 27), JPMorgan Chase (No. 31) and Goldman Sachs (No. 41).
Courting suits Morgan Stanley’s lawyers have been busy in the last few years. At the end of 2002, Morgan Stanley agreed to participate in a $1.4 billion 10-bank settlement to end governmental investigations into conflicts of interest between investment bankers and research analysts. The firm’s share of the settlement was $125 million – a hefty sum, but a far cry from Citigroup’s $400 million payment (the largest in the settlement). In a November 2003 settlement, Morgan Stanley did not admit guilt but did admit it should pay out $50 million as it settled with the SEC and the NASD over investigations into its mutual fund disclosure practices. Morgan Stanley was accused of neglecting to disclose that it was monetarily rewarding employees for convincing customers to purchase products of certain mutual funds (a service for which these funds were paying Morgan Stanley). The firm was also being charged for selling “Class B” shares without disclosing that such shares carried high fees in lieu of frontend sales charges. In addition to the $50 million payout, Morgan Stanley will also distribute a mutual fund “Bill of Rights” that will attempt to describe costs, fees and other significant information in “plain English.” That settlement came on the heels of a $2 million fine the firm paid to the NASD in September for running sales contests that encouraged the sales of its own funds. Morgan Stanley is still under investigation by Massachusetts regulators for the same offense, and the state is asking that Morgan Stanley pay a fine and give back profits. Government regulators were not the only ones upset with Morgan Stanley. In early 2004, a Paris court ruled that a Morgan Stanley analyst had issued inaccurate and biased research on Moët Hennessy Louis Vuitton (LVMH) as the French luxury goods maker was attempting to take over rival Gucci (which Morgan Stanley’s M&A group was advising on its defense). Under the ruling, Morgan Stanley was ordered to pay €30 million ($38.4 million) in damages to LVMH, and the court also appointed an independent expert to determine whether Morgan Stanley should recompense LVMH for money spent to protect its image. Morgan Stanley plans to appeal the 50
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judgment, which it believes “opens the floodgates for companies to use the threat of legal action to persuade analysts only to make positive statements about them.”
An ounce of prevention… In response to worries over conflicts of interest and mutual fund practices, Morgan Stanley Chairman and CEO Philip Purcell appointed Stephan Newhouse as president of the firm and hired Eric Dinallo, one of the lawyers who had helped New York Attorney General Eliot Spitzer formulate the legal strategy that led to the $1.4 billion settlement with 10 investment banks, to conduct a conflicts examination within the firm. Newhouse, who is responsible for Morgan Stanley’s client relationship management process, will work with Dinallo. The personnel changes are part of Purcell’s planned set of “DNA transfers at the highest levels of [Morgan Stanley’s] management and governance,” designed to improve the bank’s ability to detect and deal with potential conflicts.
Staying trim After reducing its headcount by 10 percent in 2002, Morgan Stanley dropped another 8 percent in 2003, a net loss of over 10,000 employees since November 2001. While the firm expects to keep its overall headcount flat in 2004, one group that Morgan Stanley plans to add to is its brokerage staff. The firm is aiming to add 1,800 newly trained brokers in 2004 after the number of Morgan Stanley brokers fell 12 percent over the course of the bank’s fiscal year (Morgan Stanley currently has 11,086 brokers). The prospective hirings underscore Morgan Stanley’s belief that market conditions will continue to improve.
Getting ready for a big ‘04 In an effort to retain current large clients and acquire new ones in 2004, Morgan Stanley created the strategic engagements group, a collection of nine top dealmakers, including Joseph Perella (chairman of the institutional securities group), Steve Munger and Simon Robey (former co-heads of the firm’s global mergers and acquisitions department), and Richard Kauffman (former co-heads of Morgan Stanley’s banking department). The organizational change is designed to reduce the bankers’ administrative workloads, giving them more time to court would-be bigticket clients in what many industry experts think will be a strong 2004.
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Vault Guide to the Top 50 Banking Employers Morgan Stanley
Included in such rosy forecasts is the anticipated initial public offering of Google, the Internet search engine company that plans to raise as much as $3.3 billion. In April 2004, Google tapped Morgan Stanley and CSFB as lead bookrunners on the deal. Wall Street has targeted China as an area of rapid growth, and Morgan Stanley is focused on battling rivals such as Goldman Sachs to establish foreign banking superiority in the country. Some estimates have Chinese firms raising as much as $13 billion in IPOs in 2004, and Morgan Stanley has already completed three during the year, including the listing of Shanghai Forte, the largest private real estate developer in the Chinese financial hub. Morgan Stanley is also considered a frontrunner to lead the upcoming mammoth China Construction Bank IPO. In terms of size, the deal is expected to challenge the 2000 China Unicom $5.25 billion offering (also lead managed by Morgan Stanley), a record for a mainland issuer. Morgan Stanley has some history with China Construction. In 1995, Morgan Stanley and China Construction co-founded what has become China’s dominant local investment bank, China International Capital Corp. Although Morgan Stanley still owns a 43 percent stake in CICC and regularly works with CICC on Mainland transactions, CICC is an independent organizatoin. In assessing Morgan Stanley’s chances of getting the China Construction IPO mandate, one rival banker went so far as to say, “It would be almost unthinkable if they weren’t involved.” Morgan Stanley is also strong in the emerging M&A market in China. Most recently, the firm advised Anheuser-Busch on its contested takeover of China’s Harbin Brewery. In June 2004, after Anheuser-Busch offered about $720 million for the outstanding shares of Harbin, SAB Miller dropped out of the running to buy the Chinese brewery, leaving the Morgan Stanley client as the sole bidder.
GETTING HIRED
Long looks Interviewing at Morgan Stanley can be a long and intense process, lasting three or more rounds of interviews. “I had three more rounds [after the on-campus interview], all in New York,” reports one contact. An MBA student, interviewing for an internship, had a similar experience. He says the “extensive interview process started with on-campus interviewing, then continued with a series of three callbacks in New York.” A contact in Europe says, “Associates have four to five rounds, which 52
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are pretty intense.” The source also says even if you do land a job at Morgan, you might still have to do some more interviewing. “Summer interns applying for fulltime jobs go through an M&A game where they work with senior people on a simulated M&A case. It lasts all day long.” Other contacts, though, report going through only two rounds (one on campus and one at an office). “[Morgan Stanley makes] very quick decisions,” says one contact. “That’s the difference between Goldman and Morgan Stanley.” This insider reports that there was one two-on-one interview (“good cop, bad cop”) in the first round, though “other people had one-on-ones.” During the last round, usually held in a Super Saturday-like format, recruits can expect to meet “mostly with managing directors,” according to a former employee. An associate cautions that while candidates meet with many people, “expect that the recruiting head has a veto.” Another piece of advice: Get a summer job. Sources say if you’re lucky enough to land a summer internship, you’ve just about got it made. “A large percentage of my summer class got offers to return full time,” reports one banker.
Study up Given Morgan Stanley’s strong reputation and a very competitive employment market, the firm can afford to be selective. One contact in the strategic investment division reports the firm “screened over 500 resumes and interviewed over 100 candidates for two positions” in a recent recruiting cycle. The interviews themselves are, according to some current employees, “quite formal, even for the investment banking industry.” Technical questions are common; one business school student interviewing for a trading job reports that for his final round he was asked to sit in a chair while a senior director peppered him with questions. “All he did was pace around and throw questions at me – if I was wrong he’d correct me, and then just go to the next one. I remember thinking, ‘God, I’m glad I know some of this stuff.’ It was a lot of macroeconomics: inflation, interest rates, currencies.” Says that contact: “They had me interview with pretty senior people, the head of all treasury trading, and the second in charge of all fixed income.” In the final round, one insider received “a lot of questions about macroeconomics” such as, “What factors would move the long bond up or down?” This contact says he was also asked, “How do you invest your own money?” and “How big is your portfolio?” Another source, who recently interviewed for a full-time associate position, reports receiving a “mix of industry understanding, quantitative and fit questions.” One associate, though, reports a less grueling interview process. “It’s all in who you meet here,” the source explains. “Since it’s such a large place, you are going to meet Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers Morgan Stanley
people with very different interviewing styles – I also think that if they have confidence in your technical skills and coursework, then you won’t hit many technical questions at all.” One former M&A banker agrees. “I wasn’t given quantitative questions because I had a financial background,” he says, adding, “Questions were more about fit – Why us? What are you looking for? What do you want to get out of the job? – as opposed to asking me about discounted cash flows.” However, the banker admits, “If I didn’t have the background, they would have asked me quantitative questions.” A project analyst also reports going through mostly “behavioral interviews geared to assess the personality and work ethic of the individual.” And a contact in the Singapore office says Morgan Stanley interviewers “very directly and aggressively” picked apart his past experience and its relevance to banking. The source remembers being asked: “So you did well in consulting...What makes you think you are going to be any good at this?”
Summer schooled The interview process can be “exhausting” for summer candidates as well. One former summer associate answered questions on the banking industry as well as finance questions concerning pricing a security and conducting a discounted cash flow analysis. There were also “a couple of outlier questions,” including “Define calculus” and “How do planes fly?” The contact believes “it makes sense to attend select presentations and social events to get to know the recruiters and gain an appreciation for the roles, responsibilities and opportunities within each group.” In addition, he says summer applicants should “break the ice” by attending “the preinterview cocktails the night before to meet and greet the actual people you will interview [with] the following morning.” A recent summer analyst hire in London reports going through two rounds of interviews. “The first round is fit-based,” says the contact, “while the second round is organized as a one-day assessment center, involving group exercises, one-on-one interviews, a numerical and reasoning test, and a one-on-one case study.” The contact explains further that the “group exercise includes the discussion of a business situation where candidates simulate a board meeting.” He cautions: “There’s not much room for preparation, as teamwork ability is what seems to matter. Those who got the offers contributed creative ideas directed to the core issues, rather than those who tried to be the great leaders without making effective contributions.” As for the one-on-one interviews, they’re mostly “personality-based,” but “those with previous experience got a lot of technical questions.” The numerical test is “very easy,” says one insider, who still recommends “not rushing through it” and “practicing
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calculating percentages and multiplying and dividing fractions.” The case study is also “very simple,” but “it’s essential that you ask the interviewer loads of questions and prepare a good structure for your analysis.”
OUR SURVEY SAYS
Bring your attitude Morgan Stanley is one of the premier investment banks in the world, and its employees seem to know it. Insiders say “everyone seems to have an MBA from a top business school” and “no other firm matches Morgan Stanley in terms of education and attitude.” One former banker says the firm was “a great place to learn how to work in an intense environment with smart people.” Another banker agrees, saying one of the best aspects of life at Morgan is “working with hard-charging aggressive people who like what they’re doing.” One source sums up Morgan Stanley’s culture in a few words: “Serious, white shoe, somewhat arrogant, very diverse and international.” A London contact agrees the firm is “very respectful of other cultures, and very cosmopolitan and diverse.” And a source in Asia says although Morgan Stanley is “a very difficult place to work, rewards are clearly there. So if you’re tough, go for it.” However, not everyone appreciates the atmosphere. A source who admits the “culture is open and friendly,” says it’s also “a bit of a superstar culture.” Another calls the firm “very professional,” and says it’s “full of very smart people, although sometimes they’re not the best managers of people.” And according to one source, teamwork isn’t stressed too much at Morgan Stanley; the contact says that the bank has a “sink-or-swim, no tears corporate culture. You are expected to work very individually, with little guidance, and any requests for help or [lenience] on deadlines will be viewed as weakness.” The insider does see the other side of the coin, though. “That said, Morgan Stanley is the leader in the industry. [You] work with top-notch professionals, for top-notch clients. The learning opportunity as well as the afteremployment opportunities [are] fantastic.”
Performance, not politics Sources warn that incoming employees should be prepared to conform to Morgan Stanley’s strong, entrenched corporate culture. “If you don’t fit in, you stand out a Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers Morgan Stanley
lot,” observes one banker. Another insider complains of Morgan Stanley’s “extremely rigid organization” and “heavy-handed culture.” That insider says the firm “takes pride in ‘the Morgan Stanley way.’ They have this attitude of, ‘This is how we’ve always done things, and this is how we’ll continue to do things.’” Even so, the bank puts “a lot of time and effort into developing people.” Another source echoes this; in her experience, the firm is a “very non-hierarchical meritocracy that fosters creativity and learning.” A contact in New York says Morgan “treats people fair and even-handed and makes every effort to make the rules of the game clear: ‘If you hit this, you’ll get this.’ They kept politics to a minimum.” That contact does admit, “At the end of the day, you might be able to climb up a rung or two on politics,” but he says, “mostly, you move up if you perform.” Overall, most bankers assert that at Morgan Stanley the “focus is on producing good work.”
Pick and choose Investment banking associates at Morgan participate in a generalist program that entails three rotations through industry or product groups. These rotations last four months each. One insider comments, “There’s an incredible amount of mobility when compared to Goldman. You spend your first year as a total generalist and then after two years, if you want, you can switch groups.” Another insider brags, “I have a wide latitude to choose my own projects and thus have very interesting projects to do.” A former Morgan Stanley employee says the firm is a “looser place to work and more individual oriented than Goldman, which is incredibly uptight.” He does warn that times have changed. “A lot of the senior people who were culture carriers are gone. [Former co-CEO John] Mack was one of the last tangible ties to the old partnership days,” reminisces the banker. “Now, there’s a lot of new people in there, and it’s a less special place as a result.”
Working in the lap of luxury The firm, like its Wall Street counterparts, embraced a full-time business casual dress policy in the late 1990s. The policy, for the time being, is still in place, but the firm has also issued a brochure highlighting the major do’s and don’ts for dressing appropriately at work. Some don’ts: shirts without collars or open-toed shoes. Some do’s: khakis and polo shirts in the summer. “Lots of people really push the casual dress envelope,” reports one insider. “The pendulum has swung so far that people give you good-humored flack if you wear a suit for a borderline reason,” such as interviewing MBA candidates. Morgan Stanley provides a slew of other perks, including tuition reimbursement, private equity plans, subsidized health club 56
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memberships, laptops, car service, meal allowances on nights and weekends and other standard investment banking perks. In addition, insiders say the firm sponsors “lavish” company outings and parties. One source says, “I feel like this firm really cares about making people feel like they are working for a top-notch organization.” For the health-conscious, the firm reportedly offers free fruit on every floor.
A bit long on the hours, a bit short on the comp Working at Morgan Stanley means working long, often “horrible” hours. Analysts in particular get hit the hardest and should be prepared for 100-hour workweeks. Making matters worse, some insiders complain the firm is nowhere near the top of the pay scale. “While I’m happy with my salary, they’re notorious for paying below other firms,” says one contact. “The attitude seems to be that you should work there because of the firm’s prestige and reputation for excellence, not necessarily for the money.” A former employee has a slightly different view, saying Morgan pays “inline” with the industry. He adds, “They try to be competitive but don’t want to be at the very top. They just don’t want to run ahead of the pack.” And another source sees Morgan Stanley on both sides of the compensation line. “Stars are kept with outrageous pay,” says the contact, “while marginal performers are very quickly starved out of the firm.” A recent summer hire says Morgan’s internship package, “apart from the accommodation allowance, was perfectly consistent with the other offers I received for the summer.” That source reports receiving a $1,750 accommodation allowance for the summer of 2003. Interns may also receive a “discretionary end-of-summer bonus.”
Senior moments Just as most insiders cite “the people” when asked what the best part is about working at Morgan, many, in the same breath, also say Morgan’s “management of people could definitely be better.” Offers one banker, “Though the analysts and managers were professional, the management structure was unorganized and inefficient.” Another source has a slightly different take. It’s “the attitude of senior management” that needs working on, says the contact. Of course, other sources have different views. “My boss was very helpful in helping me learn so that I could help him better,” says one recent financial advisor intern, who adds, “Everyone seemed like they were happy to be there, and everyone was more than willing to help each other out.”
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V A U L T
3
The Blackstone Group
PRESTIGE RANKING
345 Park Avenue New York, NY 10154 Phone: (212) 583-5000 Fax: (212) 583-5712 www.blackstone.com
DEPARTMENTS Corporate Debt • Marketable Alternative Investments • Mergers and Acquisitions Advisory • Private Equity • Real Estate • Restructuring and Reorganization Advisory
THE STATS Chairman: Peter G. Peterson President and CEO: Stephen A. Schwarzman Employer Type: Private company No. of Employees: 500 No. of Offices: 5
KEY COMPETITORS The Carlyle Group Goldman Sachs Hicks, Muse, Tate & Furst Kohlberg Kravis Roberts & Co. Lazard
UPPERS • Working with “incredibly talented,” “very intelligent” people • Prestige up there with Goldman
DOWNERS • Not the most diverse workforce in the business • Time in the office
EMPLOYMENT CONTACT Undergraduate/Analyst Recruiting
[email protected]
Summer Undergraduate/Analyst Recruiting
[email protected]
Graduate/Associate Recruiting
[email protected]
Summer Graduate/Associate Recruiting
THE BUZZ
[email protected]
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “Most prestigious for banking” • “Only geniuses work there” • “Very exclusive, but work their people to death” • “M&A masters”
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Vault Guide to the Top 50 Banking Employers The Blackstone Group
THE SCOOP
All you need is $400,000 and a dream In 1985, Peter G. Peterson (a Lehman Brothers senior banker and former CEO) and Stephen A. Schwarzman (a Lehman partner) took $400,000 and started a boutique M&A firm with the goal of engaging exclusively in non-hostile transactions while delivering more senior-level attention to clients than its bigger bank brethren. It turned out that Peterson and Schwarzman were on to something. Under their guidance, The Blackstone Group has blossomed, growing to 500 employees in five offices (New York, Atlanta, Boston, London and Hamburg) and expanding its business beyond M&A to include restructuring and reorganization advisory, private equity, real estate, corporate debt, and marketable alternative investments (fund of hedge funds). Missing from the Blackstone portfolio are the often lucrative underwriting and trading services of the larger investment banks, but Blackstone has purposely stayed clear of those businesses. Vice Chairman Tony James explains the Blackstone mindset: “We’re not trying to re-create Citigroup here, or even DLJ. We’re much smaller, and we like very high-margined, high-return, low-risk businesses. Not too many bodies. High-end, elite businesses where we can be a leader.” Blackstone also puts its money where its mouth is: the firm’s funds include more than $1.5 billion invested by or on behalf of its employees.
Private info Although the firm’s initial focus was M&A advisory, Blackstone’s private equity business has become its bread and butter. Blackstone’s first buyout fund closed in 1987 after Schwarzman and Peterson had raised $950 million, making it, at the time, the largest first-time fund ever. Fifteen years later, Blackstone set another record when it established its $6.45 billion Blackstone Capital Partners IV fund, the largest institutional private equity fund in history. In total, the firm has raised more than $14 billion across five private equity funds, and as Blackstone’s funds get larger, so do its deals. The Blackstone-led buyout of TRW Automotive completed in March 2003 was the largest LBO since RJR Nabisco in 1988. The deal was also noteworthy in that when a major investor (The Carlyle Group) pulled out of the deal at the last minute, Blackstone didn’t have to look far to find the missing capital; the firm ended up investing an extra $500 million out of its
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Vault Guide to the Top 50 Banking Employers The Blackstone Group
own $6.45 billion fund. In another big deal, in September 2003, Blackstone announced that it, along with Goldman Sachs and Apollo Management, had signed an agreement to a acquire Ondeo Nalco for $4.2 billion. With over 10,000 employees and $2.6 billion in sales in 2002, Ondeo Nalco is the world’s leading provider of water-treatment services to the general industrial, institutional, pulp and paper, and energy industries.
High-profile advisors Blackstone’s restructuring advisors have been very busy in the last few down economy years, helped by clients such as Enron, Global Crossing and Xerox. Overall, the group has participated in 150 distressed situations involving approximately $320 billion of total liabilities. Despite these companies’ poor financial situations, these deals make for some pretty rich fees. On its Enron dealings alone, Blackstone’s services (which include disposing of the company’s assets at pennies on the dollar) may net the firm as much as $17 million. While M&A activity was down in 2003, Blackstone’s M&A advisory group is still one of the most respected in the industry. The unit has advised on such high-profile deals as UBS’ $11 billion acquisition of PaineWebber (Blackstone advised PaineWebber) and LG&E Corp.’s $5.4 billion sale to PowerGen (advising LG&E). More recently, Blackstone’s M&A team got involved with a client of its restructuring group when it advised Enron on the sale of its North American Power and Gas Trading Business to UBS.
One helluva hotelier Blackstone’s real estate group, operating out of the New York and London offices, boasts that it owns more than 13 million square feet of real estate in Boston, New York, San Francisco and Washington, D.C., and has recently sold four of the top seven superluxury hotels in London (the Savoy, Claridge’s, the Berkeley and the Connaught). All told, the unit may have the largest real estate portfolio on the Street. Blackstone’s corporate debt group is actually two businesses: Blackstone Mezzanine Advisors and Blackstone Debt Advisors (BDA). Blackstone’s mezzanine fund of $1.1 billion is one of the largest of its kind and has investments in firms such as 24 Hour Fitness Worldwide and Vitamin Shoppe Industries. BDA is a relatively new group (created in 2002) and has $2 billion of CDO (Collateralized Debt Obligation) funds for investment predominantly in senior secured loans. Last but definitely not least is the Blackstone Alternative Asset Management unit (headed by BAAM 60
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Vault Guide to the Top 50 Banking Employers The Blackstone Group
president and CEO J. Tomilson Hill), which has almost $9 billion of assets under management in funds of hedge funds.
Balancing act President and CEO Schwarzman expects 2004 to be a less spectacular year for buyouts than 2003 given rising stock and acquisition prices, but one of Blackstone’s strengths is its breadth; when one business is relatively slow, it usually means another group is picking up the slack. For example, M&A wasn’t particularly strong in 2003, but Blackstone’s restructuring practice boomed, helped by large clients such as Enron. Observing this balanced attack, Fortune said in June 2003 that Blackstone had become “a singular powerhouse almost perfectly positioned to take advantage of today’s perverse market conditions.” And it’s not as if private equity is expected to be completely quiet. Half of the $3.5 billion Blackstone invested in 2003 was in Europe, an area Schwarzman believes will be so active with private equity deals that he had Blackstone open up an office in Hamburg. The new branch was put to work shortly after it opened in September, working on Germany’s largest public to private equity deal, the Decemberannounced €3.1 billion purchase of German chemicals maker Celanese AG. Blackstone’s German arm was also involved in the January 2004 purchase of Sulo, the German waste management company, for €500 million.
May the Schwarzman be with you… unless he’s leaving, of course Peterson and Schwarzman have reputations for keeping power to themselves, and their protective natures may have compelled a number of now-former Blackstone partners to leave. Among the bitter departures was that of Larry Fink who, with Peterson and Schwarzman, co-founded BlackRock, the asset management business begun at Blackstone and sold (along with Fink) to PNC Financial Services for $240 million in 1994. In the last few years, however, the 77 year-old Peterson has become less active in the firm, and some wonder if Schwarzman, 56, might be ready to cede some control as well. Fueling this speculation was the October 2002 hiring of former DLJ and CSFB senior banker Hamilton “Tony” James as Blackstone’s vice chairman. Even James himself has discussed the possibility of heading up Blackstone if Schwarzman eventually decides to step down. The good news for Blackstone is that James is no stranger to
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private equity, having built DLJ’s business into one of the top divisions on Wall Street. For now, however, James is the closest thing Blackstone has to a chief operating officer, and he is focused on driving the firm’s private equity strategy (i.e., how to invest $8.5 billion in funds), growing back the M&A business, and evaluating the prospects of new markets such as venture capital and proprietary hedge funds. James is also restructuring the way Blackstone does business, reshaping general practice areas into more industry focused groups. He hired Thomas Middleton, a former head of telecom banking at Merrill Lynch, to improve the M&A practice, and he nabbed three senior healthcare bankers from CSFB in April 2003 (one of whom, Lodewijk de Vink, is a former chairman, president and CEO of Warner-Lambert). The firm also hired former Treasury Secretary Paul O’Neill to consult on Blackstone’s private equity investments.
Blackstone and blue but healthy overall While most of Blackstone’s deals have been very good to the company, a few have hurt. The firm’s $2 billion communications fund started in 2000, Blackstone Communications Partners, had a few poor years, as did Blackstone’s $200 million investment in Sirius Satellite Radio, a company that, among other things, lost $468 million in one year. Things got bad enough at Sirius that Peterson joined the board in 2001, but the move also sent the message that Blackstone was not going to go down without a fight. Even with a few bumps and bruises, Blackstone looks very strong. So strong, in fact, that the company might even take advantage of improving equity markets. With Wall Street buzzing about the upcoming China offerings and Google IPO, Blackstone has quietly gone about its business, filing with the SEC to sell up to $350 million of TRW Automotive in an expected 2004 IPO.
GETTING HIRED
As select as they come “Blackstone is extremely selective, recruiting only the top candidates from the top schools,” says a first-year analyst. “Overall, the caliber of candidates asked to
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interview is very high.” For associate positions, one source says the firm “primarily recruits at Harvard and Wharton, and occasionally interviews at Stanford or Columbia.” Explains a London-based contact, “Essentially all the MBAs hired are from Harvard.” For analyst positions, Blackstone recruits at Columbia, Harvard, Virginia and Penn (Wharton), but concentrates on finding undergrads at Harvard and Wharton – “any others depend on which alum feels like going to their alma mater to recruit that year,” offers an insider. Another source agrees that “analysts primarily come from Harvard and Wharton,” but admits “there are a few from other schools, including Yale and UT Austin.” The contact adds, “In principal, if someone gets their foot in the door, any good school will be given a chance.” As far as the type of people Blackstone likes to put on salary, the firm says it’s looking for “energetic, self-motivated, team-oriented individuals with fresh ideas and innovative solutions who thrive on challenge in a fast-paced, dynamic environment.” Although sources say analyst and associate classes are small (an M&A banker says his group hires about five analysts each year), Blackstone says it’s planning to double the size of its M&A group over the next two to three years. The firm is currently focused on adding solely to the New York office, but says it might soon begin to hire for its London outpost.
Early admission There’s more than one way to land a prestigious Blackstone gig. “One is the regular drop-your-resume on campus,” says an analyst, “where we’ll hold one or two interview rounds.” The contact adds, “But we only do this for Penn and Harvard.” After these on-campus rounds, in which interviewees will “mostly meet young [Blackstone] people,” recruits who passed muster will be invited to New York for the final round where “you’re just meeting partners.” The second way to land an interview at Blackstone, admits an insider, is through the “tap-you-on-the-shoulder process, in which first-year analysts recommend you, or people somehow get a hold of your resume and you’ll be invited to an earlier interview process.” Initial interviews for the tapped are “held at the Four Seasons or another hotel.” Says one source, “This process starts a month earlier [than the regular process], but it’s basically the same. It just happens off campus, instead of on.”
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Lots of big hands to shake It’s not uncommon to have go through more than three interview rounds. A private equity contact went through “many rounds of interviews – three to six,” and “met with between two and four people in every round.” The contact adds, “ Each interview lasted between 30 and 45 minutes. Questions were detailed, analytical and thought-provoking – minimal cookie-cutter type questions.” An analyst, who was “tapped” to interview by Blackstone says, “The type of questions you get in interviews all depends on who you interview with. Some people like to bullshit and do a personality interview, and some like to grill you. It’s hard to generalize.” One insider claims the interview process is “ fairly normal” and says he “met almost every partner in the group” to which he was pplying. He adds, “There were lots of culture fit questions, more than I had at previous employers – Goldman and McKinsey.” A first-year analyst recounts his experience in a later interview round: “I met with three teams, for two to five hours each.” Overall, the contact says, “The interview process can be stressful at times and there is an emphasis initially on technical ability. I met people at every level, including several partners.” Indeed, during final round interviews at Blackstone headquarters, analysts will meet with one of the five partners, who “all have their own styles,” says a source. “One will eat you alive. One will come across as a pretty big asshole. And another is the nicest guy here – all he wants to do is find something in common with you and talk about it.” Indeed, it’s “really a crap shoot when you interview, because you’ll just meet with one of the partners,” says a former banker. “It’s luck. So much has to do with who you meet and on which day you meet them and if your personality jives with who you meet.” No matter who you get, though, expect “some pretty technical questions in the first round,” says one contact. “If you go to Wharton, or had a summer internship in banking, anything’s fair game. But no on expects you to get everything right.” An insider says one of the favorite Blackstone questions is, “If you increase depreciation by $10 million, how does that flow through all three financial statements?” They also like to throw out the “the clock question” – the one where you’re asked how many degrees there are between the minute and second hand at a certain time. And, says a source, “you better understand accretion and dilution.” The contact adds that overall “the questions are more accounting than finance,” and Blackstone “puts a large emphasis on cultural fit – and it’s obvious they do this well, because everyone here has a pretty good time together.” This insider also has a word to the very wise: “Those who are too smart and try too hard don’t make it.”
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OUR SURVEY SAYS
Tough love Blackstone is “made up of a group of people who like each other and respect each others’ immense talent,” offers one insider, who adds, “They’re aggressive on the outside, very demanding on the inside and a bit ‘old school’ as compared to the bigger firms.” Another employee agrees, saying, “While there are times of high stress and people are very demanding, everyone is very friendly and it’s not uncommon for people to spend time outside of work together.” Indeed, numerous insiders admit there’s “a lot of camaraderie,” and say Blackstone is made up of a “tight group of people who, on the whole, like each other.” But don’t expect to invite everyone at the firm to your birthday party. “At the higher levels there are some strong personalities, like there are anywhere,” says a banker. “Which can be hard to deal with. So you hope you get staffed on the right deals with the right people.” Another contact expresses a similar sentiment: “You’re generally treated well, but because there are so many big swinging senior people with rough elbows floating around the office, you need to be careful about how you behave, especially during normal work hours before the senior guys leave.” One source has nothing but good things to say about his unit’s junior bankers, and in particular, the unit’s associates: “They’re a phenomenal group of people, incredibly smart and reasonable. To go somewhere where there are seven associates and I like all seven of them is extremely rare.” Of course, this shouldn’t be taken lightly because, according to a former analyst, “your associate determines the majority of your experience.” Says one junior employee who revels in the great responsibility offered him, “Analysts typically do a fair amount of work that associates at other firms might do.” He adds that “overall people respect not only your personal life, but also your opinion on dayto-day work-related matters.”
Can you hack it? You have to be “determined” to survive a stint at Blackstone. It’s “intense, very challenging, and requires a lot of stamina and motivation,” admits an insider. Another source agrees the firm’s culture is “tough,” but says, “If you work hard and have a good attitude, things will be pretty easy for you.” He cautions those with bad attitudes: “Those who don’t work hard or don’t have a good attitude will be miserable.” Choose your department carefully. According to one banker, “M&A is known as one of the better cultures in the firm, real estate is also supposed to be Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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pretty good and private equity is pretty painful.” The source adds that overall, though, “the culture isn’t as harsh as people outside the firm think.”
All day, all night Like most prestigious investment banks, hours are rough. An associate puts his hours at about “70 to 80” on average per week, but admits, “There’s not much [B.S.] work, so I have less of a bad feeling about spending hours in the office as a result.” An analyst says he’s logging in about “80 to 90” weekly. “The first year was painful,” says a former M&A analyst, who adds, “It could’ve been worse – but it couldn’t have been much worse.” The contact reluctantly recalls his old schedule: “No vacation for the first 52 weeks, with maybe a couple of free weekends in that time. I averaged working from 9 a.m. to 1 a.m. from Sunday to Thursday; 9 a.m. to 7 p.m. on Friday; and noon to 6 p.m. on Saturday.” So, on average, that’s 96 hours a week. Although the contact’s “second year was better,” it was “more a result of a slower deal flow than seniority.” He adds, “Last year, second-year analysts here worked just as hard as the first years. It all depends on how many deals you have and what kind they are.” A private equity contact also admits the “hours are very long, with significant weekend work, and with nights ending anywhere between 10 p.m. and 5 a.m.” The contact adds that the hours do “get better as you move up the ladder: first-year analysts have it the worst, associates have it significantly better, unless they’re on a live transaction, and senior analysts are someplace in between.” If a year-round casual dress code is important to you while you’re at your cube or in your office, you’ll have to take your khakis elsewhere. It’s “formal all the time,” says a Blackstone source. “And people here dress up – cuff links, white collar shirts, monogrammed shirts, the works.” “Old school,” is how another source describes attire around the office. Blackstone does, though, have “casual Fridays in the summer” and “on the weekends people wear whatever.”
The good days are back In general, compensation receives extremely high marks from insiders. Although one first-year associate won’t offer numbers, he does admit that his compensation “is very high compared to other offers [he] got out of B-school.” A first-year analyst reports making “$55,000” in salary and expects to pocket a “$50,000” bonus. According to one insider, the private equity group pays “above the Street but not at the highest tier.” The contact adds, “We have the Goldman attitude of we are the best in the world, so we don’t have to pay top dollar to recruit and retain the best talent.”
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Although perks are good, or at least standard for investment banking, it’s a far cry from years past. A contact says that free fancy dinners used to be one of Blackstone’s big selling points: “When hiring analysts, the partners used to sell you on this perk.” While nights at Le Cirque are gone, “you still get to fly first class if your flight is over a certain distance,” says a banker, “and you still get to stay at the Four Seasons and the Ritz – but who knows how long all this will last.” Currently, Blackstone bankers get complimentary car service home if they work past 11 p.m., and get a free cab ride home before that – “after about 8 p.m.” Employees also get dinner stipends when working late during the week and meal allowances on the weekend. The firm also picks up the tab for “continuing education courses.” One source says he’s pleased with the “401(k) co-investment and carry, and free lunch and soda every day,” but says “gym discounts suck.” Blackstone’s New York offices receive high grades from insiders and, while the London outpost doesn’t (“offices are pretty dark”), one U.K. insider says employees across the Atlantic will be “getting a new office soon that will be top notch.”
Too small to go big Unlike the bulge bracket banks, Blackstone doesn’t have the typical several-week long training program for new analysts and associates. “Blackstone is too small to run a big training program,” observes one insider. Historically, analysts went through a two-week training program, but beginning with the 2003 analyst classes, the program was “extended to three weeks.” One analyst who went through the old twoweek program says it was “very good. You get exposed to a lot of information in a short amount of time and you’re not required to study and take exams like at other places.” He adds that there’s “a lot of emphasis on improving the program – it’s good and getting better.” Another analyst calls the training program “fast and dirty – you’re expected to pick everything up in the short amount of time in which training is provided.” In addition to extending the analyst training program in 2003, Blackstone implemented an associate training program. A current analyst opines that “because higher quality candidates are typically recruited, the training program for analysts is much shorter.” He adds, “Much of the learning is done on the job.”
A little help in the diversity department? Even though, in general, sources rate the firm low when it comes to diversity, one insider says there’s “a lot of diversity” at Blackstone. He does admit, though, there are “a limited number of women in M&A group.” The contact gives a possible
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explanation why this is so. “We want to hire women, but it’s not easy. Every year we try, but either no one bites or we don’t find someone’s who adequate. Because there are no women in the group, it might scare some women off.” A contact in private equity also reports that there are “no women investment professionals” in his group and adds, “While the group is pretty white, there is some representation of minorities – who are treated the same as anybody and range from first-year analyst to senior managing director.” An associate in London says his office “has a number of Indians, including one partner, which seems to indicate we are doing okay” with respect to diversity. However, in New York, one contact says while “there are several Asians,” there’s “less than a handful of any other minorities.”
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“While there are times of high stress and people are very demanding, everyone is very friendly and it’s not uncommon for people to spend time outside of work together.” — Blackstone insider
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V A U L T
4
PRESTIGE RANKING
Citigroup’s Global Corporate and Investment Bank
388 Greenwich Street New York, NY 10013 Phone: (212) 816-6000 www.citigroupgcib.com
DEPARTMENTS Finance Global Equities Global Fixed Income Global Investment Banking Global Relationship Banking Global Equity Research Global Transaction Services
THE STATS President and CEO: Robert Druskin Employer Type: Subsidiary of Citigroup Inc. Revenue: $20.0 billion (FYE 12/03) Net Income: $5.4 billion No. of Employees: 43,415 No. of Offices: 10 institutional; 500+ retail
KEY COMPETITORS Credit Suisse First Boston Goldman Sachs JPMorgan Chase Merrill Lynch Morgan Stanley
UPPERS • One of the top brand names in the world • Availability of many different business functions within the firm
DOWNERS • Tough to avoid some levels of bureaucracy at a firm this big • Long work weeks
EMPLOYMENT CONTACT On-campus information and full list of contacts by business: www.citigroup.com/citigroup/oncampus/gcib
Experienced workers: careers.citigroup.com
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “A money machine” • “Good at everything” • “With Citigroup as parent, what could possibly go wrong?” • “Amazing platform, but lost prestige as Salomon Brothers brand and tradition became lost in the shuffle” 70
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Vault Guide to the Top 50 Banking Employers Citigroup’s Global Corporate and Investment Bank
THE SCOOP
The I-bank formerly known as Salomon Smith Barney Formerly known as Salomon Smith Barney, Citigroup’s Global Corporate and Investment Bank (Citigroup) is the investment banking arm of financial services behemoth Citigroup Inc. Despite living through many a merger in its 130-year history and, in the past few years, through many a scandal, Citigroup remains one of the elite units on Wall Street, consistently securing top capital markets underwriting and M&A advisory mandates throughout the world. As part of its full range of investment banking offerings, Citigroup also provides sales and trading, restructuring advisory, cross-border transaction services, and cash management and treasury solutions. Through Citigroup Inc.’s Smith Barney division, more than 300 research analysts deliver equity and fixed income research. Smith Barney is also Citigroup Inc.’s private wealth management arm as well as the second-largest retail brokerage in the U.S. Known for its significant global reach, Citigroup boasts offices in every major city around the world. The year 2003 proved to be an extremely eventful one for Citigroup. The capital markets rebounded from a poor 2002 as did the firm’s bottom line. The unit also experienced a leadership change; COO Robert Druskin was promoted to the group’s top post when Charles Prince replaced Sandy Weill as Citigroup Inc.’s CEO. And fresh off the heels of one scandal (the banking-research conflict-of-interest debacle), the unit settled another (Enron) and unfortunately found itself immersed in a third (Parmalat). Finally, as part of a rebranding strategy, the Salomon Brothers name was officially put to rest in April when Citigroup Inc. management decreed that all parts of Citigroup’s global corporate and investment bank would henceforth be known as Citigroup, while Citigroup’s private client and global equity research groups would be known collectively as Smith Barney.
Chuck, Ed and Sandy The firm traces its roots back to 1873, when trader Charles Barney founded a securities firm in Philadelphia. Not long after, in 1892, Edward Smith also started his brokerage business in the City of Brotherly Love. The two firms eventually combined to form Smith Barney. In 1987, Smith Barney was acquired by Primerica, a financial services firm run by Sanford “Sandy” Weill. Primerica was sold to
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Hartford-based insurance giant Travelers Group in 1993, and in December 1997, Travelers bought Salomon Brothers for more than $9 billion, merging it with Smith Barney to create Salomon Smith Barney. A year later Travelers combined with Citicorp, the New York-based commercial bank, creating the merged entity Citigroup Inc. in October 1998.
Mo’ money Citigroup Inc.’s record net income of $17.85 billion in 2003 was due in no small part to its robust investment banking business, which the firm classifies into two broad divisions for reporting purposes. Capital Markets and Banking was responsible for bringing in most of the unit’s profits, increasing its income by 16 percent to $4.6 billion. The Transactions Services group saw an even bigger percentage increase (38 percent) as the unit took in $770 million in net income. Overall, investment banking recorded a 71 percent jump in net income, reaching nearly $5.4 billion and adding over $2 billion to 2002’s total. Along with the positive results came especially good news for Citigroup’s investment banking employees: fourth quarter compensation and benefits expense increased 38 percent after an unusually low compensation number in 2002.
Old faces in new places As part of a $1.4 billion, 10-firm settlement with the SEC, NASD, NYSE and New York Attorney General’s Office, Citigroup agreed in December 2002 to pay $400 million to stop probes into conflicts of interest between its investment banking and research groups. Citigroup’s payout in the December settlement was the largest of any securities firm and twice as much as the next highest settler (CSFB at $200 million). The settlement came four months after dishonored telecom analyst Jack Grubman resigned from the bank and two months after Citigroup had formally placed research personnel within the separate Smith Barney unit in reaction to the intensifying regulatory scrutiny. Citigroup’s settlement expense was a steep price to pay, but many within the bank praised one of their major negotiators, Charles “Chuck” Prince. Prince, who had been the chairman and CEO of the investment bank only since September 2002, was instrumental in reaching an agreement with the regulators notwithstanding strong evidence that Citigroup had in fact manipulated research to gain investment banking business. Prince received outside praise for his work on the settlement, too, as New York State Attorney General Eliot Spitzer told BusinessWeek, “I spent more hours
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with [Prince] over the last year than he wanted or I expected. I have enormous respect for Chuck – his intellect and his integrity.” Concurrent with Prince’s September 2002 appointment, Citigroup announced the creation of a new Business Practices Committee to oversee the bank’s practices and procedures. Prince did such a good job leading the investment banking group that just nine months after his appointment, Citigroup announced they were promoting him again, this time all the way to Citigroup Inc. CEO. In October 2003, Prince officially succeeded the celebrated Sandy Weill, who will remain chairman of the company until the company’s shareholder meeting in 2006. To replace Prince, Citigroup tapped Robert Druskin who had been the investment bank’s president and COO since August 2002. In his former role, Druskin had worked closely with Prince to improve the bank’s maligned internal procedures. Druskin had also chaired the Business Practices Committee since its inception. When Citigroup Inc. announced its 2003 earnings, Prince maintained that the big bank will grow its businesses organically and will not make a transformative acquisition even though rivals Bank of America and JPMorgan Chase each bulked up with industry-changing mega-mergers. Then again, Prince may have been playing a bit of poker when he made the remarks; word got out in February 2004 that merger talks between Citigroup and Deutsche Bank had broken off. Citigroup has worked hard to streamline its workforce in the last few years, so if there is a big combination in the bank’s future, one can expect more investment banking layoffs.
Mo’ problems In continuing to clean up Citigroup’s investment banking image in 2004, Druskin and Prince will have their hands full. The bank remains neck deep in the ongoing Enron scandal and has found itself caught in the rapidly developing Parmalat crisis. At the time of Enron’s bankruptcy in 2001, Citigroup still had over $2 billion in loans outstanding to the energy company. The bank took a charge of $228 million in 2002 to write off some of this exposure, but Citigroup is still holding out hope that it can get at least some pennies back on its lent dollars as Enron’s bankruptcy process runs its course. Unfortunately, Citigroup may not get the chance to collect. As regulators sought to assign responsibility for Enron’s financial cover-up and collapse, the SEC and others pointed fingers at Enron’s bankers, including those in Citigroup’s investment bank – specifically, its structured finance group. The investigators alleged that Citigroup bankers had helped Enron cook its books by structuring “prepays,” transactions by Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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which Enron hid debt by recording loans as revenue. The end result of the investigation was the second huge settlement in six months for Citigroup: a $145 million payout to end probes by the SEC, the Federal Reserve, the Office of the Comptroller of the Currency, and the Manhattan D.A.’s Office. (JPMorgan was also a party to the settlement and was responsible for the remainder of the combined $300 million outlay.) The total fine was one of the largest ever for a case of this nature, but Citigroup executives avoided prison time (a long shot given the accusers’ burden of proving intent, but a possibility nonetheless). As part of the settlement, the SEC also agreed to stop investigating Citigroup for similar dealings with former client Dynegy. Citigroup’s payout came from a $1.3 billion reserve the bank had previously set aside to handle litigation related to Enron and other matters, but some wonder whether the remaining reserve will be sufficient to handle all of Citigroup’s potential losses. The SEC is still investigating individual Citigroup bankers, and the Justice Department’s criminal probe into Citi’s Enron dealings has not been concluded (and apparently, exEnron CFO Andrew Fastow is the Justice Department’s star witness). In addition, Citigroup will likely have to deal with civil litigants who are seeking damages totaling much more than the bank’s reserve. Under the Sarbanes-Oxley law, however, Citigroup will be able to credit some of the July settlement payments to future liability the firm suffers in private securities litigation. Citigroup did not admit or deny guilt in the Enron settlement, and the bank continues to plead ignorance of its former client’s financial condition. There is, of course, at least one major piece of evidence that implies Citi really didn’t know much: its credit losses. “You have to take into consideration that the banks ended up to be enormous creditors,” a chief assistant district attorney in New York told BusinessWeek after the Enron settlement was announced. “There’s no indication that they knew what kind of shape Enron was in.” Given its loan exposure, Citigroup obviously hopes it can get out of the situation without further damage, especially since some have suggested that the firm could stand to lose some or all of its Enron creditor rights as punishment depending on Citi’s proven culpability.
Sour milk Just as Citi’s new management team thought they had a handle on the firm’s litigation exposure, along came the Parmalat scandal, replete with embezzlement and more fraudulent accounting. In what may amount to the greatest accounting fraud in history, billions of dollars in assets recorded on Parmalat’s balance sheet were deemed missing and Parmalat’s top executives were accused of stealing hundreds of 74
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millions of dollars from their company (including taking money to fund family businesses). The Italian dairy company and former Citi client filed for bankruptcy in December 2003, and once again, regulators around the globe wanted to know how and why. As with the Enron situation, many feel Parmalat’s banks are to blame. Citigroup’s offices have been searched, and one specific Citigroup employee is already under investigation. In some ways, Citigroup’s Parmalat situation is eerily similar to the Enron affair. Entering 2004, the bank had $302 million in loan exposure to the dairy company, after taking a $351 million charge in the fourth quarter of 2003. Citigroup had an investment banking relationship with Parmalat as well; the bank advised on Parmalat’s purchases of two food companies and held 25 percent of a Parmalat subsidiary that owned the two targets. Unlike the Enron situation, no allegations of actual manipulation of financial statements by Parmalat’s bankers have yet surfaced. However, given the short time that the investigators have had to gather facts, it remains unclear whether Citigroup will again find itself forced to pay out. In addition, Citigroup was named a defendant in a January 2004 class-action lawsuit for Parmalat accounting misrepresentations; the bank has labeled the accusations “baseless and without merit.”
The world can’t deal without Citi Despite the controversies, Citigroup is still among the best of the best on the Street. With total 2003 results of $542.7 billion raised on almost 1,900 issues, Citigroup was the No. 1 bookrunner for global debt, equity and equity-related deals, a spot the bank has held for nine consecutive quarters. Citigroup also claimed the No. 1 spot on the all-important “show me the money” stat: global disclosed fees. However, while the bank outdrew its competition, Citigroup’s investment banking fees fell by over $200 million to $1.76 billion due to relatively few IPOs (which normally carry high fees) and increased debt deals (which typically result in low fee spreads). The high number of debt deals did allow Citi to increase its fixed-income transaction value by more than 25 percent to $501 billion, which translated into a first-place finish. And while Citigroup didn’t hold the top spot in high-yield issuance in 2003, its No. 2 ranking was an improvement over its No. 4 result in 2002. In equity and equity-related issuance, Citigroup finished No. 2 again, trailing repeatchampion Goldman Sachs. Other high finishes for Citigroup included U.S. common stock deals (No. 1), U.S. asset-backed securities issuance (No. 1), global loans (No. 2) and U.S. investment-grade debt (No. 1). Two spots where the bank lost ground were global convertible issuance (falling to No. 4 after winning the category in 2002) Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers Citigroup’s Global Corporate and Investment Bank
and global IPOs (crashing from No.1 to No. 6). Citigroup was, however, one of six bookrunners on Tyco’s massive $4.5 billion convertible offering and one of seven bookrunners on General Motors’ $4.0 billion convertible issuance.
Movin’ on up in M&A Citigroup’s M&A results may be overshadowed by its outstanding capital markets performance, but the firm’s advisory practice is still extremely strong. In worldwide completed M&A in 2003, Citigroup leaped from No. 6 to No. 2, advising on four of the top 10 deals of the year. Citigroup’s No. 3 showing on the worldwide announced M&A league table was a slight disappointment, however, after its No. 2 finish in 2002 – especially since rivals Goldman Sachs and Morgan Stanley ended up at No. 1 and No. 2, respectively. Overall, Citigroup’s completed deal total of 268 transactions (good for $204 billion) equated to a second-place tie with Goldman. On the domestic front, Citigroup moved up three spots to No. 3 in U.S. announced M&A, as its total deal value of $100 billion edged out No. 4 Lehman Brothers at $99.4 billion in what Thomson Financial called a “near photo finish.” Citigroup’s global reach helped to grab a few foreign deals, too, as the bank placed No. 2 in Latin American announced M&A and No. 3 on the Latin American completed M&A league tables. Citigroup’s excellent Latin American performance was due in no small part to its role advising Laminadora do Sul on the largest completed Latin American deal ($2.3 billion) of 2003. Citigroup’s other foreign deals of note included advising Russian oil company Sibneft on its $13.6 billion deal with Yukosneftegaz, and advising Japan’s Deposit Insurance Corp. on its $16.7 billion transaction with Resona Bank. (Citigroup worked on this deal through Nikko Citigroup, joint venture with Japan’s Nikko Cordial Corporation.) And while they’ve been separated from their investment banking counterparts, Citigroup’s research teams still get to see their names in lights. On Institutional Investor’s 2003 Global Research Team, Smith Barney came in at No. 5 while scoring a No. 4 ranking on the 2003 All-America Research and a No. 2 ranking on the 2004 All-Europe Research Team. The unit’s fixed-income research was recognized as well, nabbing the No. 4 spots on the All-America Fixed-Income Research and AllEurope Fixed-Income Teams.
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GETTING HIRED
Tribeca interview festival Like many investment banks, Citigroup is selective, especially when hiring recent graduates. Each year, about 150 Citigroup hires take full-time jobs at the bank via its associate program. For full-time analyst recruiting, Citigroup holds three rounds of interviews, with the first round of interviews always occurring on campus with VP or a pair of associates. At this time, insiders note that interviewers are looking for “motivation, aptitude, leadership, commitment to achieving goals, and the ability to apply concepts to concrete, real world situations.” A second round of interviews pares down the field of candidates, and the final round of interviews, held in Citigroup’s Tribeca office, involves a series of interviews as well as a cocktail session the night before where candidates mingle with members of the firm. One contact characterized the process as “very selective,” and noted that the evaluation is based on not only analytical skills, but also on how well an applicant’s personality fits in with Citigroup. Another associate noted Citigroup’s “very selective process,” and its evaluation that “consists of not only analytical skills but also personality fit.” Another contact notes that competition is intense, and Citigroup “turns down nine out of every 10 who apply from schools that the firms targets aggressively.” Core schools, according to another Citigroup analyst, include Ivy League schools, MIT, Stanford, Duke, UVA, Georgetown, Michigan, UCLA and Berkeley. Another first-year analyst notes that Citigroup competes “hard against Goldman and Morgan Stanley for the top candidates.” However, another contact relates that Citigroup isn’t just looking for a degree. “Our firm looks for highly motivated intelligent people,” he says, noting that finance and accounting backgrounds aren’t necessary, but “one’s ability to show they will be quick learners” is. In various areas of investment banking, Citigroup also offers summer associate programs, in which interns are assigned to learn the ins and outs of a specific area at the beginning of the summer. A former intern notes that “pay is a pro-rated first-year salary,” and “the work exposure is equal to that of a first-year analyst.”
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OUR SURVEY SAYS
A Citi-wide perspective For the most part, Citigroup employees are “very professional and hardworking,” says an insider, with “a blue-collar type feel in its employees’ work ethic and dedication.” Another analyst in the corporate finance department notes the “teamoriented” environment and the “round-the-clock” work schedule. However, that analyst notes that Citigroup is still dealing with integration issues, but that creates “tremendous opportunity for junior level bankers to position themselves smartly to climb the ladder.” Another analyst in the corporate finance department praises Citigroup’s “open-door policy from the most senior people at the firm,” which engenders “a very laid-back culture and makes for a fun working environment.” A first-year investment banker highlights the smaller working groups within the very large corporate structure. “It’s a large firm but has tightly-knit groups within which the people tend to get along very well,” the analyst says. A second-year analyst echoes the sentiment, noting, “People are willing to help you out and teach you. I’m often asked if working for a large firm such as Citigroup allows you to get lost in the mix. My answer is I feel like I work at an energy boutique investment bank – I work in the energy group – but get the benefits of leveraging off the expertise of the other groups within the larger Citigroup.” A second-year analyst notes that as the world’s largest financial institution, Citigroup creates “a culture of ‘we have the knowledge and asset base to best serve our client.’” He characterizes the bank as “innovative,” “customer-focused” and “driven.” Still, one analyst notes that despite the “supportive” culture and an “emphasis on teamwork,” sometimes the job requires “very demanding work without much guidance at times.” Citigroup’s dress code is typically business casual, except for when meeting clients. However, an analyst in the treasuries department comments “management has been threatening a switch to business attire for the past two years,” and “certain floors in the building [are] always business attire.” He adds that senior management sticks to business attire.
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Time on the clock Like most large banks, Citigroup workers put in their time, working an average of more than 70 hours per week. “A question about banking hours is almost a nonstarter,” explains a first-year analyst. “You don’t work at a bank to avoid working hard. But that doesn’t mean junior bankers don’t complain. Some nights you’re jamming non-stop; others, albeit rarely, you’re out at 8 p.m. The key takeaway is that the tough thing about banking is not the hours, but the unpredictability – you never know what your day or night will look like from one day to the next.” However, another analyst tells a different story: “I’ve been extremely lucky because my group tends to work very consistent hours, and I’ve become better at managing my workload so that I can avoid weekend work many times.” Indeed, “working hard is part of this job,” says a second-year analyst. “You should expect to work between 70 and 90 hours a week.” He explains, “Basically, that means you work 9 a.m. to midnight Monday through Thursday, get out by 9 p.m. on Friday, and put in the rest [of the hours] on the weekends.” Of course, he adds, “Some weeks are worse than others.” Meanwhile, another second-year analyst might have the best deal going. “Hours vary group to group,” says the contact, “and I’m lucky to be in a more supportive environment. My boss literally said, ‘If you get your work done, you can do it from the beach.’”
The bottom line First-year investment banking analysts report receiving about a “$55,000” base salary plus a “$30,000” bonus. A second-year analyst notes that salary will get bumped to about “$60,000” the following year, when analysts can take home as much as a “$50,000 bonus.” Overall, pay receives better than average marks from insiders, who list the typical benefits given out to Wall Street employees: meal allowance and free car service if working late or on the weekends, stock purchase plans, 401(k) matching and reduced-rate gym memberships (“there’s a gym in the [Tribeca] building”). Also, sources say Citigroup offers “free checking accounts and reduced rate brokerage services.”
Skilled at the top “Managers are usually very skilled at this organization,” says an associate. “They’re generally concerned with your personal and career growth, and usually help you achieve your goals.” Another contact agrees, saying, “Analysts are generally treated respectfully by officers.” The source adds, “The thing to remember is that nothing Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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comes to the meek: the more active you are in terms of engaging and challenging superiors, the more respect you receive.” Yet another contact praises the higher-ups: “Officers are very supportive. They have an open-door policy and take part in your development. They also help analysts secure jobs after their two-year program, if [analysts] wish to leave.” Speaking of analysts, one calls the associates at Citigroup “solid,” with “strong communication and organizational skills.” But most important, explains the contact, “They realize – or try their best to realize – how hard analysts work. And they try to reward that effort.” Overall, says a VP, “people tend to respect their co-workers, and good work is rewarded, regardless of level or tenure.”
Mixed on the mix One insider notes that the “culture is extremely diverse, with people from a variety of backgrounds as well as from many different countries.” A VP says, “There are many women in management positions who serve as role models for the women coming up the ranks behind them.” The source adds, “Committees are in place dedicated to improving networking and promotion of women.” However, one female analyst says, “The most disheartening thing is to look around and see that very few women are in senior management positions.” A first-year analyst offers that while “over 50 percent of the people in the finance division are women, including admin positions, very few of those positions are at senior management level.”
Tip-top training Once you’ve been hired, Citigroup offers some of the most comprehensive training available. A VP in the corporate finance department notes that “the firm’s training is one of it’s biggest selling points – from organizing interesting lecture style classes to social outings, the firm really takes an active interest in acclimating new hires into their new environment, while also helping them up their learning curve.” And in-thetrenches employees agree. A first-year investment-banking analyst adds that “we have the best training on the Street. The length, six weeks, combined with the generalist nature of our program – everyone comes in without an industry group affiliation – means that there is maximum learning and maximum fun. The networking is fantastic, both amongst your class and with more senior level folks in the bank.”
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Career opportunities “The overall experience at Citigroup is excellent,” explains a first-year analyst. “You work for a dynamite, successful firm where winning is a state of mind, rather than a goal. We work hard and top performers are rewarded handsomely – both monetarily and in notoriety.” The contact adds, “The opportunities to continue on with Citigroup are abundant, and the firm wants to keep happy bankers in the family.” A secondyear analyst agrees, noting that the firm’s size presents many opportunities. He characterizes Citigroup as a “great place to work. [There are] very supportive people here and great opportunities within investment banking and other divisions within Citigroup.”
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V A U L T
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JPMorgan Chase
PRESTIGE RANKING
270 Park Ave New York, NY 10017 Phone: (212) 270-6000 Fax: (212) 270-2613 www.jpmorganchase.com
DEPARTMENTS Asset and Wealth Management Commercial Banking Consumer Banking Credit Cards Diversified Consumer Lending Global Markets Investment Banking Private Equity Treasury and Securities Services
THE STATS Chairman and CEO: William B. Harrison Jr. Employer Type: Public company Ticker Symbol: JPM Revenue: $31.72 billion (FYE 12/03) Net Income: $6.72 billion No. of Employees: 130,000 (after Bank One merger) No. of Offices: 2,300
KEY COMPETITORS Bank of America Citigroup Credit Suisse First Boston Deutsche Bank
UPPERS • Rapidly expanding franchise through acquisition • Strengthening global presence
DOWNERS • Still a victim of merger-induced culture clashes • Second-tier I-bank
EMPLOYMENT CONTACT Human Resources JPMorgan Chase & Co. 270 Park Avenue New York, NY 10017 careers.jpmorganchase.com
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “Second-class Citigroup” • “Major player and growing” • “Growing scale, declining prestige” • “Still more of a commercial bank than an investment bank” 82
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THE SCOOP
Coming together (again) J.P. Morgan Chase & Co. (known informally as JPMorgan Chase) is the product of a massive merger between two diversified financial institutions, J.P. Morgan and Chase Manhattan. The merger, valued at approximately $38.6 billion, was completed on the first day of 2001 and instantly created the third-largest financial institution in terms of assets in the U.S., behind Citigroup and Bank of America. Since, JPMorgan Chase has leaped over Bank of America to become the second-largest financial services firm in the U.S., and soon, it’ll be a lot closer to No. 1. In January 2004, JPMorgan Chase announced that it was acquiring Bank One in a deal worth more than $58 billion. The combined company would possess $1.1 trillion in assets, rivaling Citigroup’s $1.2 trillion. The acquisition of Bank One, which closed in July 2004, will boost JPMorgan Chase’s ability to compete with Citigroup not only in investment banking and commercial lending, but also in consumer banking, which is Bank One’s main strength. For the time being, JPMorgan Chase conducts most of its investment banking operations under the JPMorgan name and most of its commercial banking operations under the Chase name. The company can be further broken down into six major business units: investment banking, private equity, research, treasury and security services, asset and wealth management, and retail and middle market financial services.
The initial combo Completed near the high tide of the stock market, the JPMorgan/Chase merger was seen as a disappointment by many. It resulted in approximately 5,000 layoffs (the firm has laid off 5,000 more employees since) and, following the merger, the firm had to weather a recession, an economic collapse in Argentina, the bankruptcy of a major client and the effects of the terrorist attacks on the World Trade Center in New York. JPMorgan Chase was a major lender to Enron, the Houston, Texas-based energy giant that declared bankruptcy in December 2001. The following year, which was a dismal one for M&A, underwriting and advisory services, JPMorgan Chase took a $1.3 billion year-end charge, which covered costs associated with the shady dealings of Enron and WorldCom, as well as the settlement with regulators over advisory and
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research conflicts of interest. And in July 2003, JP Morgan Chase agreed to pay a $135 million fine to the SEC as a settlement for Enron and Dynergy dealings.
Pistols at dawn Chase Manhattan’s history can be traced back to 1799, when Chase’s first predecessor company, The Manhattan Company, was chartered to supply water to New York City. Included in the company charter was a provision that capital not needed for the water supply business could be used to purchase stock or in other money transactions. Thus, The Bank of The Manhattan Company was formed. Historians are unclear whether Aaron Burr, one of the backers of The Manhattan Company’s water business, intentionally inserted the clause so a bank rivaling Alexander Hamilton’s could be formed. The two Founding Fathers had a longrunning dispute, which came to an abrupt end in 1804 when Burr killed Hamilton in a duel. (The pistols, by the way, have been preserved as part of JPMorgan Chase’s historical collection.) The bank continued to grow, surviving the Great Depression (with a little assistance from the Rockefeller family) and two World Wars. In 1955, The Bank of The Manhattan Company merged with Chase National, a bank founded in 1877 by banker and currency expert John Thompson and named after former Secretary of the Treasury Salmon Chase. The Chase Manhattan Bank, as it became known, went looking for another commercial merger partner in the mid-1990s, settling on Chemical Bank, then the third-largest bank in the U.S. following a 1992 merger with Manufacturers Hanover. The 1996 coupling made Chase Manhattan one of the largest banks in the United States. Chase continued its acquisition strategy in late 1999 and early 2000, starting with its purchase of Hambrecht & Quist, a San Francisco-based boutique specializing in the tech sector. The December 1999 purchase cost Chase $1.35 billion. The bank’s next target was Robert Flemings Holdings, a London-based bank Chase purchased in April 2000 for $7.9 billion, a price many considered too high. However, the purchase added some needed underwriting muscle, especially in Asia. In August 2000, the firm finalized its purchase of The Beacon Group, a New York boutique founded by former Goldman Sachs partner Geoffrey Boisi, who joined Chase as its lead investment banker. In December 2001, Brown and Company, the online brokerage unit of JPMorgan Chase, signed an agreement to purchase Dreyfus Brokerage Services, the online trading unit of Mellon Financial. The takeover, which included about $6 billion in assets, padded Brown and Company’s customer base and augmented its position in the online brokerage division. 84
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In January 2002, JPMorgan Chase went for platinum when it acquired credit card portfolio Providian Master Trust from Providian National Bank for an estimated $2.9 billion. The deal included over $8 billion in credit card loans, covering 3.3 million credit card accounts, most of them platinum card accounts.
The venerable house of Morgan JPMorgan traces its roots back to 1838, when American George Peabody opened a London merchant bank. Junius S. Morgan became Peabody’s partner in 1854, and eventually the firm became known as J.S. Morgan & Company. Seven years later, Junius’ son, J. Pierpont, established J.P. Morgan & Company, a New York sales office for securities underwritten by his father. Working on both sides of the Atlantic, the Morgans brought capital from Europe that was crucial to U.S. growth. In 1895, five years after Junius’ death, J. Pierpont consolidated the family businesses under the J.P. Morgan name. The firm’s growth continued unimpeded until the enactment of the Glass-Steagall Act in 1933. Because of the newly formed barriers between commercial and investment banking, the firm experienced many changes. Several partners, including Harry Morgan (grandson of J. Pierpont) left to form an investment banking firm, Morgan Stanley. Following a merger with Guaranty Trust Company, J.P. Morgan moved into the commercial and personal loan business. In the 1960s, J.P. Morgan began underwriting securities in Europe, where there were fewer banking regulations. The company craved such business in the United States, especially once corporations began looking to bonds as a cheaper alternative to bank loans. In 1989, J.P. Morgan received permission from the Federal Reserve to enter debt underwriting; one year later, the door to equity underwriting was opened.
The fit is compelling Hopes for the JPMorgan Chase and Bank One union are high, with analysts still using Citigroup as the model of a multi-purpose financial services behemoth. The new entity would take advantage of Bank One’s stability and make it better able to compete, and put it within striking distance of its rival, Citigroup. Bank One’s capital base and a balance sheet not as exposed to derivatives as JPMorgan Chase’s will reduce the new firm’s risk profile. The new institution will also likely become the largest U.S. underwriter of asset-backed securities. In 2003, Citigroup posted $64.9 billion in asset-backed securities deals, while Bank One and JPMorgan Chase underwrote a combined $78.0 billion. In high-grade corporate bonds, the combined banks would have underwrote more than $116 billion in 2003, not so far off from
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Citigroup’s $135.1 billion. JPMorgan’s and Bank One’s credit-card businesses will create a $130 billion portfolio, second behind Citibank N.A. Unlike the bad dynamics that embroiled the merger between J.P. Morgan and Chase, there should be less turf battles this time around. That’s because the businesses are much more divided. JPMorgan Chase honchos will maintain their roost in the investment banking business, while Bank One executives are expected to lead operations in the consumer banking world. The combined firm will have 2,300 branches in 17 states with very little overlap. Most of Bank One’s 1,800 branches are in the South and the Midwest, while JPMorgan Chase is a leader in New York and Texas.
All eyes on the stage William Harrison, formerly chairman at Chase Manhattan, and now JPMorgan Chase’s president and CEO, has tapped Jamie Dimon, Bank One’s chief, to succeed him in 2006. Industry insiders are curious to see how the two leaders will work together. Harrison is known as a Southern gentleman who works congenially with a team of trusted managers, while Dimon has the reputation as a brash, hyper-frugal and micro-managing executive who reportedly still asks associates to split cab fares with him on business trips. Analysts believe that the appointment of Dimon sends a signal that the bank is being aggressive about cost cutting and, because of Dimon’s detailed nature, that extends to the highest levels. Dimon has spent much of his time at Bank One trimming it into a leaner business by cutting 10 percent of the bank’s total workforce and cleaning Bank One’s balance sheet of unprofitable loans. Expect the same sweep at the new JPMorgan Chase. Layoffs are projected at 10,000 out of a combined total of 140,000 workers, with many coming out of the New York area as the bulk of the responsibility for the consumer business is transferred to Bank One’s Chicago operations. Dimon’s history may also give him extra encouragement to take the war to Citigroup. Dimon was Citigroup Chairman Sanford Weill’s second-in-command for years, and helped to build Travelers into a gargantuan financial powerhouse. In 1998, he was forced out as president of Citigroup after clashes between Travelers and Citicorp executives. The merger may be, in effect, a redemptive move by Dimon to amass a company large enough to go into fair combat against Weil’s financial empire.
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Jumping back in the game With horrendous numbers in 2002, it wasn’t hard for JPMorgan Chase to make a bounce off the canvas. Investment banking revenue made quite a comeback in 2003, rising 16 percent to $14.4 billion (after declining 25 percent to $12.5 billion in 2002), and earnings were a record $3.7 billion, up 183 percent from 2002. According to Thomson Financial, the firm was No. 4 in global debt and equity underwriting in 2003, and rose to No. 3 from No. 6 in global disclosed fees. JPMorgan Chase held its ranking as the No. 2 underwriter of U.S. investment grade bonds during the year, according to Thomson Financial, and jumped a notch to No. 3 in global high-yield bonds. However, the firm was No. 2 in asset-backed securities, down from its No. 1 finish in 2002. JPMorgan Chase did manage to advise on several large M&A deals in 2003 and, as a result, held tightly to the No. 5 spot in global announced M&A, after falling to No. 6 in 2001, according to Thomson Financial. The firm did, though, drop a spot to No. 8 in U.S. announced M&A.
GETTING HIRED
Personality and vision “In terms of criteria and process,” explains a current employee, “JPMorgan Chase is no different than other Wall Street investment banks.” When looking for new recruits, the contact says the firm “emphasizes quantitative, analytical and interviewing skills.” Like its competitors, JPMorgan Chase tends to pluck entrylevel candidates primarily from the top undergraduate and business schools in the country, thus the firm is quite selective. One corporate finance banker cites “all the Ivy League schools plus Stanford and MIT” as some of the places at which the firm interviews young prospects. Students are recruited for programs in consumer and middle market financial services, wholesale financial services and corporate groups. BA and MBA entrylevel programs include: Applications Delivery, Corporate Finance, Derivatives Research, Equity Sales & Trading, Equity Research, Finance, Fixed Income Research, Internal Consulting Services, Asset and Wealth Management, Middle Market Banking, Private Banking, and Retail Financial Services. Typically, Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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JPMorgan Chase makes on-campus presentations, giving a company-wide overview of its business, and later makes division-specific presentations in association with school clubs. “The people at the early events keep track of who they met,” says one insider. “And if they have something to say about you, it’s funneled to the decision makers at the firm.” As it is with most firms, the summer internship seems like the best way in. “Summer analysts who perform well are offered a position at the end of the summer,” says a current investment banking VP. “For people without the most outstanding resumes, it’s an opportunity to show that you can do the work.”
Making the rounds After the initial introductory process, JPMorgan Chase holds “first rounds on campus with one to two senior interviewers,” then “brings back people from different schools for final rounds,” says one associate in investment banking. “[Candidates for investment banking positions] go through two sets of final rounds with six to seven interviewees in each. [Everyone] will be interviewed by 6 to 7 people, ranging from associate to MD.” Expect questions to stress “fit, people skills and technical skills,” adds the contact. “They want people without attitudes and who are willing to learn. A possible trading game with live simulations may be included – one of its kind on Wall Street.” In general, JPMorgan Chase bankers note that interviewers are trying to “get a feel for who you are.” Says one source, “It is really about your personality and vision, which should be clear.” According to another associate, candidates can expect questions such as, “What do you think of the market?” and “What do you like to do?” The contact adds, “I was never asked to lever and unlever a beta, and there were no math questions. The interviews were more or less to see if you can interact without being a total goof.” Another source says, “Personal fit is first priority. They want to know your background and thought process.” He admits there were “some technical questions, which mostly came during the second-round interviews with two MDs, who played a blatant good cop, bad cop routine.” A research analyst, who did not attend one of the firm’s target schools, says he interviewed with managers from three different industry groups. This source says the questions he was asked ranged from the standard accounting and finance questions to other common questions such as, “Why JPMorgan [Chase]?” and “Why research?”
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OUR SURVEY SAYS
Two sides Insiders nearly unanimously agree that JPMorgan Chase has two distinct cultures, as a result of the monster merger between JPMorgan and Chase. “The Chase Manhattan Bank culture, which exists on the retail side, is low-key and fairly reasonable for a big company. The JPMorgan culture, which is primarily the culture of the acquired investment banking side, is ‘Greed is good.’” The source adds, “The retail bank is profitable and the Chase culture is big on diversity and work-life balance.” Speaking about the JPMorgan side, one contact says it’s changed since the merger. “We’re now more results-oriented and aggressive,” says one investment banker, adding, “Although we’ve retained the collegial style – consistent with the old JPMorgan – there’s less of an emphasis placed on the ‘blank tombstone’ concept. That is, now sometimes it’s better to advise clients against a deal if it’s not in their best interest.” “I work on the Chase side of the bank,” says an insider, “and from what I can tell, [the two cultures] are dramatically different.” The contact adds, “Upon entering the bank I was told of the ‘Mother Chase’ attitude, where the company will help you along, provide a comfortable life and good benefits and be very nurturing. That can be true, but at times the politics can boggle the mind.” At least one banker says that while dealing with “the bureaucracy isn’t fun, things are improving.”
Mind on the money, and money on the mind JPMorgan Chase employees generally find the bank to be a congenial place to work. “They’re serious about business [at JPMorgan Chase], but it’s a pretty human and laid-back place,” says one banker. “It’s an organized, well-managed place, where it’s important to have a personality. People talk to each other about their holidays and interests, sports and the news.” Another associate agrees, calling the firm “relaxed, not too uptight, but professional.” An analyst says, “I would say that the job isn’t perfect, but management is committed to making the analyst experience worthwhile. People are always willing to help their co-workers.” One banker who says “departments work very well with each other” warns, “The idea is to solve problems and think through issues before asking superiors.” While one VP in corporate finance admits that because “the firm is very large, it’s difficult to generalize,” he says that “after the layoffs between 2000 and 2002, the Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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overall management ability of senior bankers has improved.” He explains that “weaker managers were fired,” adding, “at this point, the overall quality of the people is very high.” According to one contact, “Senior bankers typically show concern for the development of junior resources.” Another says he enjoys working at JPMorgan Chase because “analysts are praised for doing good work.” Proclaims one confident insider: “I take my job seriously, and as a result, the senior guys pay attention – and don’t give me trouble when I argue with them.” One sales associate says he enjoys the firm’s “hands-off” attitude. He explains, “Managers let you run your own business.” An experienced commercial banker has a similar, but slightly different spin. That banker says, “Most managers are reactive, but like their subordinates to be proactive.”
Is it worth it to work it? Outside of investment banking, JPMorgan Chase employees work vastly different schedules, which is to be expected in a large company with diverse product lines. A commercial banker notes that hours “seem to become more intense as you become more senior, but in my role, I typically work from 9:30 to 6:00, with longer hours for busy periods.” The contact adds, “I am also able to [go out to] lunch daily, with the occasional exception.” A trading associate who notes “no face time” is required, reports the firm’s traders work the standard “seven to seven” give or take an hour “depending on their desk.” However, some bankers say the pay-to-time-in-the-office ratio doesn’t fall in their favor. “Pay is small if compared to your input,” says one analyst. An investment banking VP who complains “hours are too long for the amount of compensation provided” reports working between 50 and 60 hours a week, which includes frequent visits to the office on weekends. “If the job market were better,” he adds. “I would leave.” However, another I-banking VP notes that the pay is line with the industry average, if not slightly above. And as far as hours, he says, “At my level, the emphasis is more on travel than it is on spending a lot of time at the office.” He reports rarely, if ever, working weekends.
Cultured club Unlike its overall culture, the attitude on workforce diversity seems to be similar on both the Chase (the retail bank) and JPMorgan (the I-bank) sides. A banker on the retail side says, “The diversity is good. The cultures represented [here] are vast. Senior management in my department consists of women and minorities, including
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Vault Guide to the Top 50 Banking Employers JPMorgan Chase
Indians, Russians and African Americans – the group seems to get along with each other well, and there’s limited division or cliques along racial or gender lines.” An investment banker who’s been with the firm for more than nine years says, “Talented women are given ample opportunities to gain promotion and are given access to senior mentors.” He adds that the same goes for minorities. Other insiders agree, saying all of JPMorgan Chase is committed to diversity, and the firm actually “seeks out women and minorities” and “goes out of its way” in this area. With respect to attire, JPMorgan Chase has a business casual dress code, but employees cannot wear jeans or sneakers. One source admits, “Top management regularly wear suits, and others wear jackets to some meetings – but those are the exceptions, not the rules.” The firm’s offices and training program receive average ratings from insiders. Says one banker, “My sense is that the training program is fairly standard when compared to that of other investment banks.”
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Merrill Lynch
PRESTIGE RANKING
4 World Financial Center New York, NY 10080 www.ml.com
DEPARTMENTS Global Markets and Investment Banking (GMI) Global Private Client (GPC) Merrill Lynch Investment Management (MLIM) Merrill Lynch & Co. (corporate resources groups)
THE STATS Chairman, CEO and President: Stanley O’Neal Employer Type: Public company Ticker Symbol: MER Revenue: $20.2 billion (FYE 12/03) Net Income: $4.0 billion No. of Employees: 48,100 No. of Offices: Offices in 36 countries
KEY COMPETITORS Citigroup Credit Suisse First Boston Goldman Sachs Morgan Stanley JPMorgan Chase
UPPERS • “Extremely professional environment;” “not snobby” • On a strong upswing after a couple of down years
DOWNERS • Behemoth-sized firm = can’t avoid at least a little bureaucracy • Still in recovery mode
EMPLOYMENT CONTACT All employment information, including how to apply, is available at www.ml.com/careers
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “Close to the top” • “Lost their luster” • “They get things done; bankers always seem relaxed” • “Morale and performance recovering after a few tough years”
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Vault Guide to the Top 50 Banking Employers Merrill Lynch
THE SCOOP
Lighter, but still a heavyweight Merrill Lynch is firmly entrenched as a giant among the investment banking bulge bracket firms. Even after significant layoffs, Merrill’s 48,000-strong workforce is one of the largest on Wall Street and includes 13,000 financial advisors in the firm’s global private client group who together manage more than $1 trillion in client assets. The firm consists of three core business units. Global Markets and Investment Banking (GMI), Merrill Lynch Investment Management (MLIM) and Global Private Client (GPC) are the firm’s three principal businesses; a fourth group, Merrill Lynch Bank Group, which is an evolving business, aligns with both GMI and GPC. Historically, GMI and GPC have accounted for about 85 to 90 percent of revenues, with MLIM for accounting for 10 to 15 percent. After a restructuring process that resulted in massive staff reductions in 2001 and 2002, Chairman and CEO Stan O’Neal is still determined to keep Merrill Lynch streamlined. The firm’s cost-cutting initiative came as Merrill faced a cool down in world financial markets and several embarrassing regulatory suits. By looking at Merrill Lynch’s 2003 year-end results, it appears that he has the firm on the right track. Earnings margins in the investment banking and brokerage unit rose during the year, boosted by a 20 percent revenue increase and cost cutting. Overall, the firm booked income for the year of $4 billion, a significant 59 percent increase from the $2.5 billion reported in 2002. Total revenues were up 8 percent in 2003 to over $20 billion.
From humble beginnings to Wall Street player Charles Merrill formed an eponymous underwriting firm in 1914; a year later, Merrill took on Edmund Lynch as his partner and the firm was renamed Merrill, Lynch & Co. Following the market crash in 1929, Merrill decided to focus on investment banking and sold off its retail operations to brokerage firm E.A. Pierce. A decade later, Merrill recaptured the retail business when Merrill, Lynch & Co. merged with E.A. Pierce. Charles Merrill, who ran Merrill Lynch until his death in 1956, was a true Renaissance man. In addition to his activities in the financial world, he founded Family Circle magazine (you’ve likely seen it at the grocery store checkout line) and even played semi-pro baseball as a young man. He quickly decided his fortune lay not in the hit-and-run, but in the sale and trade. In 1971, Merrill Lynch became the second Big Board member to have its shares listed on the New York Stock Exchange Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Vault Guide to the Top 50 Banking Employers Merrill Lynch
(the first was Donaldson, Lufkin & Jenrette, now a part of Credit Suisse First Boston). Later in 1971, the company unleashed its “Merrill Lynch is bullish on America” ad campaign. For better or worse, the firm has been linked to its bull mascot ever since.
Bitter times, but better earnings Merrill did increase profitability in 2003, after recording a revenue increase and holding down costs. A resurging investment banking climate after a difficult 2002 translated into better revenues. For the year, Merrill’s global private client group booked pre-tax earnings of $1.6 billion, up 22 percent from 2002, on $8.9 billion in revenue. But the investment management unit counted $1.4 billion in revenue, down 10 percent, and saw earnings decrease by 11 percent to $284 million. And the firm’s investment banking unit, which had revenue of $10.1 billion in 2003 after recording more than $8.4 billion in 2002, managed to increase earnings by 65 percent to $3.9 billion. Merrill ended the 2003 calendar year with about the same number of employees that it began with.
Topping tables, winning awards Part of the investment banking bulge bracket, Merrill Lynch is a global powerhouse. Almost all of Merrill’s departments are at the top of their respective league tables or, at the very least, hover somewhere in or near the top five. According to Thomson Financial, Merrill was the third-ranked underwriter of equity and equity-related issues in 2003 (the firm was second in 2002). According to Thomson Financial, Merrill ranked No. 4 in announced global mergers and acquisitions during 2003, advising on $213 billion worth of M&A deals, attaining a 16 percent share of the $1.3 trillion market. Merrill ranked No. 3 in worldwide completed M&A. Its largest completed transaction of the year was General Motors’ $16.8 billion spin-off of Hughes Electronics. In the 2003 equity league tables, Merrill took the No. 4 spot in both global common stock underwriting and global IPOs. During the year, the firm acted as lead manager on Ctrip.com’s $75 million IPO, United National Group’s $167 million IPO and SigmaTel’s $150.0 million IPO, among others. Despite a tumultuous year in 2002 and 2003, Merrill Lynch won several awards from various publications. For the fifth year in a row, Merrill picked up the top brokerage house of the year honors in 2003 from SmartMoney, which lauded Merrill for its private client focus via its extended financial advisor training program and a “retooled” research department with a policy that fixes analysts’ compensation on the
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accuracy of their recommendations. Additionally, in Institutional Investor’s 2003 “All-America” team survey, Merrill’s equity research unit ranked No. 3 in U.S. investment research, down a notch from the spot it held in 2002, behind Lehman Brothers and Morgan Stanley, respectively. In global investment research, though, Merrill jumped to No. 2 from its No. 3 ranking in 2003, trailing only UBS. LatinFinance magazine’s research poll also rated Merrill as the top firm for research coverage of Latin American equity and debt issuers. Additionally, Barron’s named Merrill Lynch the top wealth manager in the U.S. for 2003. Merrill was first among 40 wealth managers, with $630 billion in private client assets held in accounts of $1 million or more, well outdistancing second-place Smith Barney ($432 billion) and third-place Fidelity Investments ($295 billion).
Stan’s the man E. Stanley O’Neal replaced long-time Merrill general David Komansky as CEO in December 2002 and then as chairman in April 2003, at which time O’Neal became the first African-American to head a major Wall Street firm. The board’s endorsement of O’Neal wasn’t surprising. For the most part, he’d been running Merrill since becoming president in the fall of 2001, and observers thought he was a shoo-in as future CEO when taking over as head of the brokerage division in February 2000. O’Neal won much respect in the wake of the terrorist attacks of September 11, 2001, which killed three Merrill employees and resulted in the evacuation of the firm’s headquarters in the World Financial Center. O’Neal decided to restructure the management team, naming executives closer to him to positions such as chief legal counsel and head of institutional securities – despite the fact that, according to an interview with The Wall Street Journal, Komansky felt the firm needed a measure of stability after the trauma of the attack. O’Neal’s biggest decision was to trim firm fat, cutting nearly $2 billion in costs, eliminating more than 23,000 jobs (about a third of the company’s headcount) and removing 19 key executives.
Upper turmoil In July 2003, Merrill’s No. 2 executive, Thomas Patrick, was forced to retire after a disagreement with CEO Stan O’Neal over who would succeed the chief executive. According to The Wall Street Journal, Patrick, the firm’s executive vice chairman of finance and administration and a 25-year Merrill veteran, was pushing for colleague and protégé Arshad Zakaria to be named president and heir apparent to O’Neal. (Zakaria was president of global markets and investment banking at Merrill.) Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Journal sources said O’Neal “took a dim view of Mr. Patrick’s efforts” and “believed it was too soon to designate a No. 2 executive who could be considered an heir apparent.” O’Neal reportedly notified Patrick of his “sudden retirement” on the morning of July 29, 2003, one day after Merrill’s board meeting, in which Patrick “made an impassioned speech in favor of Zakaria.” Soon after, O’Neal announced that Patrick would be retiring “effective immediately.” No official reason was given for Patrick’s retirement. A week after Thomas Patrick’s forced dismissal, Merrill Lynch announced that Arshad Zakaria would leave the firm at the end of 2003. The move came as no surprise, even though Zakaria had just finished helping his unit to its second-best quarter ever, accounting for 55 percent of Merrill’s total $5.3 billion in revenue. O’Neal has also done some executive rehiring lately, including making John Sievwright, former chief of Merrill’s Japanese operations, the chief operating officer of the firm’s investment banking unit, and Robert McCann, former head of research, the head of wealth management.
Research gone wild Merrill Lynch’s reputation has taken a few bruises in recent years. In April 2002, not long after famed Merrill Lynch Internet analyst Henry Blodget resigned, news surfaced that the former star had been the focus of an investigation into Merrill’s research practices. The investigation, led by New York State Attorney General Eliot Spitzer, centered around phone calls and e-mails made by the firm’s Internet research group. Spitzer alleges that Merrill analysts had publicly hyped stocks, while privately they had referred to the same stocks as “junk” and “crap.” (Merrill said the e-mails were taken out of context.) After tech stocks tanked, regulators began scrutinizing possible conflicts of interest between a firm’s investment bankers and analysts, whose negative research can hurt bankers’ chances of obtaining advisory work. Spitzer’s office negotiated an agreement with Merrill Lynch that changes the way Merrill’s research department operates, including disclosing to investors whether it has or intends to have an investment banking relationship with a corporate client, and adding in its reports how many buy-and-sell recommendations it has in a particular sector. In May 2002, Merrill agreed to pay a $100 million fine to New York and other states to settle Spitzer’s allegations that the firm gave overly optimistic research advice in order to win advisory business. Merrill Lynch never admitted or denied any wrongdoing. 96
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Although Spitzer initially targeted Merrill, he later widened the investigation to include several other firms. In late April 2002, the SEC announced that it had joined forces with Spitzer and had begun a “formal inquiry” into the research practices of Wall Street’s top firms. At the close of the year, several other of the largest U.S. investment banks were forced to pay millions in fines, just like Merrill.
Negative energy Merrill was also linked to Enron as a participant in the bankrupt energy firm’s fraudulent transactions. In July 2002, the SEC began an investigation into Merrill’s (and other banks’) alleged value-inflating dealings with Enron in what is called a wash trade – an exchange of equal assets – in order to make it appear that Enron reached earnings targets. Merrill was accused of becoming a temporary buyer for electricity-generating barges off the coast of Nigeria with the understanding that Enron would eventually return the asset. This investigation resulted in another big Merrill settlement. In February 2003, Merrill agreed to pay $80 million to settle charges that it helped Enron overstate earnings and, in agreeing to do so, became the first bank to settle with the SEC in the matter. JPMorgan Chase and Citigroup, among other firms, have also been investigated for their roles in overstating Enron earnings. Equally embarrassing for Merrill was the revelation that its former chief energy trader, Daniel Gordon, who was responsible for building the firm’s hugely profitable energy trading operation in just two years, had embezzled millions from the firm. Prosecutors said Gordon had duped Merrill Lynch into paying a $43 million insurance premium payment meant to hedge against energy shortages but, in fact, was funneled into offshore accounts that Gordon controlled. In 2003, Gordon agreed to a plea bargain and has promised to name Merrill executives who he alleges have falsified financial information to make the firm’s energy unit appear more profitable. The information that emerges could have an effect on another lawsuit against Merrill Lynch. As electricity prices rose in California in 2000, Gordon drove profit margins for the business, but the celebration was short-lived, as the unit’s involvement with Enron dealings came to light. Merrill had by then sold its global energy markets group to Allegheny Energy, whose new president was Daniel Gordon. Allegheny is now suing Merrill for $1 billion to reverse the deal.
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Not such a good thing with Martha Merrill put two employees on paid administrative leave in June 2002 in connection with allegations that homemaker guru Martha Stewart traded shares of ImClone stock on inside information. Initially, the employees, Stewart’s Merrill broker Peter Bacanovic and his assistant, Douglas Faneuil, were not charged with any wrongdoing. In October 2002, Faneuil pleaded guilty to a misdemeanor charge in connection with the federal investigation as part of a deal to testify against Stewart and Bacanovic. Merrill then fired both Faneuil and Bacanovic. In June 2003, the U.S. attorney in New York filed separate criminal charges against Stewart and Bacanovic. Stewart pleaded not guilty to securities fraud, conspiracy and making false statements to federal agents. Bacanovic also pleaded not guilty in his case. In March 2004, Stewart was found guilty on four counts: one charge of conspiracy, one of obstruction of justice and two of making false statements to investigators. Peter Bacanovic was also found guilty of conspiracy, obstruction and perjury. In July 2004, Stewart and Bacanovic were both sentenced to five months in prison, plus five months of home confinement. Previously, ImClone founder and former CEO Sam Waksal was found guilty of insider trading and is currently serving a seven-year prison term.
Charging ahead Merrill Lynch is investing in areas that it believes complement its existing capabilities and offer opportunities for future growth. CEO O’Neal is steering the company to battle large banks such as Citigroup for a larger share of client services while upping its trading powers to match those of Goldman Sachs. If stock market conditions and investor sentiment are to become more positive, Merrill should be strategically positioned for growth in underwriting revenue and year-over-year improvements in asset management and commission businesses. Merrill recently signed an agreement to purchase the U.S. brokerage unit of ABN AMRO, a business that executives hope to turnaround. The move should help Merrill expand its options clearing business and its institutional client base. Additionally, the firm is trying to win more loan business, which pits Merrill against the likes of Citigroup, Deutsche Bank and Bank of America. The firm is also heavily courting high-net-worth clients – those with more than $1 million in assets. As a part of this aim, clients with less than $100,000 in assets who don’t generate enough fees have been assigned to two call centers, while Merrill’s greater network of financial advisors exclusively service richer clients. Merrill has
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also made plans to develop its client management technology. To that end, in January 2004, the firm joined up with Thomson Financial to create a new billion-dollar Wealth Management Technology Platform, a system that would replace Merrill’s outdated financial advisor applications and save $70 million a year in maintenance costs.
GETTING HIRED
Beyond the top ten According to insiders, Merrill concentrates on finding MBA recruits at top-tier business schools, including Wharton, Stern, Chicago and Columbia, and recruits undergrads from colleges such as Princeton, NYU, Penn State, Cornell, Harvard, Duke and University of Pennsylvania. Of course, many other schools are represented as well. “Merrill Lynch Investment Banking has a target roster of schools numbering in the dozens,” reports one insider. “If you’re not from one of these schools, and don’t happen to know a bigwig, getting attention from recruiting is tough.” But bigwigs aren’t the only ones with influence, continues that contact. “Resume books with hundreds of resumes – Penn has over 400 – are handed out to analysts to comb through. Our selections, mostly people we know, with a few others who we’re in some other way impressed by, are then given first-round interviews. From there, it’s all about who you meet and how you do.” Some insiders in certain groups report that getting a summer internship with Merrill is your best way to land a full-time spot. Merrill does its “hiring mainly through the summer program,” says a current banker, adding, “We also do some additional recruiting outside of the summer program.”
Getting the call Typically, the first round of interviews is held on the applicant’s campus, and those candidates who make the cut are invited to second rounds on campus or at one of the firm’s offices. Make sure you’re at your most charming at cocktail parties, lunches and other informal Merrill gatherings. “Each social outing prior to interviews is very important in determining who makes the closed list,” reports one insider. The summer hiring process, says one source, generally consists of an initial on-campus interview and a follow-up interview in an office or on the phone. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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“Interviews vary a lot,” says a Merrill insider. “[Sometimes] they tend to attack whatever part of your background is weakest.” The source also says beware of the short interview: “Have questions ready, since they might end an interview early and give you a lot of time for your questions.” Another banker says preparation is key. “Know the position you’re interviewing for,” says the contact, “and bring concrete evidence of experience and results that could be translated into success in that role.” An investment banker says his interviews, at least the later rounds, “were relatively informal. They generally wanted to know about my character – if I was team driven and whether I was dedicated to both the work product and the process.” Even so, Merrill doesn’t shy away from technical questions. “I went through the typical fulltime hiring process at business school,” reports one associate. “With an investment banking internship under my belt, I did the standard on-campus interview, followed by a group-specific interview [with] five people, followed by an office-specific interview with another five people. The questions were based primarily on my summer experience – I was asked to describe the deals I worked on, the strategic rationale and the valuation methodologies used.” A summer hire says he had a relatively unorthodox interview. “I think both interviews are supposed to be on site. However, I was living in Arizona at the time so I had one over the phone.” Merrill actively hires a good number of employees in its corporate resources areas, which include human resources, operations, technology, and accounting and finance. Each area recruits undergrads for its respective summer and full-time analyst programs. According to Merrill, it competes for recruits with GE’s Financial Management Program and JPMorgan’s Internal Consulting Services program, among others.
OUR SURVEY SAYS
Kicked back for banking Numerous insiders agree that Merrill Lynch’s culture is “relaxed” for investment baking. One source says Merrill’s “extremely professional environment is classy, not snobby.” Another contact explains, “[Merrill’s] different from other places. The people are nicer than at other banks.” That doesn’t mean things don’t get dicey. “While the overall culture at Merrill Lynch is much more collegial than at most Wall Street firms, investment banking and M&A in particular suffers from the same sharp 100
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elbows that afflicts all of the Street,” says one banker. “For example,” says another, “M&A has a very different culture than many of the industry groups in investment banking. M&A bankers consider themselves to be the ‘Marines’ of investment banking and will go to extraordinary lengths to serve their clients.” Overall, concedes another banker, Merrill consists of “a strong and goal-oriented group” of people. In general, Merrill employees “are driven but down to earth and more collegiate than competitive,” says one contact, who adds, “People are extremely deal- and clientfocused, and relationship building is important – you won’t advance here by screwing others.” One banker adds, “Merrill looks better than it has in a while. It’s very lean and the business units have all been massively retooled.” He adds, “Stan O’Neal doesn’t have the ‘Mother Merrill’ friendly reputation that the last CEO did, but he’s an extremely powerful leader in terms of change management.” Another banker agrees, saying, “Despite the past economy, the morale is high.” And yet another pleased banker sums up Merrill like this: “Great culture, great people.” He even reveals that the firm’s “administrative assistants are plentiful and top-notch.” As for the higher-ups, most junior bankers say their superiors treat them with a fair amount of respect. But it’s no love-fest. “I have received tremendous sponsorship from my managers, which has been my greatest source of satisfaction here,” notes one source, who does admit, though, that while “mangers are great overall, I am not particularly in love with Merrill Lynch.”
The bureaucratic bull Bureaucracy, red tape, politics. Whatever you want to call it, Merrill has its fair amount – as do most large institutions. One investment banker, who agrees that bureaucracy is rampant at Merrill, also complains of the “lack of coordination between groups” and says the firm is “managed more toward other businesses than investment banking.” Another contact explains that “the sales force is the ruling faction of the firm” and agrees that battles occur not only “between departments that worked together, but also with different locations within the same department.” The contact does admit, “For the most part, professionalism is preached to everyone, [so] pettiness is not projected to the client – not too much.”
The ins and outs of advancement With respect to opportunities for advancement, insiders say Merrill “shines.” Explains one insider, “If you have the opportunity to make it into the Merrill world, Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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you have a vast array of options – Merrill hires from within. They also have an extensive training facility and syllabus.” The contact adds, “Internal training courses help the employee perfect his or her position, and development programs set the employee up for advancement.” Another employee points to the firm’s “mobility and advancement program, which seems pretty comprehensive and allows employees to make contact with other hiring managers in an informal sense, before requiring them to alert their current manager of an ‘intent to interview’ with another group.” Employees definitely seem to benefit from Merrill’s high profile. One former associate notes, “When I left the firm, I found it easy to get a job wherever I wanted on Wall Street – even though I took two years off after leaving Merrill and did nothing. Still, when I sent in my resume to various places, they saw the Merrill name and pounced on me.” Another insider says, “Even more important than the resume value after you leave the company is the fact that Merrill, because of its name and reputation, is able to obtain major business that smaller places would not gain. So, while working at Merrill, you are exposed to clients who are in the top ranks of important companies that you might want to work for some day.”
Time machine It comes as no surprise that investment banking analysts and associates at the bulge bracket Merrill Lynch will be clocking some serious OT. In your first two years at Merrill, “expect the worst. If you can’t cope with 70 or 80 hours a week, you’re not going to make it. Even after that, you’ll be working about 60 to 70 hours a week. Plus, at least one day a weekend, you’re sure to be in the office.” Another employee says, “Working during your first two years at Merrill is not like cramming for two nights before an exam. It’s a hundred times worse. The bottom line is that whatever happens, you have to get the job done. If that means three all-nighters in a row, so be it.” As with most investment banks, “the hours of an analyst are the worst,” one analyst says. But it’s not as if associates aren’t working hard, too. One junior associate reports working about 100 hours a week, and regularly working both days on the weekends. So be thankful when you reach VP status. “My hours have improved considerably in the last several months since my promotion to vice president,” says a former Ibanking associate, who now reports working 60 to 70 hours a week. “I used to frequently work weekends, but now it is just as needed, which tends to be once a month or less, and is much more manageable when required.” Another insider reports having to put in little, if any face time. “My direct manager doesn’t watch the clock. As long as the work gets done on time and correctly, she doesn’t worry about 102
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when you get in or leave the office.” According to Merrill, analysts and associates in other businesses and corporate resources areas have significant responsibilities, but their work hours are more manageable.
Paying the average According to employees, Merrill’s compensation packages seem to hover around the Street average. Some note that pay often falls too far below the average. “Many junior people are being paid at below-market rates,” says one contact, “and if this is not addressed, turnover will become a big problem once the economy makes a solid turn in the positive direction.” However, another insider says the firm has been trying to cut the fat, so salaries could be on the rise in the near future. (Fewer employees could mean more cash to go around.) “When I first started here [in 1997],” says the contact, “folks who were just ‘putting in time’ felt very comfortable. But with Stan O’Neal taking over, that feeling is gone. Most of the those folks have left – many involuntarily – and those of us who remain are being asked to put forth considerably more effort and take on more responsibility.” Is this good? “This is a very good thing,” the contact says, “and I believe it will make the company stronger in the long run.” Employees also say perks are pretty standard for the financial services industry. Among the firm’s offerings, says one contact, are “401(k)s, pensions, life insurance and corporate gym discounts.” Of course, employees also get the usual free transportation home and dinner if they work late. If an employee works on the weekend, Merrill will cover meals as well as transportation to and from the office.
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Lehman Brothers
PRESTIGE RANKING
745 Seventh Avenue New York, NY 10019 Phone: (212) 526-7000 www.lehman.com
DEPARTMENTS Equities Finance Fixed Income Information Technology Investment Banking Operations Private Equity Risk Management Wealth and Asset Management
THE STATS Chairman and CEO: Richard S. (Dick) Fuld Jr. COO: Joseph M. Gregory Employer Type: Public company Ticker Symbol: LEH (NYSE) Revenue: $17.29 billion (FYE 11/03) Net Income: $1.70 billion No. of Employees: 16,188 No. of Offices: 47
KEY COMPETITORS Goldman Sachs JPMorgan Chase Merrill Lynch Morgan Stanley
UPPERS • “Small-firm feel” enhances “culture of teamwork” • “Extremely smart, driven and personable” coworkers
DOWNERS • “Lack of big balance sheet to compete with commercial banks” • “Focus on cost management” produces substandard perks
EMPLOYMENT CONTACT Visit www.lehman.com/careers for the appropriate contact in the division to which you’d like to apply.
KEY C888OMPETITORS THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “Great fixed income house” • “Perennial surprise of Wall Street; treats employees right” • “Overrated” • “Best run mid-major”
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Vault Guide to the Top 50 Banking Employers Lehman Brothers
THE SCOOP
A great year Like many Wall Street firms, Lehman Brothers had a strong 2003, despite the overall tepid financial conditions. Lehman posted exceptional results, with a 40 percent increase in net revenue (to $8.6 billion) and a 74 percent rise in net income (to $1.70 billion), as compared with fiscal 2002 results. Underscoring the firm’s recent performance, Institutional Investor ranked Lehman CEO Dick Fuld No. 1 in the “Brokers & Asset Managers” category of its latest “Best CEOs in America” annual survey. Lehman’s profitability isn’t unexpected. After being spun off from parent American Express in the mid-1990s, Lehman posted solid results in the late 1990s and early part of the new millennium. Continuously expanding over the last 154 years, the company is now a full-service global investment bank providing a wide range of financial services, including fixed income and equity underwriting, sales, trading, research, M&A advisory, public finance and private client services.
Southern brothers Lehman Brothers was founded in 1850 in Montgomery, Ala., by brothers Henry, Emmanuel and Mayer Lehman, and began as a commodities brokerage and trading firm. The firm opened a New York office in 1858, and in 1887 Lehman acquired a seat on the New York Stock Exchange. The firm underwrote its first stock offering two years later. The firm rolled along for the next 90 years until 1984, when American Express purchased Lehman as part of its strategy to become a full-service institution covering all consumer and business financial needs. However, 10 years later, Amex decided to refocus on its core businesses, and spun off Lehman Brothers as a separate entity. Although the new Lehman Brothers initially had difficulties, it soon became one of the most profitable Wall Street firms. Through 2001, the firm had been able to avoid laying off staff, even as revenue and net income fell 13 percent and 29 percent, respectively. Nevertheless, with the economy still in a funk in late 2002, Lehman decided to restructure, and reduced its staff by 4 percent.
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Acquiring assets In 2003, Lehman Brothers added assets – and employees – through two significant acquisitions. In July 2003, Lehman announced it had agreed to acquire the private asset management business of New York-based Neuberger Berman for $2.6 billion. The unit will keep its name and become part of Lehman Brothers’ Client Services group’s Wealth and Asset management division. When the deal closed in October 2003, the unit boosted Lehman’s client assets under management to over $116 billion and expanded Lehman’s offerings in mutual funds, wrap accounts, institutional separate accounts and alternative investments. In an interview with CNNMoney following the announcement, Jeffrey Harte, an analyst with Sandler O’Neill & Partners, said, “Neuberger has a big, high-net-worth client focus, and that overlaps nicely with Lehman Brothers’ retail, private-client focus.” Founded by art patron Roy Neuberger in 1939, Neuberger Berman sells more than 30 mutual funds directly to clients and provides advisory services to other companies’ mutual funds. The firm has more than 1,200 employees, and recorded $651 million in revenue in 2002. Lehman also acquired The Crossroads Group of Dallas, a private equity fundinvestment manager, in 2003. According to a September 2003 article on the deal appearing in The Dallas Morning News, the Crossroads Group has a solid record of accomplishment, with investments in more than 200 private equity funds worldwide, representing about 5,200 private companies. The deal expanded Lehman’s private equity assets under management to $7 billion, from $5 billion, and because of the acquisition, private equity investments will now be available to individual Lehman customers, rather than the previous arrangement of only permitting institutional investments of $5 million or more.
Ups and downs in banking In the investment banking league table for global equity, debt and equity-related issuance, Lehman jumped two places to No. 4 in 2003, with a 6.7 percent share of the market. Lehman underwrote 1,264 issues worth $354.14 billion, according to Thomson Financial. In 2003, Lehman’s investment banking division posted net revenue of $1.7 billion, which virtually matched 2002’s total. But a greater amount – $980 million in 2003, compared with $886 in 2002 – came from debt underwriting. According to Lehman, the strong performance in debt underwriting was largely due to a good fourth quarter for fixed income origination in both the U.S. and Europe. Still, the firm posted lower revenue totals in its equity deals and M&A activity in 2003, as a result of the continued reduced demand for these types of services in a
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weaker economic climate that’s just beginning to recover. Lehman posted just $363 million in net revenue from equity deals in 2003, compared with $420 million in 2002, and revenue from M&A advisory activity reached just $379 million in 2003, compared with $425 million in 2002.
Capital markets conquests Lehman’s Capital Markets division made great strides in 2003. The unit posted net revenue of $6.02 billion, compared with $3.62 billion in 2002. The increase was due, in large part, to Lehman’s record customer flow into a broad range of fixed income products, which accounted for a $4.39 billion net revenue of in 2003, compared with $2.61 billion the prior year. Lehman also bolstered this business with the acquisition of Lincoln Capital Management, a fixed income investment manager. Lehman’s overall success didn’t go unnoticed by the industry press. For 2003, Institutional Investor ranked the firm No. 1 in fixed income sales and trading and No. 1 in both equity and fixed income research, the first time in history that a firm was ranked first in both surveys in the same year. Lehman’s earnings press release also highlighted Moody’s Investors Services’ praise; the credit-rating agency raised Lehman’s long-term credit rating to A1 from A2, reflecting the company’s “consistent cross-cycle performance and continued share gains in a number of its key businesses.” Of course, not everything was coming up roses for Lehman Brothers during the year. The firm, along with 10 other Wall Street banks, paid $80 million in April 2003 to federal and state regulators as part of the $1.4 billion research analyst conflicts of interest settlement with the government.
GETTING HIRED
Timing isn’t everything, but it helps Lehman Brothers runs a “very selective” recruiting process that’s been getting “increasingly selective over time.” Successful analyst applicants are normally in the “top 10 percent” of their class at a broad range of undergradaute institutions, while those hired for associate positions typically come from the “top 10 to 15 business schools.”
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In addition to having the desired background from an academic, leadership and teamwork perspective, a candidate would be well-served to have previously spent a summer at Lehman, because the firm “hires a majority of analysts and associates from its summer pool.” One contact goes so far as to say that Lehman hires analysts “almost exclusively from the internship program, so if you miss that pre-senior year summer, it’s almost impossible.” The same general theme exists for associates, with one full-timer saying that in his year, “the only way to get hired was through the internship.” Even candidates who have a strong record of academic and leadership experience must still overcome some pretty “long odds” to land a Lehman job. “We get several hundred resumes for an available position, interview about 10 and then give one or two offers,” explains an analyst. The economic slowdown of the past few years hasn’t been helping, either. “Unfortunately, since the economic downturn, Lehman Brothers no longer interviews on campus at my alma mater for first-round interviews,” points out one source. “Timing is important,” observes another. “When the markets are good, there’s a lot more hiring.”
Making your case Lehman starts the recruiting process by hosting “a number of on-campus events to get to know the students.” These “informal interactions” are “a mix of group events and one-one-one informational sessions.” One source reports that he “must have met with 10 to 12 people prior to formal interviews” and “while it was time consuming and challenging at times, I was able to make a truly informed decision.” The contact also says that Lehman “opened up its doors and gave me access to the people I wanted to meet, even at the senior level.” The formal interview process typically commences with an on-campus interview conducted by one or two Lehman professionals, followed by a second round of “several” back-to-back interviews at either Lehman’s offices or on campus. Firstround interviewing works a bit differently for students attending “non-core” schools, as these applicants are often initially screened through a phone interview instead of being interviewed in person. Summer candidates also typically go through two rounds of interviews. Throughout the interview process, applicants can expect to meet Lehman professionals of all levels of seniority. After extending offers, Lehman might host a “sell day” at its offices where successful applicants can meet additional professionals and ask questions.
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Lehman scrutinizes candidates “not only according to typical metrics that measure analytic ability and leadership potential, but also for their cultural fit and teamwork [skills].” While many “questions focus on problem solving,” fit also seems to be a critical factor, as Lehman seeks to determine “if you’re interested in banking and if you’d be a good person to work with.” “Smarts and drive are benchmarks every firm looks for,” says one contact. “Lehman takes things to the next level and looks for teamoriented people who take initiative and fit with the firm’s culture.” The same insider believes Lehman “takes a long-term view on its hires,” looking for people who will not only perform well at the junior level, but who “can make managing director” as well. Sources cite a variety of common questions, including “How you will add value to the firm?” and “Give me an example of how you were a leader.” In addition, interviewers may pose problem-solving questions. Those with a banking background might be asked to explain financial concepts such as how to conduct a discounted cash flow analysis; candidates without banking or finance experience (the firm hires candidates with a variety of backgrounds) might be asked different problem solving questions. One contact had to take a “stance on school vouchers” and “defend it in a Q-and-A session.” Questions can be “odd” as well, reports one associate who had to respond to “Are you friendly?” and “What was the most important moment in your life thus far?” Additionally, applicants might also be asked to work through a case study that judges “a candidate’s thought process” and digs deeper into his or her analytical approach.”
OUR SURVEY SAYS
Teaming with bankers During the hiring season, Lehman advertises a strong “team culture,” which, according to an insider, is “not just a recruiting show and slogan.” Lehman employees report a “flat structure” that amounts to “essentially a small-firm feel” with a “strong team culture driven by the CEO.” “Culture at Lehman is probably the firm’s greatest strength,” explains a vice president. “The team culture that is touted by senior management actually does exist [and] is alive and well at Lehman.” “I have
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worked with people in almost every division in the firm and they are always extremely helpful,” adds one satisfied contact. In keeping with the all-on-the-same-team vibe, Lehman employees tend to view each other as “down to earth with no egos,” “cooperative” and “friendly.” “The greatest thing about working here has to be the people,” says an associate. “When you are here at 3 a.m., you want to make sure you are here with people you can work with. Lehman is chock full of them.” One Lehman staffer is a bit more cynical, saying that his coworkers are “generally pretty nice, but in the end it is Wall Street, and people are looking out for themselves.” The source concedes, however, that Lehman is still “one of the better places on the Street to work.” Another banker provides the balanced perspective that “like any bank, people here are motivated toward success and are looking to make some coin. That said, most of the people here seem to be genuinely interested in working together.” One worker worries, however, that Lehman’s team culture is deteriorating and “changing to a cut-throat attitude.” The day-to-day work environment at Lehman can be “demanding” and “competitive” with many bankers adopting a “work hard, play hard” mentality. Investment banking “deal teams tend to be thinly staffed so there’s lots of room to take on responsibility,” says one source. Another agrees, observing that “junior bankers are highly valued contributors to the banking teams, and generally have the opportunity to step up and act like senior bankers once they have proven themselves.” Similarly, according to Lehman, teams are lean and efficient on the sales, trading and research desks, where analysts can likely become significant contributors within the first two years of their career. Of course, with additional responsibility, “sometimes people are a bit overwhelmed,” but “helping colleagues is encouraged.” Lehman also has a “high degree of employee ownership,” which creates an incentive to produce top quality work. Finally, there is the perception that Lehman is “more professional than other banks” because of its dress code. Lehman was “the last [investment bank] to go business casual,” and the first on the Street to return to a “business formal” dress code. Lehman loosens the reins a bit in the summer, allowing for casual Fridays (the firm also tolerates business casual wear “the day before long holiday weekends”). For what it’s worth, at least one contact thinks dressing formally is a competitive advantage. The source, an analyst in Lehman’s trading group, says, “Formal [dress] always makes us look and feel serious. When other bankers come in to our offices wearing wrinkled khakis, we never have any doubt who is in control.”
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Mixed managed Lehman’s team atmosphere wouldn’t exist without managers who treat employees with “respect,” who take “a vested interest” in their staff’s professional development, and who maintain an “open-door policy” which helps to foster “very good, if not excellent relationships” between junior and senior personnel. “My opinions and thoughts are sought out by my managers,” expresses one contact. “I have had a tremendous opportunity to contribute to the substance of the work done by my group.” Another reports that Lehman “expects respect at each level by each employee” and “on the whole, the senior bankers truly do respect their junior banker teammates.” While one analyst concedes, “Some of the senior managers sometimes lose sight of how much needless work they sometimes create,” he believes they generally “do a good job of overseeing my career development and making me feel like a vital part of the team.” Not everyone at the firm thinks Lehman leadership is consistently good, however. “Some people I work for treat me with respect and actively try to develop me,” says one junior staffer. “Others view me, and most analysts, as commodities who aren’t a part of the team but are here to process for them.” An associate agrees, saying some managers “are very good,” but “others are more concerned about their weekend houses than taking care of their people.” And one young Lehman banker feels that those at his level are generally “looked at as ‘the help,’ with little regard for our time.” The contact even points a finger at the associates in his group – his “direct superiors” – who “are very poor in managing analysts.” Helping to keep managers in line are Lehman’s biannual reviews, through which the firm “solicits detailed upward feedback” from junior personnel. At the same time, one insider doubts the reviews have much effect because Lehman bankers seem to be “promoted more for their ‘deal skills’ than their management ability.” Still, says the contact, “there seems to be a lot of focus on managerial-skills training, and managers are better than I would have expected.” In fact, according to the firm, Lehman Brothers has invested a significant amount of resources in its leadership training courses – with a different curriculum for new VPs, SVPs and MDs. “Generally speaking,” adds an associate, “senior bankers around here understand that we can be more effective if we are treated better. It’s not the focus, but most of the senior bankers are effective managers.”
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Summer tryouts Former summer analysts and associates generally give the Lehman summer program high marks. For the most part, analysts report being treated like full-time equivalents. In the investment banking division, analysts will perform such tasks as developing company profiles, working on pitches and conducting financial analyses. One analyst “did more menial tasks,” but “still had a good learning experience.” Summer associates are also given a significant amount of responsibility, “including being placed on live deals, meeting with clients and [participating in] strategic discussions with senior bankers,” says one source. According to the firm, “In the equities and fixed income divisons, summer interns are given meaningful projects such as performing client portfolio analysis, developing trading programming models and researching industry trends.” Lehman notes that summer interns in capital markets cannot directly work with clients because they have not yet attained their SEC registration. Since Lehman “uses the summer internship as its primary interview process for full-time” employees, those who perform well have a pretty good shot at getting offers.
Training days Lehman offers an “extensive month-long” training program “for incoming analysts and associates” that many staffers find to be “good,” with one calling the program “excellent.” One contact finds the initial training “good but rushed. We received about a year’s worth of college level accounting in two weeks.” Perhaps to ameliorate the problem of too much knowledge delivered at too fast a pace, Lehman’s introductory training is “complemented by regular training sessions held every week on [a] variety of topics.” A frequent attendee finds these seminars “great” because they “keep bankers up to date on the latest market trends and provide a foundation for junior bankers.” In addition to the regular schedule of continuing education classes, Lehman hosts “occasional seminars on special topics with lawyers and accountants.” Though many at Lehman feel junior bankers can benefit from “very knowledgeable and highly skilled senior bankers who are willing to teach,” learning on the job in investment banking is “less emphasized.” According to the firm, Lehman “encourages selfdevelopment through online training and webcasts” and “will reimburse tuition for courses relevant to the job or helpful to logical career development.”
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The hourglass is half full to some, half empty to others Lehman bankers generally report “long hours,” but “not in excess of other investment banks.” Junior employees in groups other than investment banking also report long days but typically spend less time in the office than their investment banking counterparts. Analysts and associates are hit hardest, as “a lot of the analysis falls on our shoulders.” Typically, sales and trading juniors work fewer hours than investment bankers but their days start earlier. The actual number of hours a junior investment banker will work is “highly unpredictable and can range from 50 to 100 per week” with the potential for a lot of weekend work. “The hours are very long – oftentimes over 15-hour days, seven days a week,” says one hardworking first year investment banking associate, who actually isn’t terribly unhappy with her workload. She says the “majority of the time you won’t feel ill-will regarding the hours because the projects you’re involved with are exciting, interesting and challenging.” Many of her enthusiastic coworkers agree. “While this is not an easy life, the experience you get is unparalleled,” says an associate who puts in over 100 hours per week. “I don’t know of many other fields with this level of senior exposure, ability to have an impact, and opportunity to learn while proving yourself on a daily basis. To get this experience takes some sacrifice and commitment, but it is an investment in yourself on which you will undoubtedly get a serious return.” One investment banking analyst who is “almost always on two to four live deals at a time” offers a slightly different perspective, saying that although he’s “been quite fortunate to have gained expansive deal experience,” he’s “often overstaffed” and spends “more time than I’d like in the office.” Other contacts express harsher views of the Lehman lifestyle. “The hours are not to be taken lightly, and are not really worth it,” says a third year associate. The source admits that on a “good deal,” the “hours don’t matter,” but he thinks that he spends too much time “working on inane projects.” If there’s a silver lining for those who are unhappy with the hours, it’s that there doesn’t seem to be much pressure to put in “face time” at Lehman. As one insider puts it, “When I’m done, I can go home.” Another contact does “feel an expectation to stay late, but no more so than other firms.”
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At the end of the day, the pay is… Depending on who’s asked, Lehman “provides a similar compensation package to most firms on the Street,” though in 2003, “the firm claimed to pay at the top,” says a source. “The reality was they paid a few people more than most other firms, but the average was comparable to most other bulge bracket banks.” Another contact says, “If you are at or near the top of your class at Lehman you will not be compensated like the top of the class elsewhere.” Summer personnel are paid at the same base rate as first year full-timers of the same level, and summer associates, in particular, might receive a bonus and hopefully an offer at the end of the summer. Although Lehman offers some standard Street perks, including car service for late nights and weekends, and a weekend meal allowance, the firm is perceived by insiders as “cost conscious.” Particularly derided is the New York office’s nightly meal policy (in effect Monday through Thursday), which according to one gourmand banker is “by far the worst on Wall Street.” Unlike employees at many other firms, Lehman bankers are not reimbursed if they order late-night food from outside vendors, with the exception of Fridays, when they can order from outside vendors. Instead, employees are “forced” to eat what one source calls “terrible food” in the firm cafeteria. “The menu is limited,” acknowledges an analyst, “so this is not the place to work if you’re looking for great food every night,” although one associate claims the in-house dinner program “grows on you as it is insanely convenient.” Lehman will match up to $1,000 for people who earn less than $100,000 in total compensation. Lehman will also “match an employee’s charitable contributions up to $500 per year.” As for gym memberships, there seems to be some confusion. Multiple contacts complain that there are no gym deals available, while one claims that Lehman offers “discounted gym memberships at places like Equinox and New York Sports Club.” In London, Lehman boasts an in-house gym facility.
Movin’ on up After its downtown New York headquarters was damaged in the September 11th terrorist attacks, Lehman Brothers decided to relocate uptown. Now the firm “has a great new building” at 745 Seventh Avenue replete with “cutting-edge” technology and a “beautiful, modern, brand-new trading floor.” Though one contact finds the new digs “really boring” and “sterile at best,” most Lehman bankers are enamored with the “tastefully decorated and clean” space and are “proud to show it to clients.” Many associates and even some analysts have offices (as opposed to cubicles), but sharing “can be a pain” depending “on your officemate.” The major complaint about
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the new headquarters is that the desk space and the “cubicles are small” and thus “slightly more personal space would be appreciated.” In addition, an associate says that the “open plan which is conducive to communication with colleagues sometimes makes working difficult” because of the noise. Finally, there’s the desire of one overworked analyst “to have couches in senior management offices so that junior bankers could steal cat naps when burning the midnight oil.” Other than that, the contacts considers the new building “great.” In addition to the firm’s headquarters on Seventh Avenue, Lehman has another New York office at 399 Park, which has “okay facilities,” according to one source. New York isn’t the only place where Lehman has upgraded its office space. The firm’s new European headquarters is now housed in a “brand new high tech building” in the Canary Wharf section of London. Lehman also recently renovated its office in Chicago, but one source doesn’t “think they did as good a job as they could have done with it.” Still, while the contact works in a cubicle, he concedes “it’s a big cube.” In addition, Lehman’s Asian headquarters has moved to a new home in Roppongi Hills Mori Tower, which, according to the firm, incorporates state-of-theart facilities and client reception areas.
Minority report Most insiders maintain that at Lehman, “diversity is extremely important,” evidenced in part by the fact that the firm has a Global Diversity Council, which “helps to shape corporate strategy on diversity issues.” In addition, Lehman offers multiple “networks to promote and foster advancement, retention and career planning.” These networks cover a range of diversity communities to include women, Latin Americans, Asians, employees of African decent and gays and lesbians. Lehman’s women’s network (Women’s Initiatives Leading Lehman or “WILL”) is particularly strong and hosts many mentoring events. That said, while Lehman “is focused on advancing women, there are not many in the upper levels to look to as role models,” observes a third-year analyst who describes herself as “the most senior woman” in her group. Another contact agrees that Lehman has “more problems retaining than recruiting” female bankers. As for equal treatment, one source observes that “women are treated in the exact manner men are,” but another says some bankers are “sexist” and believes “it will take generations” to rid the banking industry of this bias. In addition to WILL, Lehman has “recently launched several minority mentoring networks,” and the firm seems to be “making the right efforts” in recruiting and retaining minority employees. The London office in particular is a melting pot, “employing over 80 nationalities.” In fact, in May 2004, Lehman received the City Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Focus Group Award from Opportunity Now, a government-backed gender diversity body in the U.K. Opportunity Now gave Lehman the honors for its “diversity and inclusion, which was launched by the CEO of Europe and Asia, Jeremy Isaacs, [whose] vision was to achieve a true meritocracy at Lehman Brothers where all employees felt they could reach their full potential.” Still, one insider in Chicago notes that while there are a good number of Indian and Asian professionals at Lehman, African-American and Hispanic employees are “not nearly as prevalent.” As for gay and lesbian employees, Lehman is “making the right efforts,” says another contact.
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“The greatest thing about working here has to be the people. When you are here at 3 a.m., you want to make sure you are here with people you can work with. Lehman is chock full of them.” — Lehman Brothers insider
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V A U L T
8
Citigroup
PRESTIGE RANKING
399 Park Avenue New York, NY 10043 Phone: (800) 285-3000 www.citigroup.com
DEPARTMENTS Citigroup International Global Consumer Group Global Corporate and Investment Banking Group Global Investment Management Global Private Client Group and Global Equity Research
KEY COMPETITORS American Express • Bank of America • The Bank of New York • Deutsche Bank • General Electric • Goldman Sachs • JPMorgan Chase • Lehman Brothers • Merrill Lynch • Morgan Stanley
UPPERS • Worldwide name recognition • Its reach is unparalleled
DOWNERS THE STATS Chairman: Sanford I. Weill CEO: Charles Prince Employer Type: Public company Ticker Symbol: C (NYSE) Revenue: $77.4 billion (FYE 12/03) Net Income: $17.9 billion No. of Employees: 275,000
• Many competing cultures • Huge size creates bureaucracy and distance between employees and management
EMPLOYMENT CONTACT careers.citigroup.com
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “One of the best all around” • “Good name, tough culture” • “So big, you have to respect them” • “The ‘does everything, not great at anything bank’”
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THE SCOOP
The banking behemoth of banking behemoths Offering seemingly every financial service under the sun, Citigroup is organized into five broad divisions: the Global Consumer Group, the Global Corporate and Investment Banking Group, Global Investment Management, Global Private Client Group and Global Equity Research (Smith Barney), and Citigroup International. The Global Consumer Group accounted for over half of Citigroup’s profits in 2003 and includes the firm’s Citibank, credit card, Primerica (financial planning), and personal and equipment lending businesses. The firm’s investment banking arm (formerly Salomon Brothers) is one of the most respected in the industry, consistently at or near the top of every conceivable league table. Global Investment Management includes asset management, alternative investments, retirement services, and the Travelers Life & Annuity unit. Citigroup’s private wealth management and equity research unit, Smith Barney, has more than 12,000 financial consultants in 500 offices and manages $900 billion in client assets. The firm rounds out its offerings with Citigroup International, which delivers various financial services in more than 100 countries in Europe, the Americas, Asia, the Middle East and Africa. The largest bank in the U.S. had a lot going on in 2003. Legal payouts, bad loans and intensifying competition all led to…record net income? Indeed, Citigroup’s bottom line looked very good in 2003 – $17.85 billion to be precise – but perhaps the firm’s biggest story of the year was the transition from Wall Street legend and now former Citigroup leader Sanford “Sandy” Weill to new CEO Charles Prince. Prince will have the challenging job of keeping Citigroup at the top just as competitors such as JPMorgan Chase and Bank of America have strengthened their resources through blockbuster mergers. Prince will also attempt to steer Citigroup clear of additional regulatory investigations and their associated payouts, problems which plagued the bank during Weill’s last few years. Still, Citigroup is an industry powerhouse with strong momentum heading into 2004. Weill will remain chairman until 2006, so most don’t expect Citi to miss a beat in the near future.
The making of a giant Today’s Citigroup can trace its roots back to 1812, but the foundation of its present form was set in 1986, when Sandy Weill became chairman of Commercial Credit, a Baltimore, Md.-based loan company. Two years later, Commercial Credit purchased Primerica and adopted the Primerica name. In 1993 Primerica acquired The Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Travelers Corp. and took that name. Travelers purchased the respected investment bank Salomon Brothers in 1997 and combined it with Smith Barney to form Salomon Smith Barney. In April 1998, Weill’s Travelers merged with Citicorp to create Citigroup. The two companies were gambling that Depression-era rules regulating the financial services industry would be modified. In fact, to hedge their bets, the companies lobbied strongly for the passage of the Financial Services Modernization Act of 1999, which passed, making the arrangement legal. Crain’s New York Business claims Citigroup CEO Sanford Weill has the pen used by former President Bill Clinton to sign the act into law on display in his office. Citigroup’s oldest ancestor is Citibank, the commercial bank founded in 1812 by Samuel Osgood, the first commissioner of the U.S. Treasury. The City Bank of New York (as it was then known) began by serving cotton, sugar, metal and coal merchants, and became a pioneer in overseas expansion during the early 20th century. Since then Citibank has gone on to become the first commercial bank to make personal loans, the first to provide high-interest specified-term CDs and the first to introduce ATMs on a large scale. Today, Osgood’s creation offers one-stop shopping to its customers, whether they be homeowners looking for a mortgage or institutional investors in need of derivatives to hedge bets on the market.
Sandy steps down; Prince takes the throne Ever since he merged his Travelers Corp. with Citicorp in 1998, it’s been hard to discuss Citigroup without talking about Sanford “Sandy” Weill, the Wall Street legend and Citigroup architect who consistently grew profits through expansion and acquisition. Weill’s presence at the helm of Citigroup has given shareholders so much confidence that the research community points to a significant “Weill premium” inflating Citigroup’s share price. On July 16, 2003, however, Citigroup’s shares fell 2.8 percent on the news that Weill would officially step down from his CEO spot, clearing the way for Citigroup’s new leader, Charles “Chuck” Prince. Prince had worked for Weill since 1983, beginning as corporate counsel and eventually heading Citigroup’s Global Corporate and Investment Bank before being appointed CEO. Citigroup’s new top boss (effective October 2003) will have the benefit of his predecessor’s guidance for a few more years, though; Weill will remain Citigroup’s chairman until 2006, when he is expected to officially retire at the firm’s shareholder meeting.
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Although Prince had been with Weill in the financial services business for over 20 years, his appointment came as a bit of a surprise given his lack of significant operations experience. His stint as head of Citi’s investment banking arm lasted for a year before he became CEO and, before that, he spent only six months running the bank’s emerging-markets business. While he was in charge of investment banking, however, Prince negotiated Citi’s December 2002 $400 million settlement with state and federal regulators to end investigations into conflicts of interest between research analysts and investment bankers. In total, 10 banks agreed to pay $1.4 billion, and although Citi’s payout was the largest by $200 million, Prince gained support within Citigroup for ending the probes without admitting wrongdoing notwithstanding evidence that Citi analysts and bankers had, in fact, manipulated research reports to gain investment banking business. Notably, Citigroup’s new organizational structure puts less power in the chief executive’s office than when Weill ruled the roost. All of Citi’s divisions will report to Robert Willumstad, the firm’s current president and COO. Formerly the head of Citigroup’s consumer banking division, Willumstad has significant operations experience and had been one of the lead candidates to replace Weill as CEO. While Prince officially got the nod, some suggest that Citigroup’s new leaders will share the power much like Weill and former Citi co-chairman and CEO John Reed did. Under Weill and Reed, however, many Citi executives were unhappy about reporting to two bosses, a problem cured when Reed eventually left in 2000 (reportedly due to personality conflicts with Weill). The same two-headed monster problem could surface again as some high-level managers, including CFO Todd Thomson, will report to both Prince and Willumstad. To complicate the question of who’s really in charge even more, some Citi observers point to Weill’s long-standing relationship with his successor and wonder whether the selection of Prince means Weill will still be calling the shots. For his part, Weill maintains that he’s no longer running the show; instead, he wants to concentrate on helping former Treasury secretary and current Citigroup employee Robert Rubin grow Citigroup’s presence in developing markets including China, India and Russia. Weill will continue to advise the company until 2006 by which time Citigroup’s new CEO may have developed his own “Prince premium.”
A record-breaking 2003 Citigroup set a firm record in 2003 with $17.85 billion in net income, fueled by strong results in consumer banking and investment banking. The firm’s consumer banking profit of $9.6 billion was driven by retail banking and credit card income. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Citi’s investment banking division had over $5.3 billion of net income, a 71 percent increase over 2002, and for the ninth consecutive quarter, Citigroup was No. 1 in global debt and equity underwriting. Citi’s I-bank also ranked first in global disclosed fees. Citigroup had such a successful year that its board of directors increased the quarterly dividend on the company’s stock by 94 percent to $0.40 per share. Commenting on the dividend increase, CEO Charles Prince said, “We are very confident in the continuing earnings power of our company. This marks the 19th-consecutive year that Citigroup has raised its dividend since the predecessor company was founded, and we are committed to continue to enhance returns to our shareholders.” It should be noted that as a result of the dividend increase, Sandy Weill’s retirement will be a bit more financially comfortable: he can expect to reap yearly dividends of $1.60 per share on his 22 million shares, an income of over $35 million per year.
Citing Citi for excellence Citi’s record 2003 didn’t come without recognition. The firm was 25th on Fortune’s 2003 Global Most Admired Companies list. In October, the bank was again mentioned positively in Fortune as two Citi execs found themselves on the magazine’s list of the 50 most influential women in corporate America. Marge Magner, the Chairman and CEO of Citigroup’s Global Consumer Group, was ranked No. 5, and Sallie Krawcheck, Smith Barney’s Chairman and CEO, was ranked No. 14. Global critics cheered Citigroup as well. Banamex, Citigroup’s Mexican subsidiary, was named Bank of the Year in Mexico in 2003 by The Banker. The Far Eastern Economic Review, noting the firm’s strong growth in China, ranked Citigroup one of the top ten multinational companies in Asia in a survey of 200 major companies (Citi was the highest ranked bank on the list). FinanceAsia also lauded Citigroup’s Asian operations, naming Citi the Best Bank in Asia. It was the seventh year in a row that Citigroup had received FinanceAsia’s top award. Euromoney couldn’t find enough praise for Citigroup. The magazine gave the firm Best Bank in Asia honors for the fourth straight year, and also named the firm Best Bank in Africa. Citigroup Israel charmed Euromoney as well, as the unit garnered Best Debt House in Israel, Best Mergers and Acquisitions house in Israel, and Best Bank for Treasury and Risk Management in the Middle East.
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Niches play big with a more mature Citi In contrast to the large mergers that created the banking giant (e.g., Travelers/Salomon and Travelers/Citicorp), Citigroup’s acquisition strategy in the last few years has been to make purchases that are relatively small (when compared with the size of Citigroup, that is) to enhance existing product lines or target markets. In 2001, for example, the big bank’s two major M&A moves were the addition of Long Island-based European American Bank (EAB) from ABN AMRO for under $2 billion, and the $12.5 billion acquisition of Mexico City-based Grupo Banamex Accival (Banamex). The EAB deal provided Citigroup with an expanded branch and middle-market lending network while the Banamex transaction enhanced Citigroup’s position in the growing Hispanic market via the purchase of one of Mexico’s largest banks. The Banamex deal turned out to be the first of many niche deals designed to grow Citigroup’s Hispanic market share. The $5.8 billion acquisition of Golden State Bancorp in 2002 added more than 330 branches to the company’s presence in California, the population of which is approximately 33 percent Latino. Citigroup’s 2003 acquisition of the Sears credit card and financial products business for $6 billion was also driven by the bank’s desire to penetrate the Hispanic market. Then chairman and CEO of Citigroup’s Global Consumer Group, Robert Willumstad, provided the rationale for the acquisition, saying, “Sears is a unique franchise as 60 percent of U.S. households are Sears customers, including a significant Hispanic customer base – a key focus of our consumer business marketing efforts.” In addition, the Sears purchase had the added benefit of making Citigroup the largest private label card issuer in the U.S. after the bank won Home Depot’s private label relationship card business earlier in the year. Also in 2003, Citigroup announced it was acquiring Washington Mutual Finance Corp. (WMFC) from Washington Mutual for $1.25 billion. With its purchase, Citi gets WMFC’s product offerings, including consumer installment loans, real estate secured loans and insurance sales. The acquisition also adds 409 branch offices in the Southeast and Southwest, embellishing Citigroup’s consumer lending operations in those regions (particularly California, Texas and Tennessee). WMFC is particularly strong in subprime lending (loans carrying a relatively high interest rate to compensate for increased credit risk), and the purchase will be the first major move in this market since Citi agreed to pay $215 million in 2002 to settle with the FTC over subsidiary Associate First Capital Corp.’s allegedly deceptive practices (Citi has since become a standard setter for subprime lending business operations).
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Imitation is the sincerest form… So what if Citigroup hasn’t announced a scale-changing merger since 1998 when it combined with Travelers Group for $70 billion? In mid-2003, Citigroup CFO Todd Thomson went so far as to say, “The transforming deal is no longer what this company needs.” Of course, the comment came before Bank of America’s announcement in October 2003 that it would be merging with FleetBoston Financial (a $49 billion deal), making it the second biggest bank behind Citigroup in terms of assets. Even after the announcement, however, Citigroup didn’t back off from its acquisitions stance. In November, CEO Prince maintained that Citigroup’s “era of the transformational merger every couple of years” was over. Then came JPMorgan Chase’s January 2004 announcement of a $58 billion deal to acquire Bank One; as with Bank of America, this was a move designed to give JPMorgan the scale necessary to compete head-on with its old rival. The Travelers deal was such a blockbuster that even after the recently announced mergers close, Citigroup will still be the largest bank in the country (with $1.2 trillion in assets, Citi will still outdistance the JPMorgan/Bank One combination at $1.1 trillion). But is $100 billion too close for comfort? Prince doesn’t seem worried. Commenting on the JPMorgan deal, the Citigroup CEO complimented the move and his own company. “I think it’s a good deal for the two companies,” he said. “And I think it validates our business model.” Others on Wall Street, however, can’t believe that Citigroup is just going to sit and let its competitors catch up. When the German government granted a group of companies (including Citigroup) permission to acquire banks within the country in 2003, many suggested that Citi might eventually try to go big in Germany, perhaps with an acquisition of Deutsche Bank. But Prince has insisted that Citigroup will focus on organic growth and targeted acquisitions. Areas that Citi might look at in 2004 include private banking, asset management, back-office transaction services and retail banking (Prince also disclosed that Citi may shed some non-core businesses in 2004).
Two clients, too many headaches While Citi wants to move on from its recent scandal-ridden past to concentrate on growing its businesses, old habits are hard to break. Take Enron, for example. When Enron went bankrupt in 2001, Citigroup took a hit. The bank had been a major lender, extending over $2 billion to the troubled energy company. In 2002, Citigroup
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was forced to take a $228 million charge because of its Enron exposure, but the bank is still among the many creditors who are waiting to get some money back. But Citigroup’s trouble doesn’t end with its bad loans. In 2003, the bank came under fire for structured finance work the bank had performed for the energy company before it went belly-up. In particular, investigators were looking into financing transactions called “prepays” that were structured in such a way as to avoid calling them “loans.” The money lent to Enron was recorded as revenue, deceptively boosting Enron’s top line while hiding its actual debt. Not long after the bank had agreed to pay $400 million in the banking and research conflicts of interest settlement, Citigroup was forced into another payout. In July 2003, Citi and rival JPMorgan Chase agreed to a $300 million civil settlement with the SEC, the Federal Reserve, the Office of the Comptroller of the Currency, and the Manhattan District Attorney’s Office to end probes into both banks’ connections with Enron’s financial statement manipulations. The agreement also ended the SEC’s investigations into similar work Citigroup did for energy client Dynegy. Under the terms of the settlement, Citi had to outlay over $145 million, but some observers felt the firm got off easy. BusinessWeek titled an article on the settlement “A Great Prison Escape,” noting that Enron’s bankers benefited from securities laws that make putting financial professionals behind bars an extremely difficult task. Instead of trying to prove there was intent to commit fraud in such cases, regulators usually settle for just fining the banks.
More problems for the big bank? Citigroup added $1.3 billion in litigation reserves in 2002, some of which were earmarked for “regulatory inquiries and private litigation related to Enron.” But even that much of a reserve might not end up being enough. For one thing, the evidence that compelled Citi to settle can still be used against the firm by civil litigants who have filed billions of dollars worth of suits against the bank. Furthermore, the Justice Department, which wasn’t involved in the settlement, is still conducting criminal investigations into the Enron collapse, and former Enron CFO Andrew Fastow is expected to give the government agency a lot of information on Enron’s business dealings with its banks. The SEC is not necessarily finished here either; the commission may decide to file civil charges against individual Enron bankers, which may lead to industry bans and additional fines. Finally, it’s also possible that Citigroup will lose some or all of its creditor rights with Enron, and with as much as $2.4 billion owed to the bank, this punishment would be a very tough pill to swallow. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Another headache for Citigroup is former client Parmalat, the Italian dairy company that filed for bankruptcy in December 2003 after it was revealed that Parmalat had billions of dollars in assets missing from its balance sheet (including hundreds of millions that its executives had embezzled). Officials began 2004 investigating whether Parmalat’s banks and financial advisors (including Citigroup) should be held liable for the dairy company’s fraud. Citigroup had a number of dealings with the company, including advisor roles on Parmalat’s 1997 acquisitions of Beatrice Foods and Ault Foods (the two companies were subsequently folded into a Parmalat subsidiary of which Citigroup held nearly 25 percent). Citigroup was also a Parmalat lender, and the bank suffered $351 million in Parmalat credit costs in the fourth quarter of 2003; Citigroup still has a credit exposure of $302 million remaining. The bank’s losses have not stopped a class-action lawsuit filed in January 2004 claiming fraudulent accounting (a suit which Citi calls “baseless and without merit”) and further investigations into how Parmalat’s auditors, creditors and financial advisors could have been ignorant of the fraudulent accounting.
GETTING HIRED
Are you management material? Most incoming Citigroup employees participate in one of the firm’s Management Associate (MA) programs, which typically entail two to three rotations within a particular business segment coupled with formal training sessions. While the bank’s official policy is that applicants can apply for as many programs as they like, Citigroup recommends that candidates focus on programs that would best match their interests and skills. To get an MA slot, a prospective Citigrouper sits through an on-campus interview before participating in a second round, Super Saturday-style affair, where each candidate is shuffled from one office to another for (usually) five 30-minute interviews with associates and VPs. Citigroup looks for “intelligent, highly-skilled people and tries to fit them in where they can do their best work,” says one banker. Another contact agrees, explaining that “one of the big aims of the hiring process is for corporate fit, which basically translated means that we often choose personality over academic achievement.” The interviews themselves are characterized as “pleasant” and “not very stressful,” but don’t expect a chat over coffee – Citigroup interviewers will give out brainteasers, which in the words of one contact “sound like 126
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they probably got them out of a book.” Another banker says interview questions are “centered around skills, level of expertise and commitment to organization.” Outside of the MA program (e.g., branch management or personal banking), the jobseeking process is less formal. One contact, for example, reports obtaining an interview simply “by picking up the telephone book and calling someone at Citibank.” According to one insider, Citigroup gets most of its new young hires via its on-campus recruiting efforts and some from “the usual web sites like monster.com.” For a list of current openings at Citigroup, visit the company’s web site at careers.citigroup.com. The site also provides a link (“Citigroup on Campus”) to the bank’s on-campus recruiting schedule. Citigroup recommends that interested students who are attending schools at which the bank recruits attend the firm’s oncampus presentations to learn more about various positions and get a chance to speak informally with Citigroup representatives.
Summering into the system Citigroup conducts 10- to 12-week summer associate programs in consumer banking, corporate banking, operations and technology, and its advanced development group. Interns are assigned to learn the ins and outs of a specific area at the beginning of the summer. Explains one summer intern turned permanent hire, “It is by far easier to get hired after interning because you’re already ‘in the system,’ and those you work for and work with will assist you whenever possible with landing a full-time position.”
OUR SURVEY SAYS
The many cities within Citi Due to multiple mergers and an enormous breadth of businesses, Citigroup does not have one firm-wide culture. “Your perspective on the firm’s culture will depend on which part of the bank you’re in,” says one contact, who describes the atmosphere at Citibank as still “in flux.” Of course, because of its size, many say there’s a healthy amount of “bureaucracy.” Citibankers “must deal with bureaucracy and politics, owing to the size of the organization and number of competitors internally,” says one contact. Several sources mention strain among the various merged cultures. “Those in the ex-SSB camp have a strong work ethic and a desire to get things done, even if Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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it means long hours and weekend working,” explains one insider. “So it does cause a bit of trouble when ex-Citibank staff leave at 5 p.m. on the dot.” Another employee says there’s a new problem within the bank: “The headcount restriction has created a veritable army of temps and interns, who are not counted as real employees and thus help make the organization look slimmer by giving it a better ratio of profit per employee.” This makes the company look more attractive to analysts. The contact adds, “The number of temps is seriously no joke, not only in New York but also worldwide. Some have been temping for a number of years while waiting to be brought on board officially. This has had a very bad effect on morale. Many temps take Citigroup’s promises of full-time employment to be largely empty.” And one source laments the dearth of intrafirm lateral opportunities. “Moving between divisions is said to be ‘easy’ by company officials; however, this is simply not true,” reveals the contact. “The numerous mergers and acquisitions that have turned Travelers, Citibank, Smith Barney, Salomon Bros., etc. into the beast we know today as Citigroup. They have also created a corporate environment that by design makes it nearly impossible to [move between departments]. Communication between each division is poor, and making matters worse, they know little of each other’s business. This is most noticeable when attempting to make a career change or division move.”
The view of the top Management at Citigroup “could be worse, but could be a whole lot better,” offers one banker. “My rapport with my immediate manager is excellent. Beyond him, though, there appears to be a real disconnect in communication. My impression is that there’s a feeling of disregard for upper management.” A vice president agrees with that assessment, complaining that “senior management does not care about the well-being of its employees” and that employees aren’t included in decision-making processes as much as they should be. Another contact adds that “having a ‘voice’ at Citi does not exist at most levels. They do not take criticism well from employees, despite the fact that they say they ‘welcome all input.’ They really prefer it if you shut up and just do the projects you are given.” On the other side of the management spectrum, one employee says, “Managers are very respectful of personal opinions and judgments, even those from interns.” The contact adds, “Decision-making authority is shared with subordinates when both parties are involved in a project, and this culture of respect is very encouraging, and
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is a good learning opportunity.” Another insider says that “immediate managers care about your well-being” and give “regular feedback on your job performance.” Whatever uncertainty there may be regarding the firm’s culture, Citigroup employees generally give their company high marks in a number of areas, including work/life issues. In particular, sources say they’re pleased that Citigroup initiated a companywide business casual dress code. One insider notes that “the farther away you are from client contact, the more casual you can be.” A banker who describes the work environment as “very comfortable” says, “I don’t think I could find a financial services company where I would have a better balance between my work and home lives.” Of course, in a huge financial services firm like Citigroup, “hours vary according to your group,” explains a former insider. “Some groups only require you work late hours for emergency projects, while others require you to start work at 7:00 a.m. and stop at 8:00 p.m. or later.” That said, one employee says, “Work hours are flexible where I am, but there is a regular ‘on-call’ schedule, which is stifling.” Another contact also says, “Hours are flexible.” The source adds, “Working from home does happen on occasion.” On the consumer side of the bank, employees log in 40- to 50-hour weeks, with perhaps one weekend visit to the office a month. On the corporate and investment side, though, it’s not uncommon for junior employees to log twice that many hours, with at least one weekend office visit a week.
Going stag to the X-mas party Citigroup offers industry standard perks, including dinner allowances and taxis home for those working late. Other benefits include discounts on various Citigroup financial services and products. Recently, however, the firm has been cutting back even the standard extras. In the U.K., “the late working taxi policy [moved] from starting at 9 p.m. to starting at 10 p.m.,” bemoans one European banker. Another employee says, “Business travel is at an all-time low – every line item is scrutinized and the control of cost stems from top to bottom. That said, the firm is still immensely profitable – in no small part due to the great cost cutting undertaken in past years.” A former executive recognized that Citigroup makes “more money than any company in the world,” but he complained that the firm’s profits “came at the expense of such employee perks as bringing a spouse to the company Christmas party. That’s right, if we were to bring a spouse it required a check.” Like the perks, compensation has also been “cut back over the past few years,” say employees. One source says simply, “Citigroup will never pay the highest bonuses or best comp.”
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Too easy Multiple Citigroup insiders complain that their work isn’t satisfactorily challenging and that stimulating work assignments can be hard to come by during the first couple of years at the firm. According to one source, “A number of people who entered the bank with me have left for this very reason.” Insiders lay some of the blame on the bank’s “lack of focus” and “bureaucracy.” One source points out another problem facing Citi employees. “Because of the bank’s massive size, it becomes a morass when you’re looking for something.” True, says one banker, “Citigroup can at times be a bit wearing with the bureaucracy, but size has its advantages: We are, after all, the world’s largest financial services provider.” A banker in the firm’s Management Associate program agrees that Citigroup’s girth is a good thing. He praises the bank for giving him “international exposure and a breadth of work experience.” And another first-year employee is “proud to be a part of Citigroup,” and says that working for Citigroup has helped her to become “more secure” and confident in “all business transactions.”
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“Citigroup can at times be a bit wearing with the bureaucracy, but size has its advantages: We are, after all, the world’s largest financial services provider.” — Citigroup insider
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V A U L T
9
Credit Suisse First Boston
PRESTIGE RANKING
11 Madison Avenue New York, NY 10010-3629 Phone: (212) 325-2000 Fax: (212) 325-6665 www.csfb.com
DEPARTMENTS Investment Banking (Debt Capital Markets, Equity Capital Markets, Leveraged Finance, Mergers & Acquisitions, Private Equity, Private Placement) Financial Services (Asset Management, Private Clients) Securities (Equity, Fixed Income, Global Securities Finance, Research)
THE STATS Chairman: Stephen R. Volk CEO: Brady Dougan Employer Type: Subsidiary of Credit Suisse Group Revenue: $11.7 billion (FYE 12/03) Net Income: $945 million No. of Employees: 28,415 worldwide No. of Offices: 43
KEY COMPETITORS Goldman Sachs Merrill Lynch Morgan Stanley UBS Investment Bank
UPPERS • “Solid management” that is “committed to winning” • Working “among exceptionally smart people for a leader in its field” • “Global nature” of firm’s franchise
DOWNERS • “Fails to attract some of the bigger deals on the Street” • “Negative references in the newspaper” about past management’s “messes” • Compensation “less than the Street average”
EMPLOYMENT CONTACT For employment contacts, go to www.csfb.com/about_csfb/careers
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “Good firm, tough place to work” • “Falling apart; Exodus by top bankers” • “Best tech bank” • “These guys totally blew it”
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THE SCOOP
Swiss conglomerate Credit Suisse First Boston (CSFB) is one of the world’s most renowned investment banks and a member of Wall Street’s prestigious bulge bracket of securities firms. A wholly owned subsidiary of the Zurich, Switzerland-based Credit Suisse Group, CSFB offers a full range of investment banking and asset management services. Particularly strong in debt and equity underwriting, CSFB retained its position as the world’s No. 1 high-yield corporate debt issuer in 2003 and jumped two spots to the No. 3 position in global IPO underwriting, according to Thomson Financial. CSFB rose to top-tier investment bank status thanks (largely) to two acquisitions and a man named Frank. In 1988, the firm’s parent, Credit Suisse Group (formerly CS Holdings), purchased investment bank First Boston and renamed it CS First Boston. Soon after, the firm poached Internet banking superstar Frank Quattrone from Deutsche Bank. Quattrone helped CSFB leap to the top of the investment banking league tables for tech and Internet advisory in the late 1990s. Even so, CSFB’s stranglehold on its bulge bracket status didn’t come until later, with the acquisition of Donaldson, Lufkin & Jenrette in November 2000. The $12.4 billion purchase added DLJ’s debt underwriting prowess and established Wall Street name to CSFB’s growing franchise.
Mack hits the road A recent shakeup in CSFB’s management structure suggested that the firm won’t be looking to merge with another DLJ anytime soon. In June 2004, it was revealed that John Mack, CEO of CSFB and co-CEO of Credit Suisse Group, would be stepping down in mid-July 2004, leaving Oswel J. Grubel as the sole chief executive of the parent company and Brady Dougan, the No. 2 man at CSFB, to head the investment bank. According to The Wall Street Journal, Mack’s surprise departure “came after leaders at Credit Suisse’s Zurich headquarters rejected Mr. Mack’s entreaties to pursue a merger with another big bank and criticized CSFB’s performance now that the economy had picked up.” In a press release announcing the move, Credit Suisse Group Chairman Walter B. Kielholz confirmed the firm’s strategy of going at it alone. “At this point in time, we have no interest in pursuing a merger with another financial institution.” Kielholz also gave a nod to Mack, saying he was responsible for “a dramatic turnaround of
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CSFB, delivering $1.4 billion profit last year and enhancing its reputation by resolving major regulatory challenges and strengthening the franchise in key areas for future growth.” Mack’s successor, 44-year-old Brady Dougan, is a 15-year veteran of CSFB. He’s a former trader and oversaw the equities division at CSFB from 1996 to 2001.
The roots of the franchise CSFB has a history that spans nearly 70 years. The First Boston part of its name began as the investment banking arm of First National Bank of Boston. When the Glass-Steagall Act and other legal reforms imposed barriers among commercial banks, investment banks and insurance companies, the investment banking arm became the independent First Boston. In 1988, Credit Suisse, the Zurich-based bank, renamed itself CS Holdings and became a parent company/shareholder of a newly renamed CS First Boston. The alliance became more formalized in 1997, when CS Holdings swallowed the whole investment banking unit and both parent and child emerged with new names: Credit Suisse Group (a global bank headquartered in Zurich) and investment banking arm Credit Suisse First Boston (headquartered in New York). CSFB’s reputation grew throughout the late 1990s. The firm saw a chance to become an unquestioned leader in the industry through acquisition and did exactly that, announcing the purchase of DLJ in August 2000. The deal was not universally loved – some analysts predicted culture clashes and the union resulted in the elimination of 2,500 jobs. Shortly after the merger, some senior managers abandoned the new firm. Ken Moelis, who had served as DLJ’s head of corporate finance and was named cohead of investment banking, left for CSFB competitor UBS Warburg in November 2000. Also irksome was a September 2000 report in The Wall Street Journal that Joe Roby, DLJ’s president and CEO, received a six-year contract worth over $82 million to act as chairman of the combined firm. Despite these setbacks, the new CSFB was a reasonably successful firm, staying near the top of the league tables in 2001. Profits were down somewhat, but the firm’s performance was on par with the rest of the industry.
Misconduct mess In January 2002, CSFB settled allegations that some of the firm’s brokers coerced clients to pay higher commissions and buy aftermarket shares in exchange for larger allocations of future IPOs. CSFB agreed to pay $30 million in fines and surrender
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$70 million in profit it made from managing IPO stocks during the tech surge of the late 1990s and early 2000. The $100-million payment was divvied up by the SEC and the NASD, and represented the fifth-largest fine sanctioned against a brokerage. CSFB neither admitted to nor denied the allegations. At the end of 2002, CSFB would get hit with another $200 million fine, as part of the $1.6 billion settlement paid to federal and state regulators for hyping stocks in the late 1990s and early 2000s. In addition to fines, the banks were also forced to further disconnect their research units from their advisory units, in order to mitigate conflict of interests between the two.
Hacking away In March 2002, then-new investment banking chief Adebayo Ogunlesi stood before an auditorium full of CSFB bankers and told employees that CSFB had 25 to 50 percent more senior managers than comparable Wall Street firms, and that cuts would be necessary and made swiftly. Less than one month later, CSFB cut 300 investment banking jobs, which according to an internal memo, “covered all levels of professional staff, every product and industry group.”
The new deal The year 2003 started out with a sale, as CSFB agreed in January to sell its stockclearing unit, Pershing, to The Bank of New York. CSFB had inherited the Jersey City, N.J.-based Pershing, which handles 10 percent of NYSE trades, when it acquired DLJ in 2000. CSFB completed the transaction in May 2003 for $2 billion in cash, together with the repayment of a $480 million subordinated loan. Still, the company posted mixed results in 2003. CSFB retained the number one position again in global high-yield corporate debt issuance, raising $22.8 billion from 123 issues, a 135.3 percent increase from 2002. CSFB also maintained a top-five position in global IPO issuance, bringing 20 new issues to market in 2003 and raising $3.6 billion in proceeds. This performance was good enough to jump one spot in the league tables to a No. 3 ranking, behind Goldman Sachs and Citigroup. However, CSFB fell to the No. 7 spot in global M&A activity in 2003, down from its No. 4 ranking in 2002. The company completed 257 deals, but the value of those transactions totaled just $145.1 billion, about half of 2002’s total value. A November 2003 Investment Dealers Digest article noted that Christopher Lawrence, one of CSFB’s former telecom banking heavyweights, was promoted to the title of “chief
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strategic officer” of its parent company, Credit Suisse Group. The article said the move signals to some observers that CSFB’s telecom banking activity, which has fallen in M&A and some other league tables, is becoming less important to the firm. CSFB did manage to stay within the top five banks in global common stock issuance in 2003, with 50 deals raising $6.49 billion in equity. Nonetheless, the bank fell two places to No. 5 from its No. 3 2002 ranking. Despite falling in the ranking within some categories, former CSFB CEO John Mack noted in a November press release that he was pleased with the cost-cutting that has occurred over the past two years. Mack also noted that stronger revenues from high-yield debt and credit trading helped to keep operating income flat during the first three quarters of 2003, compared with the previous year’s results.
Brining out the dead In March 2003, CSFB announced that it’s considering a move that would separate its research unit into an independent firm called DLJ Research. According to a confidential CSFB memo cited by The Wall Street Journal, the impetus behind the proposed move is to “take advantage of the opportunity stemming from the current regulatory scrutiny of research produced by analysts affiliated with investment banks.” Internally, the proposal was called “Project Independent Research,” which if set in motion could prove to save the firm some of its fines. Under the $1.4 billion settlement with regulators, $450 million will be used to fund independent research firms. So, if DLJ Research is hatched, then some of the $200 million CSFB paid out will, in effect, be returned to its pocket.
Mining the research A huge resource and selling point for CSFB is its award-winning research division. In the 2002 Institutional Investor Global Research Team research poll, CSFB tied with Morgan Stanley as the top bank overall, with 21 total positions, up from 18 in 2001. Additionally, in the 2003 Institutional Investor All-America research poll, CSFB took sixth place – tied with Goldman Sachs – with 27 team positions and five first-teamers. Finally, in the Greenwich Associates U.S. survey of 2002, CSFB’s research unit was ranked second overall.
Judging Frank Perhaps no other name on Wall Street appeared in headlines more in 2002 and the beginning of 2003 than Frank Quattrone. In February 2003, immediately following 136
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news that Quattrone would face federal obstruction of justice charges, CSFB placed him on administrative leave. The charges signaled that Quattrone might have known authorities were investigating him when he sent e-mails in December 2000 telling employees to “clean up” their files. Just a month after being placed on leave, Quattrone officially became an ex-CSFB employee, resigning from the firm at which he made over $200 million in fewer than four years. He resigned amid no less than three investigations, including a criminal one into his involvement in CSFB’s IPO practices before the burst of the Internet bubble. In a statement, CSFB said that Quattrone’s resignation was in the best interests of both parties. Two days after his resignation, Quattrone received some more bad news: he was charged yet again. The NASD accused him with using healthy shares in IPOs to gain business for CSFB and pressuring analysts to write favorable reports on client companies. In January 2004, The Wall Street Journal reported that lawyers for Quattrone filed an appeal seeking to change the judge in his planned retrial on obstruction of justice charges. Richard Owen, the federal judge in Manhattan who presided over a mistrial in October of charges against Quattrone, was set to preside on the retrial of the previous case, which resulted in a hung jury. Quattrone’s lawyers said that Owen showed pro-prosecution bias in the previous trial. Owen did preside over the retrial, which resulted in a guilty verdict on three accounts. Quattrone now faces up to three years in prison. His sentencing is set for September 2004.
Out with the old? Perhaps in a move to show that CSFB is finally moving forward with new blood, CSFB announced in a December 2003 press releases that it had appointed 125 new managing directors. What’s more, it appears as if poor performers aren’t being cut much slack, either. The New York Sun reported in January 2004 that CSFB fired two senior bond traders as a result of a bad trade of $8 million worth of adjustable-rate mortgage derivative bonds called an interest-only strip, citing unnamed senior CSFB bond officials. CSFB said the dismissals weren’t the result of the movement of a “money-losing” trade from one account to another, but as a result of a difference of opinion regarding an employee trade with the firm.
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GETTING HIRED
Marked to market Like its competitors, CSFB’s demand for workers “depends on the state of the industry” and “is somewhat cyclical.” “Right now in the cycle,” explains a CSFB source, “we, along with most of the investment banks, are looking to staff up at the junior level to support the expansion of the business, which means more positions. It’s the typical overhiring then overfiring cycle that is replicated at pretty much all investment banks.” Another contact agrees, adding, “I don’t believe it’s any easier or harder to get hired here than at any other major investment bank in New York at the moment.” Still, getting a job at CSFB can be difficult in that even with the increased demand for bankers, there are “lots of eager and smart candidates for not that many positions.” To land desirable applicants, CSFB actively recruits analysts at “most of the traditional target schools,” including the “Ivy Leagues, plus some of the larger regional universities such as Michigan, Duke and Chicago.” Associates are typically drawn from “only a select number of schools,” including “Wharton, Chicago, Stern, Columbia, Harvard and Fuqua,” as well as top law schools. However, the bank does hire outside the universe of its “core” schools, and “strong students” attending other institutions are encouraged to apply. In addition to having strong credentials, spending a summer at CSFB “is really a big stepping stone to getting hired,” says one source. In fact, depending on market conditions, it may be the only way to land a full-time position; one associate in sales says that for his year, “there were no offers outside of the summer class.”
Called in for questioning Successful CSFB applicants normally sit through “two to three rounds of interviews” before receiving offers. The first round is typically on campus, with the second and third rounds often conducted “Super Day” style at the firm with multiple back-toback interviews (several sources report meeting about six professionals during both the second and third rounds). The process can involve meeting all levels of CSFB employees (analysts to managing directors) and is described by insiders as “very competitive,” “very thorough” and “fair.” Interview questions “vary depending on the interviewer,” but tend to focus on determining “the candidate’s enthusiasm and willingness to learn on the job.” To this 138
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end, one contact warns that “interviewers always want to know why the candidate is interested in working in the specific department.” Another source reports that most of the questions are geared towards “fit” rather than “technical” knowledge. Still, CSFB interviewers may test a candidate’s financial and market knowledge, with emphasis on the skills that would be used in the particular position being sought. One investment banking associate remembers that “there were a good deal of questions that probed my understanding of finance and the concepts integral to financial analysis, such as problems involving net present value.” An associate seeking a position in CSFB’s research department “took a writing test” and answered “technical accounting questions.” The source also reports being asked, “How would you go about researching a stock?” and “What is the greatest challenge you’ve overcome?” In addition to personality and technical questions, a candidate’s reading habits might be tested; one current staffer was asked, “What was on the front page of today’s Wall Street Journal?” Questions may also be a bit off the beaten path. CSFB staffers heard, “If you could invite any four people in the world to a dinner party tonight, who would they be and why?” and “Are you motivated by making money?” To get summer stints, candidates generally sit through two rounds of interviews and are posed “both behavioral and quantitative questions.”
OUR SURVEY SAYS
One for all CSFB’s culture is in flux, moving from an environment where individual groups were run separately to a management-driven team atmosphere where “cross-selling” is critical to everyone’s success. Before CSFB merged with DLJ, the firm didn’t have “a cohesive, identifiable culture.” Management’s new approach “has changed the feel of the bank” and has “made it a [friendlier] place to work,” but the culture is “still evolving” from a “nasty aggressive investment bank” to a “team-oriented” institution. “There is some teamwork, but people are mostly focused on their business,” says a source. “Although [former CEO] John Mack [had] made some headway in breaking down the silo mentality here, it still has a long way to go.” Still, the old firms-within-a-firm culture is breaking down, and today there are programs in place intended to create a “one-firm” atmosphere. “For example,” says Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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an insider, “associates used to be hired into specific groups, but now there is a generalist associate pool where all associates work on the same floor and work across groups for their first 10 months. After that, they’re placed into a specific group.” The move towards one firm hasn’t meant that CSFB has lost its ability to “embrace individual achievement.” “Innovation has always been one of the hallmarks of CSFB,” declares an associate, “and you still can see that people can think for themselves and we don’t have ‘Stepford bankers,’ like some other bankers, who seem to be a bit cultish in their worship of their firm.” There is a complaint, however, that the firm’s culture is being “overtaken by the legal and compliance department’s aggressive policing of behavior.” The day-to-day “work hard-play hard” atmosphere at CSFB can be “intense and challenging,” says an analyst, but “all in all, [it’s] a relatively fun place to work.” Many view the firm as a “meritocracy,” and “as with any investment bank, the environment is pressured and political” but can also be “social and warm.” CSFB staffers see each other as “capable and hard-working,” with “the most striking aspect” being “the level of intelligence and respect everyone has” for each other. Overall, the “firm is on an upswing,” says an associate. “Things were pretty bad, say, two years ago, but with the company very profitable again, a great management team in place and a lot of initiatives to attract and retain the best people, CSFB is definitely a great place to work again.” CSFB’s dress code is business casual, but the suits come out “when taking companies around or meeting with certain clients.” More senior staffers have “pretty much abandoned casual dress,” and so “an easy way to favorably distinguish yourself is to model your attire on what you see on the more senior people in your group.”
Outwit, outplay, outlast For summer staffers, the 10 or so weeks spent at the firm can be a mix of training and education as well as “live transactions.” In addition, summer interns in certain groups (such as sales and trading) rotate throughout the summer to learn about various positions within the departments. Sources report varying degrees of responsibility, with one investment banking analyst saying he was treated like a fulltimer and did the same type of work as “a first-year analyst – running models, creating pitchbooks and attending client meetings.” On the flip side, an associate in sales says, “We had to do a couple presentations throughout the summer but we mostly were on the desks observing.” The contact adds, “The internship is mostly a 10-week job interview where you’re trying to impress but not screw up. One of our 140
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summer managers compared it to the TV show Survivor. You want to be impressive but not stand out so that you get kicked out.” For those who get it, however, summer responsibility has the potential to be daunting. A former summer associate reports that “since the department I was in was fairly understaffed, I was acting as the primary associate on two deals.” “It was a lot of responsibility,” he continues, “including accompanying senior management of a company we were working with on their equity and high-yield roadshow.”
Training to get better… First years begin their employment with CSFB with a six-week training program. This includes reviews of financial concepts and products, group presentations and “in-house training for many of the financial and regulatory exams” staffers must pass, including the “Series 63, Series 7 and the CFA.” Though CSFB’s training program used to be derided, today’s employees consider it “great,” “exceptional,” “very thorough” and “one of the best on the Street.” After the formal training period is over, CSFB offers continual training that isn’t as highly regarded as the initial program. The biggest complaint seems to be that “many classes last half a day, which makes it hard for a first year to step out and attend.” On the job, the general sense is that experienced “people are willing to answer questions and provide advice.”
And managing to improve Employees’ opinions of senior CSFB personnel are generally positive, though some recognize there is room for improvement. Junior bankers typically find their superiors “friendly, helpful and open to questions.” “Though CSFB is, even by investment banking standards, a relatively hierarchical firm, relationships between managers and their subordinates here tend to be cordial and generally based on a mutual respect,” says a junior banker. “Senior management continues to make an effort to improve communication within the firm and to provide junior staffers with a more significant voice in firm activities.” Others look at their leaders from more extreme perspectives. “The managing directors here are incredible,” says an awed associate. “I came from the military, which obviously puts a premium on leadership, and these guys would challenge the best leaders I met in the Army.” On the other side of the spectrum, a source feels “that the firm is still lacking leadership in certain areas. There is a lot of talk about the need to invest in people but I haven’t seen it yet outside of our initial training. The lack of feedback and interaction make it very difficult to determine where you Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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stand at times.” Another who yearns for a culture come and gone gripes, “I wish more old DLJ bankers were here.” And then again, some feel CSFB management is just about average. “I don’t think our firm is particularly better or worse than the rest of investment banks – no matter what other people may tell you,” expresses one contact with a touch of cynicism. “You are a resource to make these people more money and if you are successful at that, they will treat you like a king. If you become less useful to them, they will discard you for someone else who can help them more. Assume no such thing as loyalty exists and you will be fine.” Another employee puts things a bit more gently but agrees that “the more successful you are, the more coddled and well treated you are by managers.”
Saving face time As in keeping with the rest of the industry, CSFB employees work hard and can experience some very long days. It’s no secret that “the hours in investment banking compared to other industries [are] undoubtedly bad,” says an investment banking associate who works 70 to 80 hours per week and frequently on the weekend. “That being said, we all know what we are signing up for and, in fact, during the interview process one of the things they continually try to get you to discuss is whether you understand the hours involved and how you plan to cope.” An analyst who puts in 80 to 90 hours per week concurs, “We work hard here,” but it’s “no surprise you work a lot of hours per week in banking.” Junior research analysts also keep long hours, with “late nights, weekends and early mornings that occur on a regular basis as dictated by market events.” The good news for CSFBers is that there seems to be “little or no pressure for face time.” One investment banking associate feels that his “long hours usually represent real work rather than just showing your face.” Employees in groups other than investment banking report the same stance on face time, but many of them have the benefit of somewhat better hours. A trader says his “hours are usually [market] hours, but I occasionally work longer if there is something significant happening in the marketplace that requires additional attention or research. If I work late, it’s because there’s something interesting to look at, not because I have to put in face time.” CSFB sales employees report similar experiences. Still, a junior staffer in any group should plan to work hard. “Many days I eat lunch at my desk and constantly have work to do,” states a sales analyst who normally works from 6:30 a.m. to 6:30 p.m.
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Buoyed by expectations set in the recruiting process, employees are generally content working in New York. One banker with perspective, however, doesn’t look back at his days in the Big Apple with a lot of fondness. “Life in the Australian office is very different from New York,” he says. “While in New York, I averaged 80-hour work weeks. Not only that, but if anybody left work at a decent time – earlier than 10:00 p.m. – it was almost like you had to have a good excuse, otherwise you were thought of as a slacker. As you move up levels and particularly if you get out of New York, this kind of culture improves drastically.”
Workers’ compensation In general, CSFB professionals could be happier with their paychecks. Many bankers’ salaries seem to be “slightly below industry average,” and one source gives a reason why. “I think CSFB has tried to raise its financial performance for the Credit Suisse shareholders and, as a result, has underpaid its investment banking professionals in comparison to the Street,” says a vice president. “In 2003, I believe we were in the lower half of the industry and until people start leaving as a result, management will continue” the practice. One good piece of news is that the “firm has eliminated multi-year guarantees, which tended to eat up the bonus pool in the past.” Not all employees are terribly dissatisfied with their compensation, however. One staffer believes “CSFB offers salary levels that are competitive with peer investment banks,” and another’s wages are “well above the average of the bank” because he is “in a very successful group [the trading division] with its own payout structure.” Summer analysts and associates are compensated at “rates in line with full-time graduates.” As for retirement benefits, CSFB offers a 401(k) program, but some believe CSFB “does not match very generously.” CSFB’s contributions are determined in part by “the firm’s overall ROE [return on equity] performance for the year.” Upon certain promotions (vice president and above), employees receive stock options. One vice president has “25 percent of bonus paid in phantom stock,” which he says creates “an incentive to stay.” He also remembers that “in the past, merchant banking deals have been offered to employees.” Employees are generally pleased with the perks they receive at CSFB. “In New York, the building [11 Madison Avenue] is amazing,” says an insider. “They basically provide everything possible within the building so people never have to leave.” The amenities include a “gym, cafeteria, bank, shoe shine/repair, hair salon, dry cleaning,” and “they even sell Metrocards [for the subway] and have a nursing room.” The presence of an in-building gym “is both positive and negative,” Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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according to one employee. “Since there is a gym, on-site employees are not offered corporate accounts to other gyms. Therefore, we are afforded the convenience of not having to leave the building to exercise during the week, yet have to commute to the city if we want to workout on the weekends.” The gym (which one contact views as “fantastic”) is subsidized with the monthly fee determined by a “sliding scale based on title.” The meal allowance is deemed “very cheap” by one hungry banker, but another finds the cafeteria “quite good.” For additional perks, including “free admission and discounts to Broadway shows, operas, museums and retail stores,” there is a “Work Perks web site that has all kinds of discounts at all times.” In London, there is an “excellent gym” as well as standard meal and car service perks.
Superficially splendid CFSB’s office at 11 Madison Avenue in New York is a “beautiful building” that has a “gorgeous lobby,” which unfortunately “welcomes you to relatively sterile office space” with a “very cold atmosphere.” Some see CSFB’s office in a different light. “Our offices are very nice,” stresses one impressed employee. Another shrugs and says simply, “We have a nice building and, frankly, cubicles are cubicles everywhere I suppose.” Traders report that the trading floor is “fairly standard for an investment bank,” offering “little room to their employees.” One highlight is the presence of “mini-cafeterias on the equity and fixed income trading floors.” A contact in research notes that “the department recently lowered the walls of all cubes to promote a more friendly and collegial environment.” In London, one banker says, “the entire building is quite modern and attractively furnished.”
Old boy network no more Like many firms on the Street, CSFB is focusing more on improving diversity in the workplace. “Our CFO and several members of the operating committee are women and we were even voted as one of the top firms to work for by Working Mother magazine,” observes an associate. “The old boy network is pretty dismantled.” Still, some reminders of that network remain, as there are “few women in higher management” positions overall. But the firm seems to be doing “everything from running seminars, specific recruiting trips and special privileges to attract more female employees to move up into management.” With respect to actively recruiting and hiring women, CSFB’s workplace is “getting better” and, once they take the jobs, female employees generally report being treated fairly. “I don’t think anyone here sees employees as man or woman,” says a female analyst. “We are all equals and all treated the same.” 144
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As for improving diversity with respect to African-Americans, “CSFB has made tremendous strides,” says an associate. “There is a global diversity office and the firm has several programs to attract and retain minority candidates, including scholarships, explorer programs, firm sponsored employee networks, etc. In term of senior management, some of the most senior bankers at the firm are people of color. I myself am African-American and feel very comfortable here.” CSFB has also been “cited with praise for its leadership in” promoting a comfortable workplace for gay and lesbian workers. One source says that the firm “actively recruits gays and lesbians and hosts functions.”
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V A U L T
10
Lazard
PRESTIGE RANKING
30 Rockefeller Plaza New York, NY 10020 Phone: (212) 632-6000 Lazard & Co., Limited 50 Stratton Street London W1J 8LL United Kingdom Phone: +44(0)20-7187-2000 Fax: +44(0)20-7072-6000 121 Boulevard Haussman 75382 Paris Cedex 08, France Phone: +33(1)-4413-0111 Fax: +33(1)-4413-0100 www.lazard.com
DEPARTMENTS Asset Management Capital Markets and Alternative Investments Investment Banking
KEY COMPETITORS Goldman Sachs JPMorgan Chase Merrill Lynch Morgan Stanley
UPPERS • Prestige; “great name recognition”
DOWNERS • Time spent out of the office is minimal
EMPLOYMENT CONTACT www.lazard.com/career_opportunities
THE STATS Chairman: Michel David-Weill Head: Bruce Wasserstein Employer Type: Private partnership No. of Employees: 2,500 No. of Offices: 29
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “A European, mini-Goldman” • “Great at M&A, especially given their size” • “Arrogant; cruising for a spectacular breakup” • “Restructuring powerhouse” 146
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THE SCOOP
A trusted name Lazard might be called the classic advisory boutique, specializing primarily in providing mergers and acquisitions advice. Unlike the more integrated bulge bracket firms, Lazard has built its reputation on experience, instead of its balance sheet and underwriting abilities. Despite the firm’s specialization, Lazard’s profits and influence are hardly limited. Quite the opposite, in fact: Lazard is known for its superstar culture, and its elite, well-connected bankers are known as the trusted advisers to the princes of business. The firm touts itself as “the only private partnership in global investment banking.”
French bred The Lazard family’s U.S. business ventures can be traced back to 1848, when the clan immigrated to the United States from France and opened a dry goods enterprise in New Orleans. In 1849, the family moved to San Francisco after a fire destroyed the New Orleans operation. The Lazards arrived just in time for the gold rush and the resulting economic boom caused by arriving prospectors. The company began banking operations in Paris in 1852, adding offices in London in 1877 and New York in 1880. Much of the firm’s growth is attributed to Alexandre Weill, a cousin of the Lazards who opened the New York office. The company has remained in the hands of the Weill family for more than 120 years. Michel David-Weill (the family hyphenated the family name in the 1920s to add aristocratic luster) took the helm in 1977.
Internal conflict David-Weill’s leadership of the firm came under fire in the late 1990s, forcing him to change the structure of the firm to placate investors and partners. Several highprofile partners (including Edouard Stern, David-Weill’s son-in-law) left the firm, reportedly amid complaints about David-Weill’s leadership style and the firm’s direction. Lazard Fréres (as it was then known) underwent a sudden reorganization. The firm’s three main offices (in New York, London and Paris) were consolidated and managed by a seven-member executive committee headed by David-Weill. Additionally, the firm dropped the Fréres, becoming known internationally as Lazard. Finally, David-Weill agreed to appoint a CEO who would manage some of Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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the firm’s day-to-day operations. After a short search, David-Weill settled on Lazard veteran William Loomis, the first American to be name CEO. Still, complaints by Lazard partners and outside shareholders continued, with some requesting a public offering or additional changes to the firm’s ownership structure and compensation structure. Some were upset at David-Weill’s take (it was reported that he was paid approximately $100 million) and the overall firm compensation formula, which heavily rewarded offices that did well. (Since the New York office was generally the most successful, this formula had the effect of rewarding New York and U.S. partners disproportionately.) As a concession to critics, Lazard’s outside ownership structure was simplified. Nevertheless, Lazard’s strife resurfaced in late 2001 after Loomis resigned suddenly in October. The firm said Loomis wanted more contact with clients and time to pursue personal interests, but observers saw him as another casualty in the Lazard power struggle. According to The Wall Street Journal, Loomis never enjoyed widespread support and was caught in a struggle between David-Weill and London and Paris partners. The renewed bickering gave David-Weill’s old nemeses, French industrialist Vincent Bollore and UBS Warburg, the chance to make another play for the firm. Bollore began buying up shares in Eurazeo while UBS was upping its interest in Immobilie’re Marseillaise. (Both companies are part of the intricate web of Lazard owners.)
Wasserstein steps in Facing dissension, David-Weill again hoped to quiet critics by naming a new head. Lazard named Bruce Wasserstein, the star founder of M&A powerhouse Wasserstein Perella, as CEO in January 2002. Wasserstein had sold Wasserstein Perella to Dresdner Bank in January 2001 for $1.4 billion and resigned from the company in November 2001 after an altercation with Dresdner’s management. Wasserstein didn’t need much time to shake things up. He held the first ever meeting of the partners in each office and, according to The Wall Street Journal, declared to employees at the meeting, “No more politics.” Since taking over the Lazard helm in January 2002, Wasserstein has expanded operations in Europe, and even brought in an Italian partner (IntescaBCI’s $300 million equity infusion). While other banks shed staffers, Lazard under Wasserstein lured more talent and brainpower. Incoming partners were attracted to Wasserstein’s promise of big paychecks and the ability to cash in on equity packages if the firm were to sell or float on the market. In fact, Lazard distributed 60 percent in new equity to its 150 partners during the year. New 148
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dealmakers on the Lazard payroll now include Archie Norman, former chief of Asda and a conservative MP in the British Parliament, and Richard Wyatt, former head of Schroeder Securities, who Wasserstein plucked from Citigroup. More recently, Gary Parr and Bill Lewis, both former Morgan Stanley bankers, joined Lazard. Wasserstein’s progress appears to be holding. After getting a fortunate boost from the $60 billion Pfizer/Pharmacia merger in 2002, the firm jumped from the No. 15 spot to the No. 3 spot in worldwide mergers and acquisitions, according to Thomson Financial. In 2003, the firm hung around the top 10 list, ranking No. 6 with over $154 billion in M&A transactions. Lazard was also involved in a couple of big U.S deals, including the $10.4 billion take over of John Hancock Financial Services by Manulife Financial. In the first half of 2004, Lazard again went big, advising JPMorgan Chase on its $58 billion acquisition of Bank One, and Belgium-based Interbrew (the producer of Rolling Rock and Beck’s, among others) on its $11 billion merger with Brazilian-based AmBev.
Wasserstein’s no holds barred A difficult task that Wasserstein faces is the simplification of the company’s labyrinthine corporate structure. David-Weill controls Lazard through a shareholding structure that involves a web of companies. If Wasserstein wants to float the company in the market or make it attractive to suitors, this structure will have to be transformed. Already, the changes have caused a stir with David-Weill and outside investors. Under the current structure, working partners own Lazard’s goodwill while capital partners have a stake in the firm’s net worth. By building up the business with star talent, Wasserstein is insisting that working partners get their bonuses paid first, causing furious capital partners like David-Weill to see smaller profit shares. Wasserstein’s presence has also irritated a few insiders by trying to shift Lazard away from an old-school, individualistic star culture. In early 2003, William von Mueffling, the (now former) head of Lazard’s hedge fund division, turned in his resignation letter. The trouble within Lazard Asset Management (LAM) began when Wasserstein decided to distribute equity to the unit’s employees. Hedge fund guru von Mueffling, referred to as a “rock star” by Street analysts, thought he and his team should get a significant portion of the equity. Von Mueffling’s reasoning was this: Even though he and his team held only 8 percent of LAM’s total assets under management, they accounted for a large part of LAM’s revenues and profits. To von Mueffling’s chagrin, his crew was offered a much smaller percentage. As a result, in mid-January 2003, von Mueffling left the firm. Six of his employees soon followed. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Lazard’s restructuring unit in growth mode When the economy suffers and an increasing number of firms begin to file Chapter 11, Wall Street’s restructuring bankers cash in. Companies that have expanded beyond good reason or fortune typically look for advice from eager restructuring advisors like Lazard. Bankers Barry Ridings and Frank Savage have built the firm’s restructuring unit into the leader in the industry. Ridings and Savage joined Lazard from Bankers Trust in 1999, and today, Lazard’s restructuring business is nearly 10 times as large as it was when they joined. In Europe, the group advised on Marconi’s $6.3 billion debt-to-equity swap, Swissair Finance’s sale of Gategourmet and the debt restructuring of Versatel. In the U.S., Lazard’s clients have included Worldcom, Adelphia, Owens Corning and the Conseco bondholder committee.
Independence in question? In January 2004, Lazard confirmed its agreement to purchase U.K. brokerage firm Panmure after months of negotiating with its seller, the troubled German bank WestLB. Panmure, founded in 1876, will operate under its own name within investment bank Lazard’s capital markets division. For Lazard, the move was strategic. Owning a corporate broker will allow Lazard to not only sell merger and acquisitions advice to its existing client base but to also encourage new clients to come in the door. Panmure’s 70-strong client list has a few big names such as Associated British Foods and Safeway, but is made up mostly of small and mid-sized companies.
GETTING HIRED
College is king Lazard recruits at only the top business schools and undergraduate colleges. Harvard, Wharton, Columbia, Chicago, Stanford and Berkeley host MBA recruiters from Lazard. For undergrads, the firm recruits from those schools and others, including Yale, Princeton, Duke, Barnard, Georgetown, Michigan and Illinois, among others. Sources say “there’s a very strong representation of Wharton and Princeton at all levels” inside the firm. Another says, “Most Lazard people are from the Ivy League, UVA or Duke. It’s mainly a Northeast crowd.” A recruiting schedule
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for investment banking and contact information for other departments are available at the firm’s web site, www.lazard.com. Lazard’s full-time analyst and associate recruiting process is pretty standard. First, says a contact, “we go to campuses and give a presentation. We say this is who we are, and we’re coming back on so and so date to do on-campus interviews.” After those initial on-campus interviews, which are usually two-on-ones, Lazard “brings back a select group for a Super Saturday in [their] offices, where recruits will meet with five to six bankers for 30 minutes each, in mostly one-on-one interviews.”
Not what you’d expect At a prestigious bank like Lazard, you might expect interviews to include some tough technical questions. But this isn’t the case, say insiders. “I found the interview process to be quite informal,” says a recent hire. “Interviews are relaxed.” That contact adds that the interview with her future boss was “completely fit-based – no technical questions.” One Lazard source who’s conducted several interviews agrees, saying, “Interviews are fair. I don’t believe that undergrads should know all sorts of technical stuff. We’re not going ask technical questions to a history major at Brown. We might, though, ask where they think they’ve learned analytical skills, or to tell us about a group project.” A recent interviewee says, “My interview was very straightforward. I don’t think these guys want to hear BS about culture; they want to hear that you are willing to work ridiculously hard and that you have the ability to hit the ground running.” The contact does say that his “interview was a bit more technical” than others, but admits, “Maybe that was because I have a finance background.” Could be. According to one insider, “Lazard believes you can teach all that technical stuff to bright people. So we give [recruits] a chance to talk, to tell us what they’ve been taught.” Even so, expect a few questions to include some numbers such as, “How many hours are in a week?” and “What would you say if I told you that you’d be working on average almost 120 of them?” (Answers: 168 and “Sounds good.”)
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OUR SURVEY SAYS
It’s not all kegs and mixers Lazard “doesn’t have as much of a frat guy culture as other firms,” says one insider. “It has a more professional atmosphere – it’s really quiet.” Insiders say this low-key vibe is a result not only of the mentality of the firm’s senior bankers, but also of the physical layout of the place. Lazard “doesn’t have huge bullpens with 200 people sitting in an open space where people are throwing a football back and forth like there are at bulge bracket firms,” explains one source. “At Lazard, at most four analysts sit together in a pod. You go in there, get your work done, and get out of there. People aren’t hanging out and f**king around as much as they do at other places. There was no peer pressure to throw around the football.” Even after working hours, the firm has a less fraternal atmosphere than other banks. “People don’t go out with co-workers as much as at other places,” explains one former employee, who adds, “It’s not because people are mean or snobbish, but I guess they figured they spend enough time with each other at the office.” That said, another source describes the firm as “kind of like Goldman, with a club to go with it.” He adds, “It’s a little too touchy-feely and very politically correct.” Explains a former analyst, “It’s tough to make generalizations [about the culture] anymore. It’s becoming a very motley-cultured place. And it’s constantly changing, so it’s tough to determine what your experience will be like, because groups are so diverse and have completely different cultures.” The contact explains further: “By far the biggest money maker has been the restructuring group, which used to be the restructuring group at Alex.Brown. That brought in a completely different culture. Plus, Wasserstein has brought in his guys, too, so there’s a ton of First Boston boys who all used to work with Bruce at First Boston during the 80s. And now, there are many old Merrill guys, too.” Bruce has certainly had a strong affect on the firm. “Wasserstein’s arrival has provided a ton of momentum, “ observes an insider, “and has really given some direction to a firm that previously suffered from legendary internal power struggles.” However, some say internal struggles remain. One current employee who admits that “Lazard is a solid firm,” says “they do have had a lot of senior management upheaval.” Even so, she adds that the aesthetics around the office aren’t bad. “The people are intelligent and pleasant and, overall, they are extremely good looking. Everyone is preppy and well-dressed.”
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Money talk “During the last few years compensation has been all over the place,” says one insider, “but generally, Lazard is known for paying better than the Street.” Another source agrees, saying, “The salary package is on the high end of comparable companies.” But not everyone thinks Lazard doles out the goods. “They pay employees relatively poorly,” says a current employee. No matter what your paycheck looks like, “you will work your ass off,” says a former summer intern. “I did roughly 80 to 120 hour weeks – more than anybody else I knew on the Street — and only had about 5 days completely off the whole summer.” That said, the contact did get to “work on one of the top 10 biggest deals ever” and the “experience of running a deal and of dealing directly with partners.” He adds, “If you can come to terms with [the long hours], there is no better summer opportunity in the world, and there is no experience that will open more doors for you down the road.” Like Lazard’s culture, though, hours vary from pod to pod. “It’s all dependent upon group,” offers one contact. “But if I have to generalize, I’d say hours are the same as everywhere else.” Something you won’t get everywhere else is “personal attention – the admin person knows who you are,” says a Lazard contact. “The firm is good about handling all the little stuff. You don’t get nickel and dimed like you might at big firms. And you don’t get lost like you might at Citigroup or Merrill.” One source says other perks include “free transportation home after 9 p.m. and $20 dinner allowances.” Training receives good marks from employees as well. The firm’s formal six-week analyst training program is “very good,” says one former employee. “They bring in all kinds of professors from different schools to teach business skills, accounting, etc.” The contact adds, “And bankers teach you Lazard-specific stuff such as building merger models and leading a restructuring.”
Small, safe and booming Lazard is a “much safer place to work as far as cuts go,” says a former banker. “It can absorb more pain – because it doesn’t have massive overheard.” That’s because Lazard is just an advisory firm. It doesn’t underwrite securities, and it doesn’t provide research. As a result, the firm is “in a good position,” says one source. “Other places are out of favor because of their research, insider trading and underwriting problems.” However, adds the contact, “a few years ago, during the Internet boom, we weren’t as flexible. Other banks were cashing in.” This could be seen as a downer about working at Lazard, which doesn’t “do as well in boom times, but doesn’t do as bad in down times.” Another banker paints a similar picture. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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“While Lazard didn’t soar the way some of its competitors did during the bull market,” he explains, “today its pure advisory model is winning a ton of business.”
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“If you can come to terms with [the long hours], there is no better summer opportunity in the world, and there is no experience that will open more doors for you down the road.” — Lazard insider
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V A U L T
11
UBS Investment Bank
PRESTIGE RANKING
299 Park Avenue New York, NY 10171 Phone: (212) 821-3000 www.ibb.ubs.com
DEPARTMENTS Equities Financial Control Fixed Income, Rates and Currencies Information Technology Investment Banking Operations
THE STATS Chairman & CEO, UBS Investment Bank; Deputy CEO, UBS AG: John P. Costas Employer Type: Subsidiary of public company, UBS AG No. of Employees: 15,700 No. of Offices: 60
KEY COMPETITORS Citigroup Credit Suisse First Boston Deutsche Bank Goldman Sachs JPMorgan Chase Lehman Brothers Merrill Lynch Morgan Stanley
UPPERS • “Working for a growing franchise” • Opportunities for junior personnel to take on significant responsibility • Strong global presence
DOWNERS • “Hours can be brutal” • Organizational structure often “bureaucratic” • Loses some high-profile deals to more established competitors
EMPLOYMENT CONTACT
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
Human Resources UBS Investment Bank 677 Washington Boulevard Stamford, CT 06901 Phone: (203) 719-3000 www.ubs.com/graduates www.ibb.ubs.com/careers
• “Up and coming” • “A bunch of transplants from other banks” • “They’re only going to get stronger” • “Weak in the U.S.” 156
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THE SCOOP
Coming to America UBS Investment Bank, formerly known as UBS Warburg, represents the investment banking operations of UBS AG, the global financial-services giant with more than 65,000 employees worldwide. Like other huge banks, UBS offers a full suite of financial products and services. In addition to UBS Investment Bank, its business groups include UBS Wealth Management USA, UBS Wealth Management & Business Banking and UBS Global Asset Management. In May 2000, UBS listed its shares on the New York Stock Exchange, underscoring the plans it had for expansion and acquisitions in the U.S. (At the time, UBS CEO Marcel Ospel told CNBC that the NYSE listing would enable the company to “act in the United States on the acquisition front.”) The firm didn’t disappoint: Soon after, UBS acquired PaineWebber for $10.8 billion, and since, the firm has been making a huge push to become a major force in U.S. For the most part, UBS has largely been successful, and has also avoided the layoffs that have plagued many of the largest American financial firms in recent years. In November 2002, UBS announced that the Warburg and PaineWebber names would be officially retired by mid-2003, at which time UBS Warburg became known as UBS Investment Bank, and UBS PaineWebber (the U.S. wealth management arm) became UBS Wealth Management USA. The move to a single brand name reflected UBS’ goal of presenting an integrated “one firm” global business model.
Swiss history The company’s history begins in 1897 with the founding of the Swiss Bank Corporation (SBC). SBC soon expanded internationally; the London office, the bank’s first outside Switzerland, opened in 1898. By the 1990s, SBC had established alliances or subsidiaries in the world’s major financial centers. Over the following decade, the firm became a major player in the investment-banking world by purchasing the securities business of S.G. Warburg Group, a firm started in London in the 1930s by Siegmund Warburg, a German fleeing Nazi persecution. The investment banking division of the new firm had the moniker SBC Warburg, which expanded into the U.S. with its September 1997 acquisition of Dillon, Read & Co., a New York-based investment bank founded in 1832. The investment banking division became SBC Warburg Dillon Read. In June 1998, SBC merged with UBS (Union
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Bank of Switzerland), taking the name UBS AG. UBS formed in 1912 by the merger of two regional Swiss banks, the Bank of Winterthur and Toggenbirger Bank. Early analysis of the UBS/SBC/Warburg combination wasn’t favorable, and much of the criticism was directed at the integration of SBC Warburg into UBS. Profits for 1999 were lacking and critics were vocal, most notably The Economist, which called UBS “a directionless and unhappy institution.” Things picked up in 2000 when UBS reported profits of $4.6 billion, an increase of 27 percent over the previous year.
Climbing the ladder Perhaps one symbol – albeit a negative one – of UBS Investment Bank’s position as a top-level I-bank: The firm was one of the banks included in the record $1.6 billion settlement of conflict-of-interest allegations involving Wall Street’s top players. UBS was fined $50 million and ordered to pony up an additional $30 million to provide independent research and education for investors. Nonetheless, UBS Investment Bank made headlines in 2003 in ways that are much more positive. In the prestigious worldwide M&A league tables, UBS moved up to the No. 7 slot from its No. 10 position in 2002, completing 226 transactions valued at $128.7 billion. In addition, UBS retained the top spot for the third consecutive year in the booming U.S. mortgage-backed securities market, with $104.1 billion in proceeds from 98 issues. According to data released by Thomson Financial in late December 2003, the growth in the mortgage market was due to low interest rates spurring extensive home loan refinancing. UBS picked up other accolades in 2003, too. In International Financing Review’s 2003 review, UBS received awards for its Global Emerging Market Bond House, Financial Bond House (Subordinated Debt), Swiss Franc Bond House, Asia Bond House and Asia-Pacific Equity House, according to a December 2003 company press release. Additionally, Institutional Investor cited UBS as having the best overall global equity research in its 2003 survey. UBS placed in 23 out of 29 research categories and took first place in aerospace, household products and personal care, mining, oil and gas, paper, tech software, telecom services, utilities and asset allocation. In a press release, Alan Hodson, UBS’ global equities chief, credited the firm’s success to the breadth and depth of its global research teams. Early in the year, in February 2003, UBS Investment Bank was honored as “Bank of the Year” by Investment Dealers’ Digest. In a cover story, IDD observed how the environment on Wall Street had shifted in the firm’s favor. “Today UBS’ bulgebracket rivals are busy defending their turf and trying to stanch their losses, while 158
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UBS is an up-and-comer. That makes it a place where bankers can help build a business and contributes to that intangible known as culture.” In July 2003, the firm picked up yet another big honor, as Euromoney named UBS the world’s best bank. According to the publication, “Even with global equity indices falling over the previous year, UBS had done well in its chosen markets in market share and financial returns. It has won private-banking client assets, as other banks have lost them.” Euromoney added that UBS “has risen to the top of the tree in foreign exchange, a market traditionally dominated by commercial banks, and in equities, traditionally dominated by the U.S. securities houses.”
Unhealthy news For the most part, UBS has avoided the large scandals that have plagued large financial firms in recent years. But they haven’t completely avoided them. In May 2003, federal investigators began looking into connections between UBS and a $2.5 billion accounting scandal at health care company HealthSouth. The U.S. House Energy and Commerce Committee wanted to know if UBS had any knowledge of the accounting scandal before it was made public. From 2001 to 2003, UBS advised on $2 billion worth of deals and, leading up to the public announcement of the accounting discrepancies, UBS’ health care analyst was bullish on HealthSouth’s stock. Additionally, UBS advised HealthSouth on a breakup plan that might have helped the firm avoid disclosure of the scandal. In July 2003, amid the investigations into possible ties between UBS and HealthSouth’s accounting fraud, UBS health care stock analyst Howard Capek resigned. Capek announced his resignation after UBS accused him of commenting on HealthSouth’s stock while the stock was restricted. In September 1999, Capek reportedly sent an e-mail to an institutional investor saying he “wouldn’t own a share” of HealthSouth stock. But from 2000 to 2002, when UBS was earning huge investment banking fees for its advisory work for HealthSouth, Capek issued a “strong buy” for HealthSouth stock.
Cutting down abroad, but still hiring in the States In July 2003, UBS announced it would lay off 500 employees, representing 3 percent of its global workforce, as a result of the poor equity markets and a decrease in merger and acquisition activity. Previously, UBS had avoided the sweeping layoffs other big banks had made in the midst of the lagging market, largely due to its parent’s strong balance sheet and its success in areas outside of investment banking.
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The cuts will mainly affect the firm’s European staff. Despite the layoffs, UBS plans to continue to selectively hire in the U.S.
Fortune tellers Although predicting the future is hardly an easy feat, UBS’ chief U.S. economist Maury Harris and his colleagues, James O’Sullivan and Susan Hering, were cited as being the most accurate market sage team in November 2003. Harris’ team was the most accurate of 30 forecasters who contribute to the CBSMarketWatch weekly consensus forecasts of key economic data. Separately, Bloomberg Markets magazine, in its November issue, cited the team as being the second most accurate among 62 economists in forecasting real inflation-adjusted U.S. gross domestic product for the 12-month period ending August 2003.
GETTING HIRED
Getting in is getting harder While insiders agree that landing a post at UBS Investment Bank is no easy task, there is some dispute over just how selectively the bank chooses its employees. According to some staffers, the hiring process at UBS is “difficult” and “extremely selective” with one source even saying the firm’s “selection criteria are as strict as I’ve seen in my career.” Other contacts, however, believe that while UBS is “fairly selective,” the firm is “open to a wider profile of candidate” and sometimes seems to “pick up a lot of leftover from the top firms.” One associate thinks that UBS “would like to be highly selective and is so during the process,” but the bank finds “that candidates turn us down for Goldman Sachs or Morgan Stanley.” Notwithstanding the firm’s difficulty in “hiring the best candidates,” the general sense is that its “quality of candidates is exceptional and improves every year.” In fact, a concept about which most insiders concur is that getting a job at the firm has gotten increasingly hard over the last three to five years as the firm’s “overall ranking has improved.” One factor helping the cause of would-be UBSers, however, is the current market upswing, which has increased the “need for Wall Street firms to hire more people.”
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UBS recruits heavily at a select group of “core” institutions which basically includes the nation’s “top” undergraduate and MBA programs. In addition, the bank has “‘non-target’ school initiatives,” which are led by “specially formed recruiting teams” consisting of alumni from particular non-core institutions. UBS also encourages any interested applicants to submit resumes through its web site.
Technically speaking, it’s about fit UBS puts full-time and summer intern candidates through two or three rounds of interviews before extending offers. First-round interviews are held on campus (or, in some cases, by phone) and are usually conducted by two UBS professionals of varying levels of seniority. For those candidates who sit through three rounds of interviews, the second round may be held on campus or at the firm’s offices. The final round is “typically a ‘Super Saturday’” at UBS’s offices “with four to six interviews with bankers at all levels.” According to UBS insiders, the hiring process has recently been restructured, and interviews are now “divided into a technical portion, team work, background and a casual dialogue.” Before the reorganization, many prospective UBS employees fielded a range of “general personality,” “complex financial” and “problem solving” questions, with the actual mix “geared towards fit” but dependent on the interviewer’s style and the applicant’s background. Questions generally focused on an applicant’s “understanding of investment banking culture and commitment” with particular emphasis on “Why UBS?” as well as team work and leadership experience. The often “highly technical” questions posed during interviews can be “demanding,” and one source even opines that UBS conducts the “most technical interviews on the Street.” A contact in Los Angeles warns that his office in particular is “known to have one of the most technically difficult interviewing processes in the industry.” Insiders in the sales and trading groups report an even higher level of technical scrutiny, with a math exam administered during the final round of interviews. Former UBS summer staffers report that it is “very difficult” to secure summer spots, but the summer experience makes it “much easier to get hired” full-time and is “the best way to secure a full-time offer.”
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OUR SURVEY SAYS
Aggressive underdog In the last few years, UBS has experienced rapid growth and an influx of senior level hires, leaving its firm-wide culture unsettled and “in the process of evolution.” One thing already binding UBS staffers together, however, is the sense that they are part of a “hungry” and “scrappy” “growth firm” where employees are focused on “the common goal of building the business into the top investment bank in the U.S.” and are “excited about the firm’s growth” thus far. “We fight like the underdog and it’s exciting every time we win,” says an analyst. Another source echoes, “We know that we are not No. 1 but that we are at the right firm that will be there someday soon.” This feeling of growth coupled with a still evolving firm identity also has many UBS insiders inspired by the “entrepreneurial” chance to work at “one of the few places on Wall Street where you can still have an impact on what the culture becomes.” While the firm’s culture currently “varies significantly from group to group, if not intra-group as well,” insiders view UBS overall as a “performance-based meritocracy.” Employees are “expected to take on multiple assignments and multitask effectively.” Those who do so successfully will get additional responsibilities. “People are encouraged to take risks and take the lead if they find the opportunity,” adds a senior banker. Summer analysts and associates are typically treated like fulltime staffers “but with many social events” to break up the work week. Interns work on live deals as well as pitches, may take on “a lot of responsibility” and often experience significant client contact. Overall, UBS is cultivating a “friendly” atmosphere filled with “egoless bankers who are very aggressive in going after business.” One UBS professional speaks for many in calling his co-workers “hard working, smart people who know how to work hard and have fun at the same time.” In fact, the source claims that he “wouldn’t work anywhere else.”
Oh, the agony Working at a junior level at an investment bank typically demands a lot of hours in the office, but some UBS bankers comment that at their firm, “working long hours has taken on a whole new meaning.” “We work the most ridiculous hours of any people I know on the Street,” complains a first-year analyst who tells prospective employees to “expect 18-hour days seven days a week.” The all-day, every-day motif
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is echoed by multiple staffers who report working 90 or more hours per week. “I was told that bankers work 100 hours a week,” says another shell-shocked analyst. “They lied. It’s more like 115 per week for me. My hours are absolute hell.” Another disgruntled source calls his hours “terrible” with much of his time “wasted with meaningless work created by mid-level employees trying to impress their superiors.” Those superiors also get some of the blame for the long days as one analyst grumbles that “a lot of the hours are spent waiting for comments from senior people who have little regard for your time.” But not all employees are unhappy with their hours, even if they do spend a lot of time in the office. “We run a tight ship here, which translates to longer hours per junior banker,” states an analyst. “On the flip side of the equation, that also translates to a richer learning experience.” Others report that the firm actually has “typical banking hours,” and that “investment banking hours at UBS are no better or worse than other bulge-bracket I-banks.” Finally, an analyst in the San Francisco office admits that the job requires a lot of time, “but everyone exaggerates how hard they work.” Those in groups other than investment banking generally report better hours, but many junior staffers still put in long weeks. The need to put in “face time” seems to depend on the particular group, but many UBS employees say that there is a general expectation to stay late. “A lot of face time is required even if you are not busy [or] staffed,” reveals an insider. “People tend to mock you for not working hard even though you cannot control how much work your current projects require.” But others dispute the existence of face time pressure and report that working long hours is simply a result of having work to do. “While I am not happy with the amount of hours I spend in the office,” explains an analyst, “I know that it is productive hours, rather than my friends at other firms who are kept at the office for ‘face time’ and other meaningless reasons.”
Leading indicators “You can’t work these hours and enjoy it without good leaders,” points out a staffer, and in general, his UBS co-workers agree. UBS is seen as “very much a teaching firm” where “everyone is treated with the utmost respect.” “You get the sense that some people really focus on teaching you, and make sure you understand everything that’s going on,” says a junior banker. One particularly pleased contact calls UBS’s “great” managers “probably the best on the Street.” Some UBS insiders say that incoming junior staffers can expect that they will be treated well by their superiors, but “respect is also something you earn” and “once Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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you screw up, you lose it quickly.” And “just like any other firm,” there are those highers-up who don’t treat their employees well regardless of work quality. “Depending on whom you are working with,” says an insider, “you could be treated with great respect or like the lowest life form on Earth.” For those staffers who get stuck with bad managers, the work day can be pretty frustrating. One source complains that his managers “don’t tell you what work is important and when it really needs to get done. They spend little time explaining things or making sure you understand the transactions that you are working on.” The source likens his role in the firm to “a robot that they abuse until it malfunctions.” Overall, though, “UBS does a great job making lower-ranking bankers feel appreciated for the work they do,” says an analyst. One contact acknowledges that “in the U.S., there is a lot of ego at the senior level, but there are also a lot of really good bankers with incredible knowledge and experience who are approachable and interesting to work with.” “Team is the word,” explains another. “Everyone depends so much on everyone else, there’s generally little room for those who disrespect others.” Finally, one junior staffer sums up the situation: “At the end of the day, we are all people in a very stressful job, but people really respect each other and have a good time.”
Putting training on the map New UBS hires participate in a “great” and “extensive” six-week training program that has vastly improved in the last few years according to insiders. On the job, UBS offers a continuing education program, including presentations from “highly qualified outside consultants” (some of which are available online). Not surprisingly, many junior staffers report difficulty in finding time to attend (or access) these sessions because of their workloads, but those who do make room can learn about or brush up on various topics such as “negotiation skills, client interaction, phone skills and advanced technical topics.” UBS also provides suggested “education roadmaps” that let staffers know what skills others of the same level are expected to have.
Passable pay UBSers judge their paychecks to be in line with the industry average, but they complain that the bank waits to pay until its competitors have defined just what that industry average is. As one associate puts it, “UBS likes to match the Street rather than lead the Street.” Another source adds that “the firm pays just enough to retain its people and nothing more.” But a director finds that notwithstanding the time UBS
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takes to assess the industry’s going rate, compensation at the bank is actually “severely under average, particularly after considering that UBS does not command a bulge-bracket discount, but rather would require a second-tier premium in order to retain really good people who have choices available to them.” For the most part, though, UBS bankers find that “the firm pays a couple of people above average and then everyone else down the middle.” Summer employees are paid an equivalent “full-time salary pro rated” and may receive bonuses at the end of their internships. In addition to monetary compensation, UBS offers a “generous benefits package, which includes 401(k), employee share ownership plans, health care, Flexible Spending Accounts, Employee Assistance Programs, tuition reimbursement, mortgage programs, etc.,” explains an insider who also notes that “employees become eligible for benefits as of their first day of employment, which is a rarity.” The UBS employee stock purchase program (“Equity Plus”) is particularly lauded; employees report that under the program, “every share of UBS stock purchased by an employee results in a grant of two ‘free’ options at the same price.” (There is a vesting period for the options.) Like their colleagues at competing firms, UBS staffers working late can make use of a meal allowance ($25 on weeknights; $30 on weekends) and an industry-standard car service. Those in New York do not have the benefit of an in-house gym; however, the bank does offer discounted gym memberships in the city. Other benefits include cell phone and BlackBerry reimbursement as well as “free admission to all major museums in New York City and discounts for tickets to major cultural events (i.e., opera, symphony, theater, etc.).” In Los Angeles, workers receive “all-you-can-drink soda” and free parking.
Multiform uniforms The dress code at UBS is business casual with more formal business attire expected for meetings with clients (senior personnel tend to dress up more often). Though the attire policy at UBS is reasonably uniform, certain groups and offices have their respective senses of appropriate style. A source in the Los Angeles office says working there “is almost like working at a dot-com. It’s not out of the ordinary to see bankers at all levels wearing jeans and tennis shoes on any given day of the week.” In New York, dress tends to lean towards more formality with an increased number of suit-sporting staffers.
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Adequate digs Many UBS insiders are satisfied with the New York offices at 299 Park Avenue, which are described as “nice,” “adequate” and “practical.” Junior bankers and directors (vice-presidents) “sit on the main floor in cubes,” while “senior bankers sit in windowed offices.” Overall, says a source, the workplace is “comfortable,” but “it would be nice to have a gym, showers, lounge and a place to sleep.” Other employees see more “room for improvement,” especially criticizing the “shabby,” “old building with a hopeless elevator system” and “client meeting areas that are disgraceful compared to other banks and law offices.” One particularly dissatisfied staffer calls UBS’s Park Avenue digs “the worst offices on Wall Street,” comparing the work environment to “a sweat shop in a developing country.” For the most part, though, insiders view the office space as functional and “sufficient.” Other UBS offices generally receive higher marks. The firm’s facility in Stamford is hailed as “beautiful,” and the “new UBS Tower in Chicago is great.” The Los Angeles office is also “relatively new” and “is designed to allow a lot of natural light to come through,” providing “a much brighter feel to the office.” In San Francisco, however, although employees can take advantage of “great views,” “the cubicles are small,” and “analysts, associates and VPs do not have offices.”
Mixing it up UBS gets mixed reviews on promoting and enhancing workforce diversity, but the general sense is that the firm is “moving in the right direction” and “making significant progress.” According to one insider, the firm’s recruiting efforts are hurt by a “chicken and the egg problem,” where UBS is “trying hard to recruit women, but it is hard to attract them without women already in place.” As for retention, one female banker says that “like every other firm, [UBS] has trouble retaining us above the director level. However, UBS does have events that encourage women to stick around.” Some of these events are “held to facilitate discussions on topics of interest to women and also to improve networking,” explains another source. In addition, “women are specifically given an opportunity to meet in small groups with the most senior management and are always encouraged to provide ideas for improving the offerings at the bank.” One contact actually says UBS is going too far in its efforts to attract and retain female bankers; the source says the bank gives women “favorable treatment,” including “being promoted and paid for all the wrong reasons.” Along with improving its efforts to encourage workplace gender diversity, UBS has made recruiting and retaining minority candidates a “clear priority.” There are “a
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number of diversity initiatives and focus groups,” says a source who points out that he “just attended a mandatory diversity training session.” As for the current mix, some staffers believe that UBS already has an “exceptionally diverse employee base in terms of minorities” and has “a much more diverse, open policy than any other firm” given its “foreign firm” status. Other employees think the bank needs “to do a better job of attracting African-Americans and Latinos,” although both groups are “growing in size.” For gay and lesbian employees, UBS has “a pride network that offers networking and support,” and sources also report that there are “very high profile, high-ranking individuals who are openly gay and are active leaders at the bank.”
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Deutsche Bank
PRESTIGE RANKING
60 Wall Street New York, NY 10003 Phone: (212) 250-2500 www.db.com
DEPARTMENTS Corporate and Investment Banking (Commodities, Corporate Finance, Corporate Trust, Fixed Income, Foreign Exchange, Global Cash Management, Global Equities, Global Securities Services, Global Trade Finance) Corporate Investments Private Client and Asset Management (Private and Business Clients, Private Wealth Management, Scudder Investments, Deutsche Asset Management, DWS Investments, DB Real Estate)
THE STATS Supervisory Board Chairman: Rolf-E. Breuer Spokesman of the Board of Managing Directors & Chairman of the Group Executive Committee: Josef Ackermann Employer Type: Public company Ticker Symbol: DB (NYSE) Revenue: $54.06 billion (FYE 12/03) Net Income: $1.72 billion No. of Employees: 67,682 No. of Offices: 1,700+
KEY COMPETITORS Citigroup Credit Suisse First Boston Goldman Sachs Lehman Brothers Merrill Lynch UBS
UPPERS • “Relaxed,” “entrepreneurial” culture • Making strides in the States
DOWNERS • Still second-tier in the U.S. • Possible acquisition target
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “Getting bigger in the U.S.” • “Never quite got there” • “Good in some areas, but not impressive overall” • “Emerging power”
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EMPLOYMENT CONTACT www.db.com/careers
© 2004 Vault Inc.
Vault Guide to the Top 50 Banking Employers Deutsche Bank
THE SCOOP
German banks have their scandals, too Deutsche Bank AG provides financial services to 13 million individuals and businesses in over 75 countries. Headquartered in Frankfurt, Germany, the firm conducts business through three groups: Corporate Investments (CI); Corporate and Investment Banking (CIB), which includes corporate banking and securities and global transaction banking; and Private Clients and Asset Management (PCAM), which includes asset management, private banking, and personal banking. In many ways, 2003 was about as successful a year as Deutsche Bank could have hoped for. The German economy awakened from its coma, Deutsche’s earnings reports were lauded, and its return on equity improved to over 9 percent (from a dismal 1.1 percent in 2002). From an operations standpoint, Deutsche Bank successfully instituted various cost-cutting restructuring initiatives, and was able to divest unwanted assets to concentrate on its core businesses.
The West and the War Founded in Berlin in 1870, Deutsche Bank initially expanded throughout Germany and later throughout the rest of Europe. The company first made its mark in the U.S. in the 1880s when it helped finance the construction of the railroads to link the East and West coasts. Deutsche Bank grew in large part due to several mergers with, and acquisitions of, European banking firms in the late 1800s. Like most German corporations, Deutsche Bank’s actions during World War II are a sensitive subject. The company has admitted that it helped finance the construction of the Auschwitz concentration camp. To its credit, the bank participated in the $1.25 billion settlement fund offered by Swiss and German companies to Holocaust victims. And Deutsche Bank mentions unseemly events such as the 1933-1934 ouster of Jewish board members in the history section of its corporate web site. The company’s growth continued after the war, but it wasn’t until the late 1990s that the firm made the move that placed it among the major U.S.-based international players. In June 1999, Deutsche Bank acquired Bankers Trust (BT) for approximately $9 billion. BT had purchased Alex. Brown & Co., a U.S. investment bank with nearly 200 years of history, two years earlier, giving Deutsche Bank significant corporate lending and underwriting prowess. Although the combination initially faced skepticism, the doubting subsided after BT was integrated. Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Deutsche was on the verge of becoming even more formidable in 2000 when it announced plans to merge with German competitor Dresdner Bank AG in March. The deal fell apart one month later, reportedly over the fate of Dresdner’s investmentbanking unit, Dresdner Kleinwort Benson (now Dresdner Kleinwort Wasserstein). Deutsche Bank had wanted Dresdner Kleinwort Benson closed or sold; Dresdner’s people resisted, and the dispute scuttled the deal. In September 2001, Deutsche Bank announced an agreement to buy Zurich Scudder Investments from Zurich Financial Services in a deal valued at $2.5 billion. The news came after two disappointing years for Scudder and confirmed speculation that its Swiss parent company would put it on the chopping block. At the time of the deal, Zurich Scudder had $300 billion in assets, bolstering Deutsche’s total assets under management to $900 billion.
Good in the U.S., better in Europe Deutsche Bank’s 2003 solid earnings reports were more a result of leader Josef Ackermann’s ability to reduce costs than his firm’s knack for dominating global league tables. Still, Deutsche Bank had a decent year in the capital markets, aided particularly by the firm’s showing in debt products. In 2003’s near-record market for global high-yield debt (one of Deutsche’s strong suits), the firm did not miss out, increasing its underwriting total from $8.5 billion to $15 billion. (Deutsche Bank did, however, slip a spot from No. 2 to No. 3 overall in the year-end high-yield debt league table, according to Thomson Financial.) Perhaps Deutsche Bank’s biggest high-yield success was its appointment as joint bookrunner on Crown Cork & Seal’s $2.1 billion offering, one of the 10 largest junk bond deals ever. Deutsche fared solidly in winning other U.S. debt deals as well, holding its No. 5 spot on U.S. syndicated loans and its No. 4 ranking on the U.S. leveraged loans league table, according to Thomson Financial. The firm’s biggest improvement in the U.S. market was in U.S. federal credit agency debt. With $101.9 billion in proceeds (a jump of 77.8 percent) in 2003, Deutsche Bank leaped to a No. 1 ranking in that league table, after finishing No. 2 in 2002. As usual, Deutsche did very well in Europe, ranking first in European convertible issuance, which included its co-lead role on a record $5.66 billion convertible offering from Kreditanstalt fur Wiederaufbau. Deutsche Bank’s other European deals of note included Italy’s €7 billion sovereign debt issuance, Finland’s €6.5 billion loan offering, and France Telecom’s €5.5 billion debt issue. Overall, Deutsche Bank stayed at No. 4 on Thomson Financial’s 2003 global loan league table (though at $83.1 billion in proceeds, the firm was substantially behind No. 3 Banc of America 170
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Securities at $193.9 billion). And while it’s not the biggest equity player in the securities game, Deutsche Bank ended 2003 with a bang, acting as joint global coordinator and joint bookrunner on China Life Insurance Company’s $3.475 billion IPO, the largest initial public offering of 2003. Notwithstanding Deutsche’s renewed commitment to increasing revenues in the U.S., the firm had a down year with respect to U.S. merger and acquisition deals, slipping from No. 11 to No. 13 in U.S. announced M&A and from No. 7 to No. 11 in U.S. completed M&A, according to Thomson Financial. Deutsche was not left completely on the sidelines, however. The firm did manage to grab a high-profile role as Ocean Energy’s advisor on its $5 billion merger agreement with Devon Energy Corp. Deutsche Bank had much more success in the emerging market of Latin America. The firm climbed from No. 19 to No. 5 in Latin American announced M&A, increasing its rank value 527 percent from $440 million to $2.8 billion (and jumping one spot ahead of last year’s No. 1, Goldman Sachs). Worldwide, Deutsche Bank slipped from No. 9 to No. 10 in announced M&A and from No. 7 to No. 9 in completed M&A. Deutsche’s 2003 M&A highlights included co-advising Deposit Insurance Corp. of Japan on its $16.7 billion deal with Resona Bank Ltd., co-advising Orange SA on its $7.1 billion sale to France Telecom, and coadvising an investor group on its $4.2 billion acquisition of a 32.6 percent stake in German branded goods company, Beiersdorf.
Straight to the core Perhaps the reason Deutsche Bank didn’t have a banner year on the 2003 league tables was that it was too busy implementing Josef Ackermann’s plan to divest noncore assets. Ackermann succeeded Rolf-E. Breuer in May 2002 and almost immediately began slimming down the firm. Deutsche Bank sold a majority of its U.S. leasing business in September 2002 to General Electric for $2.9 billion, and at the end of 2002, E*Trade Group paid $100 million for the consumer financing businesses that GE had left behind. Deutsche continued the strategy in the beginning of 2003 by selling a large part of its Global Securities Services businesses to State Street Corp. for more than $1 billion. Included in the sale were many of Deutsche Bank’s securities lending and global custody businesses, and 3,200 Deutsche employees transferred to State Street. In February 2003, Deutsche Bank was at the seller’s table again, disposing of its global passive equity, enhanced equity and passive fixed income businesses to Northern Trust Corp. In another February deal, Deutsche sold a substantial part of its lateVisit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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stage private equity portfolio to a group of investors for €1.5 billion. Other 2003 Deutsche divestitures included many of its industrial holdings and €1.04 billion of real estate assets, including 51 bank branches and offices across Europe. Deutsche is still getting trim in the new year, as January 2004 witnessed the sale of the bank’s global real estate private equity fund for more than $1.2 billion. While Deutsche Bank was dropping its non-core weight in 2003, it was expanding in areas such as investment banking and asset management. Throughout the year, Deutsche hired scores of senior bankers from rivals Morgan Stanley, Goldman Sachs, Merrill Lynch and Credit Suisse First Boston to strengthen its corporate advisory, M&A and equity capital markets capabilities. And to further develop its U.S. investment banking operations, Deutsche created a unit to focus on cultivating relationships with the largest U.S. companies. Deutsche also concentrated on growing its private clients and asset management division in 2003, acquiring Rüd, Blass & Cie AG from Zurich Financial Services in February. The purchase bolsters Deutsche’s ability to provide private banking services to high net-worth individuals.
How do you say “awards” in German? Noting the firm’s success in reducing many of its risk-weighted assets, decreasing its loan book, and selling many non-core industrial holdings and private equity investments, International Financing Review magazine presented Deutsche Bank with its 2003 Bank of the Year award. IFR lauded Deutsche for “creating progressive and innovative solutions for its own problems, and generating novel solutions for clients with an uncompromising focus on the bottom line.” Euromoney also praised Deutsche Bank, naming the firm Best Bank in Western Europe, Best Bank in Germany, Best Asset Backed House, Best Credit Bond House and Best at Risk Management. Deutsche’s equity research analysts were also recognized, ranking first on the Thomson Extel Pan-European Survey in the autos, beverages, chemicals, food and drug retailers, general retailers and tobacco industries. The bank also garnered awards for providing the best equity research in Germany, Austria and South Africa. Institutional Investor recognized Deutsche’s improved U.S. equity research team, ranking the bank No. 10 on the 2003 All-America Research Team standings after keeping Deutsche off of the list in 2002. Overall, Deutsche Bank’s research analysts moved up one spot to No. 4 on II’s 2003 Global Research Team scoreboard. The firm’s fixed income research analysts jumped two spots on both the All-America Fixed-Income Research Team (up to No. 7) and the All-Europe Fixed-Income Research Team (up to No. 2) rankings. 172
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Decapitated and devoured? Although Deutsche Bank was hoping to head into 2004 ready to evolve from asset divestiture and cost cutting to increasing revenues and market share in its core businesses, the firm found itself entangled in legal battles involving its top two executives, Josef Ackermann and Rolf-E. Breuer. Ackermann’s legal problems dated back to a February 2000 agreement by German telecommunications company Mannesmann to be acquired by British telecom Vodafone Group. Deutsche Bank was a large shareholder of Mannesmann, and Ackermann served on the company’s board, approving the sale to Vodafone as well as controversial “appreciation awards” totaling $70 million for Mannesmann’s top executives. While performance bonuses are not against German law, critics claimed that the payments were unnecessary and amounted to kickbacks. Ackermann and five other directors were subsequently charged with breach of trust for acting against the interests of Mannesmann’s shareholders. According to The Wall Street Journal, Ackermann indicated that, as of June 2, 2004, Deutsche Bank had spent €1.9 million on legal fees to defend him in the breach-oftrust case. The Journal also reported that “a preliminary assessment of the trial delivered by judges in April [2004] has led many observers to believe that all six defendants [including Ackermann] will be acquitted.” It turned out that the Journal was right, as Ackermann and the five others charged were indeed acquitted in July 2004. In February 2002, around the same time German prosecutors announced their case against Josef Ackermann, former Deutsche Bank head and current supervisory board chairman Rolf-E. Breuer gave an interview on Bloomberg TV, announcing that many banks were hesitant to give more loans to a troubled business he mentioned by name. As a result, the supposedly credit-unworthy company was unable to secure necessary financing and went under. Unfortunately for Breuer and Deutsche Bank, the business belonged to media mogul Leo Kirch, who was a client. Kirch brought suit against Breuer for breach of confidentiality. The former client not only won the trial and Breuer’s appeal, but Deutsche Bank was ordered to pay damages. Though many familiar with the case believe that Kirch will not get his desired compensation of over $7 billion, Deutsche Bank may still have to pay as much as $620 million (and the firm may try to recover any payments from Breuer personally). Experts also speculate that as a result of the Kirch dispute, Breuer will eventually be forced from the firm.
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Kirch isn’t finished suing either. In the beginning of 2004, he filed another claim against Breuer, but this time, he also sued Deutsche Bank directly, alleging that the bank, Breuer, U.S. cable company Liberty Media, and Liberty CEO John Malone conspired to bring about the demise of Kirch’s media empire. Kirch’s legal team contends that Deutsche and Liberty plotted Kirch’s end to help Liberty gain control of the German cable TV market (giving investment banking fees to Deutsche Bank in the process). Despite the firm’s legal battles, Deutsche Bank spokespeople insist the company is doing just fine, and 2003 earnings reports showed no telltale signs of loss of business.
GETTING HIRED
Making the rounds Deutsche Bank culls the usual top undergrad and MBA programs for recruits. Typically, the firm will hold one or two on-campus rounds of interviews, followed by a Super Saturday barrage at the firm’s headquarters. A recent corporate finance analyst hire, who “felt very comfortable during the interviews,” says that “in the first round you’ll be asked where you’re from and why you chose your school. Then you’ll have to walk through your resume and answer behavioral questions based upon what parts of your resume you highlight.” Additionally, you might receive some technical questions, such as “How do you value a company?” and “How is net income reflected on the balance sheet?” “I had listed a valuation course on my resume so I guess they wanted to see what I had picked up,” says one insider, who admits to being “the only one of my peers who was asked a technical question.” Overall, in the first round “they basically just want to see if you’re a good fit,” explains one contact. “It’s more of a conversational style of interview than a question-and-answer interview. I talked about why I wanted to do banking for at least five minutes.” According to another current employee, “The second-round interview was exactly the same as the first, with different people asking the same questions.”
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OUR SURVEY SAYS
Relax with Deutsche Deutsche Bank insiders describe the firm as “professional,” “efficient” and “easygoing.” One former insider, who agrees “the culture at the bank is very relaxed,” notes that “people genuinely get the opportunity to take on as much responsibility as they can handle.” Indeed, another says what sets Deutsche apart is that it’s “more entrepreneurial than most banks.” A former employee explains that “there was a huge growth in the department I was in, so there was always opportunity to step up to the plate.” The contact adds, “This earned me a lot more work and responsibility.” Like any large firm, insiders’ experience with managers varies. One employee says, “Instead of working together to improve things, there were often clashes and fighting among managers.” However, another insider says he “had the pleasure of working for a great manager – a get-it-done, hands-on, fun, easy-to-get-along-with-type of manager.” There are some who aren’t reporting as rosy an outlook about the firm. “There’s a lot of red tape and politics to get anything done,” says a source. “And a lot of outsourcing both in house and off site. At this company, the rich get richer while the poor stay poor.” Another contact agrees that there is an “extreme amount of politics to deal with” at the firm. Several employees also say that it’s “difficult to advance very far internally.”
The practice of diversity, the word on pay and perks An insider who notes that the firm has “a diversity program in place for women, minorities and gays,” admits that she doesn’t know “how effective it is.” Though, another banker says, “I had the pleasure of working with a very diverse group, which seems to represent many different countries, and not limited to any specific race or color.” As for compensation, a source in Hong Kong says, “[The firm] is able to compete with the major American I-banks in the region on an equal footing.” In the U.S., an associate says pay is also “pretty much equal to the Street.” A recent summer hire (an investment banking corporate finance analyst) gives specifics, reporting that he receives “$2,204.33 on a bi-weekly basis,” which comes out to about $57,300 annually.
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Deutsche offers employees all the typical perks that other big banks do, including a stock purchase plan and free meals and transportation if working late or on the weekends. One insider adds that the firm’s “vacation policy is great.” Overall, says an employee, “If you’re just starting out [in banking], Deutsche is a great place to learn, but you will have to put up with long hours.” Another source agrees that the firm offers “a lot of opportunities to learn and the chance to get good experience.”
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“People genuinely get the opportunity to take on as much responsibility as they can handle.” — Deutsche Bank insider
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Bear, Stearns & Co.
PRESTIGE RANKING
383 Madison Avenue New York, NY 10179 Phone: (212) 272-2000 Fax: (212) 272-4785 www.bearstearns.com
DEPARTMENTS Asset Management • Custodial Trust • Derivatives • Equities • Fixed Income • Global Clearing Services • Investment Banking • Merchant Banking • Private Client Service
KEY COMPETITORS Goldman Sachs Lehman Brothers Merrill Lynch Morgan Stanley
UPPERS • Entrepreneurial; allows “individual stars to shine” • Tough to find a better fixed income house on the Street
DOWNERS THE STATS Chairman & CEO: James E. Cayne Employer Type: Public company Ticker Symbol: BSC (NYSE) Net Revenue: $5.99 billion (FYE 11/03) Net Income: $1.16 billion No. of Employees: 10,500 No. of Offices: 30
• Culture dependent on who you work for • Good name in banking, but still not one of the big boys
EMPLOYMENT CONTACT Resumes can be submitted online at the careers section of www.bearstearns.com.
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “Top-notch second-tier” • “Great fixed income house” • “Least prestigious of the big investment banking firms” • “Excellent reputation”
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Vault Guide to the Top 50 Banking Employers Bear, Stearns & Co.
THE SCOOP
The profiteer Bear Stearns doesn’t have the cachet of a Goldman Sachs, nor the big bank status of a Citigroup or a JPMorgan Chase. But what Bear Stearns has is an eye for fiscal responsibility and a penchant for looking at long-term results, rather than a quick buck. The firm booked net revenue of $5.99 billion in 2003, up from $5.1 billion in 2002, and remained profitable, as it has for more than 80 consecutive years. Known as “Bear” to Wall Street players, and called the banking world’s “nouveau riche” by Fortune, Bear Stearns has three core area of business: capital markets, clearing services and wealth management, under which falls the firm’s asset management and private client units.
Joe, Bob and Harry In 1923, Joseph Bear, Robert Stearns and Harold Mayer founded Bear Stearns & Co. The firm initially operated with a small staff out of a single office at 100 Broadway in New York City. Founded as a partnership, Bear Stearns focused on brokerage services. Ten years later, the firm established its institutional bond department, which was the forerunner to today’s fixed-income division. Investment banking operations began in 1943, and its international department was set up in 1948. As the company expanded during the 1950s, 1960s and 1970s, offices opened up in major national and international cities, including London, San Francisco and Dallas. In the 1970s, Bear began several new departments, including correspondent clearing in 1973, high-yield bonds in 1977, public finance in 1978 and government securities in 1979. Asset management operations and capital markets followed in 1984 and 1985, respectively. Bear Stearns went public in October 1985, and continued to increase its capabilities as they headed into the 1990s. The firm launched its derivatives department in February 1993, and it co-managed the Lucent Technologies IPO, what was then the largest IPO in U.S. history. Bear also served as an advisor in the mega-merger of telecom giants Bell Atlantic and NYNEX, which became Verizon Communications.
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Safe bettors Bear’s strategy of exercising prudence was best demonstrated in late 2000, when the firm tightened its belt, cut costs and focused on its core businesses. This action was in direct contrast to most other large banks, which spent millions to retain the services of high-profile bankers, in the hope that the equity markets would rebound. However, as everyone witnessed, the economy actually dropped further, with the equities markets slumping badly throughout 2001 and 2002. The poor equity markets actually helped Bear, which focused on the fixed income market, which always performs well when the equities markets are down. Its strategies had worked to the tune of $340 million in eliminated costs, and in the first quarter of 2003, the firm boasted a 28 percent profit margin – its best ever – up from a very healthy 22 percent in 2002. The quarter was the firm’s fifth straight in which it increased margins. By the end of fiscal 2003, Bear’s net income increased to $1.16 billion, an increase of 31.7 percent above the previous year, and the firm wound up with a pre-tax profit margin of 29.6 percent, according to the firm’s earnings release. Much of the firm’s success was due to its excellent performance in its fixed income division, which reported record results for the third consecutive year. Record net revenue was posted in virtually all product areas, including corporate bonds, interest rate products, high yield and distressed bonds, government bonds, foreign exchange and mortgage-backed securities, resulting in fixed income net revenue of $2.9 billion, up 51 percent from the $1.9 billion in fiscal 2002. As a major global clearinghouse, Bear posted slightly better year-over-year results in 2003. Net revenue in global clearing services rose 0.8 percent to $784.1 million over fiscal 2002 results.
B-Listed? Despite stellar earnings and profitability, Bear Stearns hasn’t broken into Wall Street’s highest banking echelon. While Bear is a steady performer in areas such as public finance, which includes underwriting and issuing municipal bonds and mortgage-backed securities, Bear rarely cracks the top five in the league tables in sexier markets, such as global M&A or IPOs. In 2003, Bear Stearns dropped to the No. 4 spot in the U.S. mortgage-backed securities league table, with 118 issues netting $92.1 billion in proceeds. Part of the reason for the decline to fourth place from second in 2002 was the growing
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dominance of Goldman Sachs, which jumped from the No. 5 position to the No. 2 spot behind perennial leader UBS. However, Bear Stearns improved its position in the M&A market, moving up five spots to No. 11 in the worldwide completed M&A league table, with 49 deals worth $98.3 billion. Nonetheless, it’s clear that Bear is more focused on the debt markets, given the likelihood that if M&A activity picks up, bulge-bracket firms are likely going to be the recipients of much of the new business, due to their cachet among executives.
A fine mess Bear Stearns hasn’t been immune to scandal that has plagued the top-tier firms on the Street. The firm was one of the many banks assessed millions of dollars in fines to settle allegations of conflicts of interest between research and I-banking operations. In addition to its $50 million portion of the record $1.6 billion paid to regulators, Bear Stearns was required to pay $30 million to provide independent research and education for investors. More recently, Reuters reported in January 2004 that U.S. regulators might file civil charges over possible trading violations against Bear Wagner Specialists, a unit of Bear Stearns.
John and Fred’s Bear Stearn’s venture In July 2003, Bear Stearns hired John Hyman and Fred Patykewich (“pioneers in the managed account business,” according to the firm) to begin its new Private Client Advisory Services unit. The firm says the unit will “complement Bear Stearns’ highly successful, transaction oriented brokerage business as well as its asset management business by providing clients with cutting edge, fee-based managed account offerings.” Hyman and Patykewich previously managed money at Oppenheimer and Smith Barney, Harris Upham, and are credited with having built one of the most successful operations in terms of assets per broker and production per representative. In a press release announcing the new hires, Steve Dantus, head of Bear Stearns’ Private Client Services Division, said, “We are committed to creating a world-class asset management business for the high-net-worth investor. The experience, depth of knowledge and enthusiasm that John and Fred bring to the Private Client Advisory Services effort is a giant step toward achieving that goal.”
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GETTING HIRED
Hunting for new recruits “Bear Stearns is known not to look at what Ivy League college you graduated from but rather what kind of drive you have the succeed,” says on insider. “They look for people who are hardworking and want to make something of themselves.” Even so, sources report that Bear’s investment banking division targets the usual top business schools to locate new associates. Think “Wharton, NYU, Columbia, Chicago, Darden, Duke, UCLA and a few others.” The unit searches for analysts at similar top-of-the-charts undergraduate institutions, including “Wharton, Michigan, NYU, Columbia, Virginia, Duke, Texas, UCLA and USC, among others.” But indeed, it’s entirely possible to get inside without going to a target school. “I go to a non-core school,” one contact says, “and we have about four people a year who land full-time jobs at Bear, and usually get one intern.” Bear’s interview process is similar to that of other big banks. An insider explains, “There’s usually an initial on-campus interview, a two-on-one. Second round interviews are also generally held on campus. And a ‘super’ day in New York generally follows before an offer is extended.” Over the course of the process, expect to meet with “different department heads as well as human resources.” In the later rounds, those interviewing for a summer analyst spot should expect “four half-hour, one-on-one interviews with associates and third-year analysts.” For full-time spots, you’ll interview with higher-ups. One insider reports going through “five interviews with different managing directors.” And make a note: Bear doesn’t want resumes clogging up their mailroom and e-mail inboxes. A message on the firm’s web site, www.bearstearns.com, instructs applicants to submit their resumes through Bear’s online application process. At Bear’s target schools, interested parties can arrange a Bear interview through the career services office.
The questions on the inside Recruits should be ready for the full gamut of questions from several interviewers. A source who interviewed for a summer associate position says he was interviewed by bankers with “very serious demeanors” who “will press you on why you want to work at Bear versus other banks, particularly if you’re interviewing with lots of banks or higher ranked banks.” And “you need to get this right,” the contact adds.
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A source who recently interviewed for a summer analyst internship at Bear says the first interview was “very informal – with alumni from my school.” The contact adds, “The interview was just to see if they liked me and wanted back me for a final round.” The final round, though, was a different story. “Every interview was technical in some way,” says the contact. “They were by far the most technical interviews I have ever had.” Questions that might come up in a summer or a fulltime analyst interview session include: “What is a P/E multiple of an industry that you like? What is the most important financial statement? How are the statements connected?” You should also know how to calculate WACC (weighted average cost of capital), and be able to walk someone through a discounted cash flow model. Aside from these, and other basic accounting and finance questions, insiders say to expect quirky finance questions, such as “What is the sum of every number from 1 to 200?” Even so, one source reports receiving “no dirty tricks,” but he does admit, “If you’re going through the interview process from start to finish be prepared for a long and painful process. It’s standard and predictable – but long.”
OUR SURVEY SAYS
It all depends “Everything at this firm depends upon who you work for,” notes a current employee. “It runs the gamut from ordinary people who will respect you as a person and employee and treat you accordingly, all the way to a Nazi who doesn’t care that you need air to live and seems to take joy in smacking you down daily.” The contact adds, “That said, this can be a nice place to work with the right boss.” If you do get to work with good higher-ups, you might be singing the following insider’s tune: “My senior bankers have taken a true interest in my development; I feel that I can sit down in any of their offices at any time and be welcomed. They personally push me to the limits of my ability and are genuinely thankful for the work that I do for them.” Although many employees agree the culture of the firm “depends on where you are and who you work with,” numerous say the firm is “entrepreneurial” and “aggressive.” Says one source: “Every place says they’re entrepreneurial – this place is entrepreneurial.” The firm also allows for “individual stars to shine.” Observes one banker, “Bear people are, above all else, individuals, and the culture not only accepts but applauds this.” Because of Bear Stearns’ “thorough commitment to recognizing individual merit, those who perform well can really hold their heads up Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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high,” offers another source. One junior banker explains, “There’s an openness here to new ideas. If I do something unique, it’s going to get noticed and appreciated.” Sources note the firm offers “so much responsibility that it automatically becomes a rewarding experience.” “You’re going to a firm that’s large and has its fair share of marquee deals, but you’re not going to a factory,” reports another insider. One source called the firm “flat,” which enables everyone “to make an impact on every level.” That autonomy does have its price. “The every-man-for-himself culture and the lack of honesty and fair-mindedness I see in the management outweigh, for me, the early responsibility and challenging, interesting work I have received,” rails one insider. “Little effort is made to cultivate junior pros or to instill loyalty in the right kind of people.” One contact, who admits the culture is not for the shy, says, “The person who will be happy and successful here is the person who views business as an individual, contact sport.” Another employee says, “Because “there’s very little structure, you have to find your own way” at Bear Stearns.
The bottom line No matter how insiders view the firm from a culture standpoint, they mostly agree that when it comes to the bottom line, it’s tough to beat Bear. “This company makes money when none if its competitors are,” observes one current employee. “The revenues this place churns out amazes me.” The contact adds, “If they paid me enough money to buy any stock, I’d buy Bear Stearns.” While insiders note the lack of handholding that might be present at some other firms, at least one Bear employee says everyone has “the chance to become a star player for the firm.” Some employees say the firm has a “survival of the fittest” mentality that “extends into all ranks.” Bear is “very much a cowboy culture,” continues another source. “[There’s] lots of whooping and hollering emanating from the trading floor. A colleague put it best: “Every man is his own corporation.” Another insider tries to quiet the culture dissenters. “The bottom line is to make money,” says one associate. “If all that they say about back stabbing and sink-orswim were true, how the hell would we make any money?” Brags another insider, “From a junior banker’s perspective, the culture encourages development and rewards those who excel. It truly is a meritocracy.”
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Training: what lies beyond the program? Don’t expect a great deal of training outside of the “extensive” analyst and associate initial training program. “On-going training is helpful, but not very methodical – no set schedules,” says one source. “Come to Bear Stearns already knowing the job you are to do,” warns another insider. “Otherwise it will be very difficult. Training simply is not a priority at this firm.” A trader in investment management says, “There is no formal training.” He adds, “Usually you will be trained by one of your coworkers.” Those outside the firm’s New York headquarters report that some formal instruction is “offered over video conference.” Speaking of formalities, the firm recently (in September 2002) went back to business attire Monday through Thursdays, which is “strictly followed,” with business casual allowed on Friday. And employees say even “casual Fridays aren’t so casual anymore.”
The extras and the hours Insiders report receiving standard perks, plus some that are less standard. Bear bankers get a “decent” dinner allowance and free transportation home on the weekends. “All employees get to participate in a 401(k) plan after one year of employment,” says a banker. “But there is no matching on the plan.” The contact adds, “After two years of employment you can participate in profit sharing, and the medical, dental and travel reimbursement benefits are great.” Another source points out that Bear “participates in many corporate discounts at luxury stores and select sports clubs.” And for the athletic- or health-conscious-minded folk, Bear, “recently constructed a gym at our work facility to accommodate employees who choose to workout during or after work hours.” says one contact. A trader in New York says one perk could be Bear’s new home. “Our new headquarters is very modernized and equipped with the latest technology,” says that source. He adds that he spends about “nine to 12 hours a day” inside the new HQ, but rarely works weekends. On average, New York-based analysts work about “70 hours” a week. VPs log in about “50 to 60.”
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Banc of America Securities
PRESTIGE RANKING
9 West 57th Street New York, NY 10019 Phone: (888) 583-8900 www.bofasecurities.com
DEPARTMENTS Corporate and Investment Banking • Global Markets Group (Debt and Equity Capital Raising, Sales, Trading and Research) • Global Treasury Services • Portfolio Management
THE STATS Chairman: Carter McClelland President: Jon Sandelman Employer Type: Subsidiary of Bank of America Revenue: $8.93 billion (FYE 12/03) Net Income: $2.01 billion No. of Employees: 6,300
KEY COMPETITORS Citigroup Credit Suisse First Boston Goldman Sachs JPMorgan Chase
UPPERS • “Ability to take on responsibility very quickly” • “Same talent as the rest of the Street minus the attitude” • “Not forced out when the analyst program is over”
DOWNERS • “Still feels second-tier” • “Growing pains that come along with trying to grow the business at a fast pace” • As a “relatively new player on the Street,” hard to secure client relationships
EMPLOYMENT CONTACT www.bofa.com/careers
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “On the move; becoming a force” • “Wannabe bulge bracket” • “Gobbling up investment banking deals with its large balance sheet” • “Still suffers from general lack of reputation” 186
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THE SCOOP
Under the bigger bank Born of a complicated merger history, Banc of America Securities (BofA Securities) is the investment banking arm of the giant Bank of America Corporation, a Charlotte, N.C.-based commercial bank. Banc of America Securities – also referred to as the Global Corporate and Investment Bank (GCIB) unit of Bank of America – has focused on companies in eight primary industries: technology, consumer retail products, health care, real estate, financial services, media and telecommunications, natural resources and diversified industries. The investment banking practice has offices in over 30 countries worldwide, with major offices in New York, Charlotte and London. Its debt business is divided into three segments: GCIB International and Global Risk Management; Global Debt Capital Raising and Fixed-Income Research; and Global Institutional Sales. Banc of America Securities was founded in 1971 as Montgomery Securities. In 1997, NationsBank bought Montgomery and renamed the firm NationsBank Montgomery Securities. After the 1999 merger between BankAmerica and NationsBank, the entity became Banc of America Securities. Bank of America’s $47 billion merger with FleetBoston Financial, announced in late 2003, is not expected to significantly affect investment banking, as Fleet had shuttered its investment banking unit, Robertson Stephens, in April 2002. The merger will, though, create one of the largest financial services company in the world, rivaling Citigroup and JPMorgan Chase.
Sacking to save BofA Securities made several rounds of job cuts in 2001 that resulted in more than 660 layoffs and the closing of some of its smaller U.S. offices. The cuts didn’t stop in 2002. In July 2002, the firm sacked 40 employees from investment banking, sales and trading, research and back office operations. In November 2003, 100 jobs were cut in the investment banking group, with 80 of those jobs in New York. These moves didn’t come as a surprise to analysts in the current economic downturn. The lower cost structure should allow BofA to reap higher profits when action on the Street picks up.
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Comings on board In early 2003, the firm moved its cash trading desk to New York from San Francisco in an effort to have all its equity traders in one place after the hiring of Ciaran O’Kelly from Smith Barney. In April 2003, the firm placed Geoffrey Snyder, former head of U.S. Equity Sales, as its head of Global Equity Sales. Later in the summer, BofA Securities announced the hiring of Paul Phillips as global head of technology investment banking. Phillips came to BofA Securities from Goldman Sachs. In total, BofA Securities hired approximately 70 managing directors in 2003.
Buying and selling BofA Securities ranked No. 6 in U.S. announced M&A by deal value in 2003, advising on 64 transactions worth $92.5 billion, according to Thomson Financial. This represented a slight hop from BofA’s No. 12 spot in the same category in 2002. In worldwide M&A for 2003, BofA Securities came in at No. 11, a significant leap from No. 20 in 2002. Though the IPO market significantly cooled in 2003, BofA Securities did co-lead manage a few decent sized initial public offerings during the year. The firm co-lead managed deals for American Financial Realty Trust ($804 million offering; priced in June 2003) and Molina Healthcare ($133 million; July 2003). In the secondary stock markets in 2003, BofA Securities acted as sole lead on AES’ $346 million offering in June, co-lead managed Chicago Bridge and Iron’s $215 million common stock offering June, and Alliant Energy’s $332 million followon offering in July. With over 55 analysts covering more than 600 companies, BofA Securities’ research unit has earned several accolades. The Wall Street Journal, in its 2003 “Best on the Street” analyst survey, recognized five BofA analysts, all of whom were repeat honorees. And in the Journal’s 2003 “batting average” ranking, BofA took the No. 6 spot among U.S. investment banks.
Under the probe BofA Securities recently settled a couple of high-profile regulatory probes. In March 2004, the firm paid $10 million to settle SEC claims of improper record keeping in the BofA Securities’ San Francisco office. The SEC had alleged that the firm was “improperly storing certain documents relevant to an inquiry and not producing documents in a timely manner.” Also in March, the firm agreed to pay $375 million to settle an investigation into improper trading practices at its mutual fund arms. The probe, led by New York Attorney General Eliot Spitzer and the SEC, focused on the
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practice of trading mutual fund shares after-hours, called “market timing,” which hurts long-term investors in funds.
GETTING HIRED
Know your holidays BofA Securities administers a “selective” hiring process, primarily targeting students at “top universities around the country” (the Ivies, MIT, UNC, Morehouse, etc.) and “top 10” MBA programs. The firm does dip into the talent pool outside of this core group, however, and one source says that “qualified candidates from any school [should] apply.” One contact has noticed that getting a job at BofA Securities has recently gotten a bit more difficult, but “it is hard to tell if it is because of the firm itself or the current job environment.” A former summer employee reports that “it was considerably easier to get a full-time job after having worked as an intern.” Current staffers went through two or three rounds of interviews to land their posts at BofA Securities. The first round is normally on campus and may be a “30- to 60minute interview with two [firm] employees.” Follow-up rounds, which consist of “four 30-minute interviews and sometimes more,” are usually held at the firm’s offices, but some sources who ended up sitting through three rounds of interviews report a second round of on campus interviews. A candidate for a summer associate position had six interviews over the course of two rounds. Conducting the interviews are BofA Securities’ staffers from across the titular spectrum (“associates to group heads”). To be an attractive candidate to BofA Securities, one contact says that an applicant “must demonstrate excellent interpersonal skills, be an entrepreneurial self-starter, and embrace the team mentality and higher standards of our corporation.” Questions can be technical (“corporate finance and markets-related”), but the majority seem to focus on “fit” (e.g., “Why BofA Securities?”). One source warns applicants to be ready for brainteasers such as “How many Christmas trees do you think are sold each year in the USA?”
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OUR SURVEY SAYS
The somewhat united state of BofA Securities In general, employees at BofA Securities are happy to be there. In fact, one insider thinks BofA Securities has “hands-down the best culture in the industry.” Others describe the bank as “friendly,” “non-hierarchical,” “supportive” and an “inclusive meritocracy.” Some insiders, however, observe that the bank does not, as yet, have one consistent culture. “Some areas have a very strong culture and cohesiveness, while others suffer from a lack of management strength above,” says a source. Another feels the firm’s overall culture is “changing.” He notes that “the investment banking side of the business is relatively young and is still in the process of developing.” A contact in trading makes a similar point about the firm’s “fixed income platform,” saying it’s “relatively new and a culture has yet to be defined.” A lot of the change perceived by employees is being driven by the firm’s growth, which has created a “sense of excitement” and “momentum.” “While the culture is open and friendly, we are extremely competitive and aggressive about building our market share,” says a trading analyst. “It is a real ‘team’ mentality.” And although the work atmosphere can be “very intense,” “this is not an aggressive, untrusting, back-stabbing environment,” says an analyst. Another analyst agrees, “BofA has a very collaborative, easy-going, not back-stabbing culture as evidenced by its super low turnover rate.” One investment banking contact maintains that there has actually been a “high amount of voluntary analyst turnover – higher than the industry norm – in the last two years,” hurting morale, which the source calls “very low.” There is also an undercurrent of competitor envy. “The real tie that binds is that people would rather be working at another, better firm,” says an analyst. But a gung-ho staffer disagrees with the contention that employees would rather be elsewhere. “Everyone who [works at the firm has] a similar story – they got offers from Goldman, Morgan Stanley, etc., and turned them down” because of the allure of BofA Securities’ culture.
Breaking the code Staffers feel that BofA Securities is “much less stuffy than the typical Wall Street firm,” evidenced in part by the firm’s rules on workplace attire. While the dress code at BofA Securities is generally the industry standard business casual except when
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meeting clients, some offices are less formal than others. “The Charlotte office is more business casual with some people preferring to come to the office in business attire,” says an analyst in sales. “I think it is a southern thing because people in the Chicago office wear jeans all the time.” In New York, employees seem to dress within the traditional standards of a business casual code, but a sales analyst in San Francisco explains that his bosses don’t care about what employees wear “as long as you perform.”
There is such a thing as a free lunch BofA Securities’ junior employees agree that in general, their supervisors are “committed to developing junior talent.” Analysts and associates alike report good working relationships with senior staff members who, they say, treat their employees as “100 percent part of the team.” An analyst in trading says, “From the associates to the managing directors, everyone makes time to help me develop.” One insider adds that “the amount of time and thought managers put into our semi-annual review process is extremely helpful; their criticism is always constructive and precise and has really helped grow both personally and professionally.” In addition, the managers at BofA Securities are not afraid to give junior employees responsibility commensurate with their ability. “I have been able to work closely [with my direct supervisor] and have been given a good amount of responsibility in my role,” says a sales analyst who calls his bosses “very helpful.” He can’t always escape menial labor, however, and “occasionally, as the youngest person on the desk, I have to get lunch for the group or my boss.” (The bright side: “I usually get a free lunch out of it.”) As with all big banks, there are some managers who are not well regarded. A vice president in an investment banking product group reveals that the “management in my group suffers.” The source laments that “grand promises of how the group will operate and function, the tools and training we will receive, and the role we will have at the firm never materialize.” An analyst doing corporate finance work isn’t happy with his immediate overseers either, saying that “the associates in my group have limited managerial skills.” For the most part, however, BofA Securities personnel are pleased with their superiors. One contact admits that “respect must be earned, but with the right attitude it can be obtained fairly easily.”
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Working on the training New hires participate in a formal training program that was once called disorganized but is now “getting better.” One investment banking associate says the “formal training in New York City is good, but too short. Our program lasts only five weeks.” Another investment banking associate offers a different perspective on the firm’s training program, calling it “lacking” and saying that BofA Securities employees are “expected to learn on the job more here than elsewhere.” Fortunately, he says the “informal training through more experienced peers is quite good – people are always willing to teach.” An analyst reports that the sales desk he sits on “has additional training opportunities that have proved to be quite informative and beneficial.” BofA Securities does offer continuing education programs that one trader says “vary in usefulness.”
The grass is greener The number of hours per week a BofA Securities employee spends in the office depends largely on the particular group in which one works. Investment bankers work “terrible” hours according to one source. Multiple analysts report working 90 or more hours per week and spending “every weekend in the office for one, if not both days.” One analyst says that the firm’s view is “if you’re not in the office all weekend long, you have ‘capacity’ to be doing more work.” In the firm’s research department, “hours are much better than investment banking, but still very long” and unpredictable. As much as the firm’s investment bankers might loathe their lifestyles, employees in sales and trading seem pleased with their workloads. An analyst in the trading group says that “in general for sales and trading, you are looking at 50 to 60 hours a week,” as well as “a full three weeks [of vacation that] you truly get to take.” Sales and trading personnel also report working infrequently (“almost never”) on the weekend. There is little pressure to put in “face time,” which is “actually discouraged as it keeps people away from home and family while adding no value at the office,” says a satisfied sales professional. The same source sums up his view of working where he does: “You can’t beat the hours, dress code and work environment.”
Financial security While some insiders seem to be satisfied or even pleased with their compensation, many BofA Securities employees believe their wallets could be heavier. “Pay has suffered at [the firm] recently,” complains a vice president who says that
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notwithstanding “very strong results, the firm continues to pay well below what others are paid. So much for ‘pay for performance.’” The source notes that if a bonus meets a certain threshold, an employee may receive a portion in restricted stock. An analyst agrees that the pay at BofA Securities could be better, and says that it seems to be “less than [others receive] across the Street.” But a colleague sees things differently and expresses that he and his co-workers do “get paid more than the average person on the Street.” For those at BofA Securities for the summer, an intern is “paid as a full-time first year” employee and may receive a “small” bonus at the end of the summer. Perks at BofA Securities are standard for the industry with a meal allowance ($20 for dinner) and car services for those who work late or on the weekend. The firm also offers “discounted gym memberships” as well as a “wide range of discounts at various companies.” Perks are particularly good in the San Francisco office where an analyst receives complimentary gym membership and parking. BofA Securities also offers a 401(k) plan that matches up to 5 percent of an employee’s salary “after 13 months of service.” One contact who says the firm matches “only in stock options” grumbles that the fact that the matched contribution takes five years to vest (“20 percent per year”) makes the 401(k) plan “meaningless for most young employees” who don’t plan to stay at the firm for that long.
Is this an office or a museum? The New York office of BofA Securities at 9 West 57th Street is in “one of the nicest buildings in the city, is in a great location and has one of the most impressive trading floors around.” The “brand new” trading floor on the second floor is particularly praised though “other trading floors are more cramped and less spacious.” One trader likes the new floor so much that he even takes his “friends here on the weekends just to see how nice it is. There is also an amazing overlook of Central Park on the top floors.” The “very nice and spacious” trading floor in Chicago is also highly regarded, and in Charlotte, there is a “new office building with decent space.” Luxurious office amenities exist in San Francisco, where an analyst boasts that employees “have individual AC units built into our desks. The kitchen has Sub-Zero fridges, and we have $20 million in art in this building alone.”
Mixing things up BofA Securities is making “significant efforts” to “bring more diversity” to the firm. Analysts have noticed that significant percentages of their classes are women and
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minorities, and BofA Securities “recently implemented a broad-scale diversity initiative to identify potential minority candidates after their second year of college – rather than waiting until their third – for internship opportunities.” But one analyst in New York thinks the firm hasn’t done enough to attract women to the bank. “We have far fewer women at our firm than other firms on Wall Street, both at a junior and senior level,” he says. “There is never any female representation at recruiting events for the firm.” On the job, most women and minorities believe they are treated fairly. “As a woman,” says an analyst on a decreasingly male-dominated trading floor, “I find the firm extremely receptive to and respectful of female colleagues. I was matched with a senior mentor – a female managing director – who has been invaluable in my development.” For gay and lesbian employees, one contact reports that the firm “offers domestic partner benefits.”
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“While the culture is open and friendly, we are extremely competitive and aggressive about building our market share.” — Banc of America Securities insider
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Bank of America
PRESTIGE RANKING
100 North Tryon Street Charlotte, NC 28255 Phone: (704) 388-2547 www.bofa.com
DEPARTMENTS Asset Management Commercial Banking Consumer Banking Global Corporate and Investment Banking
THE STATS CEO: Kenneth D. Lewis Employer Type: Public company Ticker Symbol: BAC (NYSE) Revenue: $37.8 billion (FYE 12/03) Net Income: $10.8 billion No. of Employees: 133,549 No. of Offices*: 4,277 *Banking centers
KEY COMPETITORS Citigroup JPMorgan Chase Wachovia Wells Fargo
UPPERS • Up-and-coming, expanding franchise • Good hours and benefits
DOWNERS • Inconsistent culture as a result of mergers • Sub-par compensation
EMPLOYMENT CONTACT To search job openings, submit a resume or to find out about oncampus recruiting, log on to www.bofa.com/careers
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• • • •
“Best commercial bank out there” “Rising star” “Struggling to make the top tier” “Too big”
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THE SCOOP
Betting that (even) bigger is better Bank of America (BofA) might have a moniker suggesting a domestic-only focus, but the financial services giant has established a significant global reach. The Charlotte, N.C.-based bank has clients in more than 150 countries and maintains business relationships with 76 percent of the companies in the Global Fortune 500. That said, the U.S. is where BofA does the vast majority of its business, and the firm serves an incredible one in three American households through more domestic banking centers (over 4,200) than any other financial services company. BofA considers consumer and commercial banking, asset management and global corporate and investment banking to be its three major businesses, but the firm also operates a large equity investment arm. BofA’s traditional banking offerings include checking and savings accounts, home equity loans and mortgages and credit cards. The company is the top domestic issuer of debit cards, and the bank boasts the largest proprietary ATM network in America. The commercial banking practice is also strong, and the firm is the No. 1 small business lender in the U.S. BofA’s asset management division is a large profit center for the bank and provides retail brokerage and private banking services, including investment management and estate planning. The firm’s investment banking business is conducted through its Banc of America Securities subsidiary, which offers capital raising and advisory services to companies and institutions worldwide. Heading into the fourth quarter of 2003, BofA was already one of the largest U.S. financial institutions in terms of assets, but it obviously wasn’t satisfied. In October, the big bank decided to get even bigger, announcing a $49 billion agreement to merge with FleetBoston Financial. If approved, the combination will temporarily create the second-largest U.S. bank (the company will drop back to third when the subsequently announced JPMorgan/Bank One merger is completed).
The marriage of two banking giants Italian businessman Amadeo Peter Giannini founded BankAmerica (originally called Bank of Italy) in San Francisco in 1904. Over the years, Giannini pioneered many banking services, such as home mortgages and auto loans. By the time of his death in 1949, BankAmerica had become the largest bank in the U.S. NationsBank, which was known as North Carolina National Bank (NCNB) until 1992, was formed in
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Vault Guide to the Top 50 Banking Employers Bank of America
1960 by the merger of Security National Bank and American Commercial Bank. It was the nation’s third-largest bank when it merged with BankAmerica, the fourth largest, in 1998. The $43 billion merger created not only what was at the time the nation’s largest bank, but the first coast-to-coast bank in the country.
And you thought that was a big merger In March 2003, BofA purchased a 24.9 percent stake in Grupo Financiero Santander, the third-largest bank in Mexico. The deal was part of BofA’s strategy to capture a larger share of the Hispanic market, which BofA CEO Kenneth Lewis thinks will provide 80 percent or more of BofA’s growth in retail banking. The purchase price for the Mexican bank was $1.6 billion, relatively small for an M&A deal, and right in keeping with Lewis’ acquisition pattern of strengthening niches with small deals while avoiding large blockbuster transactions. Then came October 27, 2003, the day BofA announced it was entering into a $49 billion stock-for-stock merger agreement with FleetBoston Financial, creating the second biggest bank in the U.S. In accepting the offer to merge, FleetBoston’s chairman and CEO Charles “Chad” Gifford said that “it became increasingly clear to us that scale is a tremendous advantage, if properly managed. Bank of America was the one bank that was taking advantage of this scale.” Current BofA head Kenneth Lewis will be the CEO and Gifford will become chairman of the merged company, which will retain the Bank of America name. The new industry giant will hold nearly 10 percent of all U.S. bank deposits and will be in the top three in consumer banking market share in 23 of the 30 fastest growing metropolitan areas in the country. Bank of America will directly serve 29 states (up from 21), and in eight states, the new company will hold more than 20 percent of all bank deposits. In addition, BofA will provide commercial banking services to approximately 30 percent of the businesses in its 29 states. BofA’s asset management and corporate and investment banking divisions should also be significantly enhanced by the transaction. The new company will have $470 billion in assets under management, making it the ninth-largest asset manager (BofA is currently the 17th-largest and FleetBoston ranks 27th). BofA also calculated that the combined firm would count 95 percent of the Fortune 500 as clients and would have the fastest growing investment bank on Wall Street. Critics of the deal cite the high premium (43 percent) BofA agreed to pay, one that seems especially steep given that JPMorgan Chase later arranged to purchase Bank One for only 14 percent more than its share price. Detractors also worry that BofA 198
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is just getting itself into another large, highly dilutive merger, a practice that plagued the bank when Lewis’s predecessor, Hugh McColl Jr., was in charge. But Ken Lewis, Chad Gifford, and the rest of the BofA team are confident that this combination will be good for business; at the press conference announcing the deal, Lewis called FleetBoston’s core customer group in New England “probably the wealthiest single market in the world.” With this in mind, BusinessWeek opined that if BofA can continue its “success at cross-selling a broad array of financial products to FleetBoston’s wealthy customer base, this deal could have more hidden value than investors realize.” BofA anticipates a restructuring charge of $800 million and after-tax cost efficiencies of $1.1 billion due to overlapping business infrastructures and processes. It is unclear how the new firm’s organizational redundancies will be resolved, but it’s a safe bet that some of the combined 180,000 employees will be sacked for cost cutting purposes.
Merger or not, this bank keeps on growing BofA’s 2003 revenue was $38.5 billion, a 10 percent increase over 2002. The results included $22.1 billion of interest income driven in large part by the low interest rate environment; consumer loans increased substantially, and the bank had the added benefit of low interest expense on BofA customer deposits. Overall, the bank saw increased net income in its three main businesses, with the global corporate and investment banking division earning $2 billion for the first time in history. BofA helped its own cause, hiring its Banc of America Securities subsidiary to advise on the mega-merger with FleetBoston. The $49 billion deal was the financial sector’s largest of 2003 and accounted for more than one-third of the total dollar volume of all announced M&A deals. Banc of America Securities also advised its parent on the $1.6 billion acquisition of a stake in Grupo Financiero Santander.
Banking on human capital Bank of America prides itself on providing a high level of workplace satisfaction for all of its employees. In 2003, for the 15th consecutive year, the bank was recognized by Working Mother magazine as one of the “100 Best Companies for Working Mothers.” BofA also received Working Mother’s highest rating for work/life programs. Minority MBA magazine was another source of praise for BofA, naming
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it one of America’s best companies for corporate diversity and opportunity in 2003 for the second straight year. BofA has also motivated its employees financially. In February 2002, the firm rewarded its staff with company stock options, allowing employees to buy company stock at the then market price of $61.36. Half of the options became exercisable in June 2003, when BofA shares closed in the high $70s for 10 consecutive trading days. The other half will vest when the share price closes at more than $91 for 10 consecutive days.
Harmed a lot by Parmalat Bank of America has not steered completely clear of the industry-wide crackdown on illegal mutual fund practices. In September 2003, New York Attorney General Eliot Spitzer cited BofA’s Nations Funds unit for its connection to hedge fund Canary Capital Partners’ improper late-trading and market-timing practices. In response to the investigation, BofA has conducted an internal review to avoid further abuses, and the firm has pledged to stop doing business with funds that trade improperly. In addition, BofA has allocated $100 million to compensate shareholders who lost money due to any illegal trading. Bank of America is also engulfed in the rapidly developing Parmalat crisis. In an extreme case of corporate accounting fraud, Parmalat’s top executives admitted they secretly embezzled hundreds of millions of dollars from the now-bankrupt Italian dairy company, and billions remain unaccounted for. BofA actually sparked the now high-profile case in December 2003 when the bank disputed the existence of a $5 billion account Parmalat claimed BofA was safeguarding. BofA later refuted a contention made by a lawyer for some of Parmalat creditors who supposedly had traced $7.7 billion of Parmalat funds to another numbered BofA account. After an internal audit, BofA unequivocally stated that the account “does not exist and never existed at Bank of America.” Meanwhile, government agents have raided offices, seized documents and questioned executives of Parmalat’s former banks (including BofA’s Banc of America Securities, Citigroup, Deutsche Bank and Morgan Stanley) to determine how more than $13 billion in assets could have just disappeared. BofA has disclosed that after a self-conducted investigation into its connections with Parmalat, the firm had $274 million of remaining exposure to the dairy company as of December 31, 2003 (due chiefly to $244 million of outstanding loans). While $105 million of this amount is credit-insured, BofA will have to add the remainder to
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the estimated $350 million in write-downs the bank has already taken because of bad Parmalat exposure. It remains to be seen whether Parmalat’s fraud was known or should have been discovered by its financial advisors, especially since many of them ran capital raising deals for the now failed company. The former head of BofA’s Italian corporate finance division is being investigated for his role in a $500 million Parmalat bond sale, as is the bank’s behavior in arranging $750 million of Parmalat debt sales through private placements between 1997 and 2002. Although BofA’s large losses suggest the bank was ignorant of its former client’s fraudulent accounting, the bank may still be responsible for losses on Parmalat bonds the firm sold in these deals.
GETTING HIRED
Looking for the best Bank of America actively recruits undergraduate students at 40 schools across the country, including UC Berkeley, the University of Virginia, MIT, NYU, Texas A&M, Arizona State University and the University of Chicago. The bank targets MBAs at a dozen business programs such as Harvard, Cornell and the University of Michigan. A full campus recruiting calendar is available on the firm’s web site at www.bankofamerica.com. The site also allows interested candidates to search job listings and submit resumes. In addition to its on-campus recruiting efforts, the bank attends many national conventions that target minorities for management positions. Some of the events BofA has recently attended include those sponsored by the NAACP, the National Association of Black Accountants, the United States Hispanic Chamber of Commerce and the National Association of Asian American Professionals. According to one junior banker, BofA is “looking for the best. They want younger people who are looking to stay for a long time.” MBA-level associates are recruited directly by each department, and one former employee cautions, “You can’t always choose your city. [The firm] will try but, for example, if you want to work in highyield bonds, you aren’t going to be working in San Francisco.”
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Not a piece of cake Candidates should expect to go through a few rounds of interviews. One source in sales says he was interviewed first by phone, then in person by “HR, co-workers and my boss.” A somewhat senior source in real estate reports having gone through six interviews with the “recruiter, hiring manager, a peer and three of my new employees.” Yet another contact, in loan review, says he met with the “head and second in command of the department, plus mid-level managers.” No matter whom you meet, sources say BofA interviews are no cakewalk. “They were fairly intense, going over your background and giving you the scoop on the company while asking a bunch of analytical and personality-based questions to see how knowledgeable you are about the company and how quickly you can fit in to the operation,” explains an insider, who adds, “They’re not big on extensive training, so you’re expected to really hit the ground running.”
OUR SURVEY SAYS
Buckle your seatbelt Hurt somewhat by mergers and associated layoffs, BofA’s culture is going through some growing pains. “This used to be an organization where we felt like family,” says a manager. The company is now “an extremely large retail bank with an extremely large retail bank culture.” Another source says, “It’s become a numbersoriented culture. [Outside] consultants have directed a high degree of organizational and management change, and the formula-driven performance scales have created fear in the ranks, given the past three years of layoffs and uncertainty.” The contact adds that the “excessive pace of change” has created “confusion and mistrust.” An employee in commercial banking sees two sides of the story. She concedes that “acquisitions and mergers have left painful changes lingering as we try to be bigger and better at the same time,” but she also says it “feels good” to work at a company that has a “forward-looking desire to get better.” The shifting corporate atmosphere does have some benefits for junior employees who are able to take advantage of an “entrepreneurial” environment where new employees get “immediate exposure to clients, upper management and other bank groups.” And while some think the changes have been detrimental to employee morale, others approve of “a new aggressive attitude with an emphasis on teamwork.” Then again,
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some sources aren’t so sure the company’s stated emphasis on teamwork really lives up to the hype. One contact reports, “It’s a very competitive atmosphere, but not in a positive way. I’ve worked places where the competition was fierce but there was an unspoken ‘fair play’ rule. This is most definitely not the case at Bank of America.” Another contact finds the politics at the company to be distracting, saying, “With so many people looking for an angle, it tends to get in the way of your work and the company suffers for it. With the pay being lower than at many other banks, everyone looks for a way to climb up the ladder. I know that that’s how the world works, but it’s really become a problem here.”
Bravo for the bosses For the most part, BofA junior professionals have good things to say about their bosses. “The exposure to top management is gratifying,” says one associate. Comments another insider, “You will not find many jerks in the organization, as they get culled fast.” Yet another says managers know when to step back: “If you work hard, you won’t be micromanaged,” says the contact, who adds, “As long as you get your work done, you can maintain flexible hours.” One source with a few years under her belt, however, warns that she’s had “both bad experiences and good” with senior management. In general, though, BofA superiors score high marks for their effectiveness. Perhaps a reason why the managers are so good is that the bank “requires extensive initial leadership training for all leaders, and ongoing training every year.” Junior staffers participate in training programs, as well, and overall, insiders seem to be pleased with the firm’s learning opportunities. One banker says training has been “beyond all expectations,” while another raves that the firm offers “excellent and diverse computer-based programs.”
All-inclusive BofA is taking big strides to improve its workforce diversity, though an insider acknowledges that (like many financial services companies) the prevalence of women and minorities “could be better the higher up [in seniority] you get.” In addition to actively recruiting minority candidates at selected events, the bank has organized various leadership and support groups to assist minority employees in creating a better work environment. BofA’s Diversity Network, for example, helps to “promote personal and professional development” through regionally organized
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teams of volunteers. Employees of all levels can become members of this support group.
If time is money… BofA offers “excellent” benefits such as an “impressive 401(k) plan.” Other perks include stock options, reduced or free financial management, child care reimbursement, parking subsidies, flex time, accommodations for handicapped employees, “strong” support for training and education, tuition reimbursement and “numerous programs to help with family.” One employee says her “favorite perk” is the bank’s “strong support of employee volunteerism, including paid volunteer work.” Insiders also say hours are good, and most report only occasional visits to the office on the weekends. Explains one banker, BofA “believes that too many hours means unhappy and stressed associates. Regular and consistent 40- to 50-hour weeks means happy associates and happy families.” However, the firm doesn’t receive such high grades for its compensation. One insider, who concedes “benefits are good,” says “the pay is low, especially starting out.”
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“They’re not big on extensive training, so you’re expected to really hit the ground running.” — Bank of America insider
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16
PRESTIGE RANKING
Dresdner Kleinwort Wasserstein
1301 Avenue of the Americas New York, NY 10019 Phone: (212) 969-2700 www.drkw.com
DEPARTMENTS Capital Markets Corporate Finance and Origination Global Business Services Global Risk Management Information Technology
KEY COMPETITORS Allen & Company Credit Suisse First Boston Lazard
UPPERS • Great momentum in the market (seven consecutive profitable quarters)
DOWNERS THE STATS CEO: Andrew Pisker Employer Type: Division of Dresdner Bank AG No. of Employees: 6,500 No. of Offices: 17
• Strategic focus not yet settled
EMPLOYMENT CONTACT Corporate Finance and Origination Capital Markets Information Technology Frances A. Lyman E-mail:
[email protected] For contact information at other offices, refer to the careers section of www.drkw.com.
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
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“Small and fast moving” “Not what it once was” “Second tier” “Rebuilding”
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Vault Guide to the Top 50 Banking Employers Dresdner Kleinwort Wasserstein
THE SCOOP
Riding out the storm The great investment banking slump of the early 21st century hurt the entire industry, but some firms took it a little harder than others. Dresdner Kleinwort Wasserstein (DrKW) is one firm that’s been waiting anxiously for dawn to break. DrKW, the investment banking arm of über-firm Dresdner Bank AG and a member company of German insurer Allianz Group, was swept up in the banking consolidation frenzy that ushered in the end of the dot-com era boom. The firm provides a full, integrated range of services to corporate, institutional and government clients worldwide through its capital markets and corporate finance and origination divisions. DrKW is headquartered in London and Frankfurt, and has offices in other international financial centers such as New York and Tokyo. In July 2004, DrKW announced the integration of two units (corporate finance and advisory, and capital markets origination) into a new business line called corporate finance and origination (CFO). According to DrKW, “The creation of CFO is another important step forward in building a modern, productive and well-managed client coverage effort.”
Welcome to the family The foundation for Dresdner Kleinwort Wasserstein’s current incarnation was laid in January 2001, when Dresdner Bank paid $1.4 billion to purchase American investment banking boutique Wasserstein Perella, a merger and acquisition specialist led by star rain-maker Bruce Wasserstein, a former M&A attorney at New York law firm Cravath, Swaine & Moore LLP who built the M&A department at First Boston (now Credit Suisse First Boston) before leaving to start his own shop with Joseph Perella. Dresdner combined Wasserstein Perella with its European investment banking operations, Dresdner Kleinwort Benson, to form DrKW, providing a platform with substantial resources in both Europe and North America. In July 2001, German insurance firm Allianz purchased Dresdner Bank for $22 billion, placing DrKW under Allianz ownership. The combination of Dresdner Bank and Allianz created one of the world’s largest integrated financial services providers for banking, investment and insurance products. Allianz’s immediate plans for DrKW included a spin-off of the investment bank, but it soon pulled the old switcheroo, announcing that it would combine DrKW’s
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investment banking operations with Dresdner’s corporate banking unit. Allianz also cut 1,500 employees from DrKW in a bid to save up to $439 million annually. The insurance company blamed the weak IPO market for the sudden abandonment of the spin-off plan, an excuse that, while probably true, did nothing to assuage the anger of top DrKW bankers, including Wasserstein, who dreamed of independence and a potentially lucrative new ownership structure. At the end of 2001, Wasserstein announced his resignation. A few months later, he took over as head of DrKW competitor Lazard.
Out with the old, in with the new In late 2002, the firm saw another high-profile insider depart. Effective October 2002, DrKW CEO Leonhard Fischer resigned after what The Wall Street Journal called “three years of internal turmoil and a collapse of his units’ profitability.” Fischer blamed differences between himself and Dresdner Bank and Allianz officials over DrKW’s future. Andrew Pisker, head of the firm’s capital markets division, succeeded Fischer as CEO. In 2003, the name of the game for DrKW was adding, not subtracting, as the firm hired numerous high-profile bankers. In April, DrKW hired Steve Berger, the former head of European investment banking at Lehman Brothers, as executive chairman of DrKW’s corporate finance and origination business line. As part of a growth plan, Berger has stated that he intends to make 10 to 20 senior hires at the managing director level. Since mid-2003, the firm already made several such hires, including former Credit Suisse First Boston banker Adam Parten as head of telecommunications, based in New York; former Lehman Brothers banker Chad Floe as head of health care, based in London; and former JPMorgan Chase banker Pascal Maeter as head of the financial sponsors group, also based in London. In August 2003, the firm also named a new head of corporate communications, David Waller, a veteran journalist and public relations executive. Waller is based out of London and also acts as the London press representative for Allianz Group. Also joining DrKW in August 2003 was CSFB refugee Ken Robins, who was named global head of equity-linked origination and is also based in London. In September 2003, DrKW named Chris Seery global head of equity derivatives. Seery had worked in the equity derivatives departments of Bankers Trust, Merrill Lynch and Morgan Stanley before becoming a founding partner at hedge fund Oxburgh Partners. The firm built its trading teams through a series of moves in September 2003. Stephen Garrett joined from CSFB as head of corporate block trading, and Samir 208
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Bederr joined DrKW as head of financial institutions trading, after six years at Merrill Lynch. In fact, DrKW raided several firms to establish a new proprietary trading team in September 2003. Tony Baker, most recently the CEO of The Disc Kiosk (a company that produces CDs for record companies and other businesses) and before that a trader at ING, was named head of proprietary trading. Filling out Baker’s team was Paul Varcoe (co-founder of a derivatives software company), Mark Smith (an investment manager at Stapleford Asset Management) and David Cockbill (a trader at ING Barings).
On the charts The firm is ranked among the leaders in advisory and underwriting. According to Thomson Financial, for the first quarter of 2004 (January to March), DrKW ranked No. 15 in U.S. M&A, No. 10 in European M&A and No. 13 in global M&A, all based on completed deals. For the year ending December 31, 2003, the firm was ranked No. 23 in announced M&A worldwide, advising on 70 deals worth $17.2 billion, and was No. 23 in completed M&A transactions in the U.S., with 10 deals worth $4.12 billion. From 2001 to 2003, DrKW advised on M&A transactions with a total volume of more than $407 billion. For that three-year period (ending December 31, 2003), DrKW held several top 10 rankings in the M&A league tables. According to Thomson Financial, DrKW ranked No. 7 in completed U.S. M&A, No. 7 in announced U.K. M&A, No. 2 in completed European to U.S. cross border M&A, and No. 10 in completed global M&A. In 2003, DrKW won several Deal of the Year awards in publications such as IFR, Euromoney, Euroweek and Corporate Finance. Among the DrKW deals cited were Gazprom’s $1.75 billion bond transaction and United Utilities’ £1.1 billion rights issue. In Euroweek’s annual poll of 100 leading international bond issuers, DrKW was voted a Top 3 bank in three categories: Most Impressive in Euros, Best Lead Manager of Corporate Bonds, and Best Bank at Understanding Borrowers’ Needs. DrKW’s research group also had some impressive results in 2003, ranking No. 7 overall for equity and equity-linked research by Thomson Extel and No. 1 for accuracy of research in RQ’s Euro 300 survey. In addition, DrKW’s chief information officer was voted “CIO of the Year” in 2003 by Risk Waters magazine.
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GETTING HIRED
Sized up for fit Like many of its investment banking brethren, DrKW looks for candidates primarily from top-tier business programs and universities, including “all the Ivy League schools, Chicago, Northwestern, NYU and Stanford.” The firm posts its full schedule of recruitment events on its web site, which also allows all interested candidates to submit analyst and associate applications online. Prospective new hires should expect DrKW’s interview process to last two or three rounds, with the final round held “Super Saturday” style (multiple back-to-back interviews) at the firm’s offices. Meetings may be two-on-one, where two DrKW professionals will ask a candidate a variety of technical and finance, accounting and fit questions (such as “Why banking?”). A vice president hired as a lateral to work in the San Francisco office reports that he “met with four to five people in each of the San Francisco and New York offices. Most questions were about the experience at my prior employer.” For those interested in learning more about DrKW’s interview process, the firm provides curious candidates a list of potential interview questions as well as other relevant information on its web site (see “Sample Interview Questions” within the “Resource Zone” section of the career page).
OUR SURVEY SAYS
Trickle down theory Some young bankers at DrKW refer to the firm as “friendly” and “team and goal oriented.” One source says that at night, “people will typically eat together or watch TV in a conference room. Everyone knows everyone.” The workdays for young employees tend to be long. “A good week is 70 hours, a really bad week is 110 hours,” says an analyst, who believes the heavy workload is “a function of not having a lot of analysts” at the firm. For those staffers in groups other than investment banking, the lifestyle isn’t much better. An associate in the research group, for example, reports working 60 to 70 hours a week, coming in multiple weekends each month.
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As for the actual work, it seems to come in intense spurts. “Sometimes, you could be working until four or five in the morning fairly constantly,” explains a contact. “But other times, there might not be anything to do.” Even within a workday, there may be dry spells. “For all the long hours,” says a source, “much of the day is spent waiting for work to trickle down.” When the work does trickle down, however, junior personnel tend to assume relatively high levels of responsibility. DrKW is “definitely looking for people who can work the late hours, people who understand the differences between the small firm and a large firm,” says a source. “It’s not a firm where you can sort of hide in the corner and do one small part of a deal.”
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Rothschild
PRESTIGE RANKING
New Court, St. Swithin’s Lane London EC4P 4DU, United Kingdom Phone: +44-20-7280-5000 Fax: +44-20-7929-1643 www.nmrothschild.com Rothschild North America 1251 Avenue of the Americas 51st Floor New York, NY 10020 Phone: (212) 403-3500 Fax: (212) 403-3501 www.rothschild.com
DEPARTMENTS Asset Management Banking Investment Banking Private Banking Treasury Trust Services
THE STATS Chairman: Sir Evelyn de Rothschild Deputy Chairman: Baron David de Rothschild Chairman: Raymond W. Smith CEO: Gerard (Gerry) Rosenfeld Employer Type: Private company No. of Employees: 2,000 No. of Offices: 40
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• • • •
KEY COMPETITORS Credit Suisse First Boston Deutsche Bank Goldman Sachs ING Lazard
UPPERS • Internationally renown name • Chance to work on some monumental, cross-border deals
DOWNERS • Still not a large presence in U.S. • Focused in a few business areas
EMPLOYMENT CONTACT Diane Shults Recruiting Manager Rothschild Inc. 1251 Avenue of the Americas 44th Floor New York, NY 10020 Fax: (212) 403-3652
[email protected] To apply for positions in Europe and Asia, refer to the firm’s online applicant process, which you can access by going to the career opportunities section of www.rothschild.com.
“Great rep but very focused” “Boutique; good M&A” “Better in Europe” “Not particularly strong, but the name evokes cachet”
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THE SCOOP
In the family Rothschild is the investment banking arm of the London-based, family-owned N.M. Rothschild Group, the world’s largest independent international merchant and investment bank. Rothschild has offices in over 30 countries, including London, Paris, Frankfurt, Milan, Madrid, Toronto, Hong Kong, Singapore, Sydney, Beijing, Tokyo and New York (where the unit Rothschild North America is based). The firm specializes in mergers and acquisitions, restructurings and privatizations. In addition, through a joint venture with ABN AMRO, the firm provides equity underwriting services via the entity ABN AMRO Rothschild. For decades, the Rothschild name has been synonymous with art, culture, wine and, of course, finance. In fact, the Rothschilds have been in the finance business for over 200 years. In 1769 Mayer Amschel Rothschild founded the eponymous firm in Frankfurt and, soon after, enlisted his five sons to expand it throughout Europe. They did, and in 1814 proved that their bank was a force to be reckoned with: the brothers bankrolled the Duke of Wellington’s battle against Napolean by purchasing gold coins throughout Europe, secretly sending them to Holland and, finally, smuggling them into Britain. The deal cemented Rothschild as one of the premier banks in Europe, and led to other monumental deals as well. In the late 1800s, Rothschild offered its expertise to the British government on the acquisition of a large stake in the Suez Canal. In the 1920s, the firm helped finance London’s Tube transportation system.
On its way in M&A Since the days of smuggling and subway construction, Rothschild has become a quiet force in the world of M&A advising. But in 2003 the firm slipped a couple places in the league tables, thanks to a 33 percent decrease in total deal value. The firm ranked No. 12 in worldwide M&A, according to Thomson Financial, falling two spots from its No. 10 place finish in 2002. According to an April 2003 article in The Wall Street Journal, Rothschild “has been making a major push into North America, where it has become a significant player both in mergers and acquisitions and restructuring.” Even so, Rothschild slipped two spots to No. 20 in the U.S. M&A league tables in 2003. The firm did, however, make a significant leap in Latin America announced M&A in 2003, jumping to No. 10 from its No. 21 finish in 2002.
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Vault Guide to the Top 50 Banking Employers Rothschild
Rothschild’s recent transactions include Dial’s $3 billion sale to Henkel, SchlumbergerSema’s £1.3 billion sale to Atos Origin, and the €3.3 billion merger between Banca Populare di Bergamo and Banca Populare Commercio e Industria. Rothschild is also advising French drugmaker Adventis in defense strategies against a hostile takeover by rival Sanofi.
Cross-border dealing Rothschild’s increased success in the U.S. market and high flying advisory business overseas are at least in part a result of the firm’s secret weapon: cross-border deals. Two recent deals illustrated this strength. In April 2003, Rothschild advised the family shareholders of the German hair care firm Wella AG on their divestiture of a 77 percent ownership stake to U.S. company Procter & Gamble. And in February 2003, Rothschild advised U.S. company General Electric Capital Corp. on its $1.5 billion acquisition of the secured and unsecured lending business of First National, a unit of the London-based Abbey National Plc. In addition to GE, Rothschild’s American client list includes big names such as Pacific Gas & Electric Co., United Airlines and TWA (Rothschild advised TWA on its $4 billion sale to American Airlines parent AMR Corp in 2001). And because of the recent increase in business in the States, Rothschild has boosted the number of employees in the U.S. by nearly 300 percent since 2000. That said, the firm’s U.S. presence is still pretty small – a little more than 100 Rothschild employees work in the U.S. To be sure, the Rothschild family also has to thank a man named Jerry for the firm’s recent winning ways. When Gerald “Jerry” Rosenfeld left Lazard to become Rothschild America’s CEO in early 2000, he not only took some huge clients with him – the likes of United and TWA – but also went to his Rolodex to bring in some big time bankers, not the least of whom was David Resnick. According to the Journal, Resnick has been “described by other bankers as a restructuring junkie.” So it comes as no surprise that he heads up Rothschild’s U.S. restructuring group. Resnick – who founded and headed the restructuring group at P.J. Solomon from 1996 to 2000 and, prior to that, worked on restructurings and M&A transactions for Lazard – has a client roster that rivals Rosenfeld’s. During his career, Resnick has worked on deals for Barneys, Renault, Olympia & York and Walt Disney, among others. Nevertheless the company is still going strong in Europe. The firm is advising Air France on the purchase of rival Dutch airline KLM, and is also advising the Glick Family as it tries to resist a takeover of Canary Wharf.
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Changing of the guard Rothschild has a new patriarch at the head of the table. Early in 2003, 72-year-old Sir Evelyn de Rothschild stepped aside to make room for his 60-year-old cousin, Baron David de Rothschild. Baron David had been running Rothschild’s Paris-based bank and had chaired the firm’s global investment bank, run jointly out of London, Paris and New York. According to the Times of London, Sir Evelyn, who’s held the chairmanship for more than 30 years, stood to gain 300 million pounds from the sale of his interest to Baron David and French family members. He formally remains chairman of the NM Rothschild. According to The Wall Street Journal, the Rothschild succession “could trigger harmonization of the sprawling empire’s mysterious ownership structure.” This harmonization might be similar to competitor Lazard’s back in the late 1990s, when it united its Paris, London and New York divisions. These are moves by the last of the old European merchant banks to retain its independence and competitiveness as many formerly prominent institutions fall prey to takeovers and misfortune (Schroeders, Barings, Morgan Grenfell and Robert Flemming, to name a few). Even before the announcement of the succession, the Rothschild empire went through recent consolidation and reorganizing. In September 2002, N.M. Rothschild Group combined 13 separate private banking units into a single worldwide private banking business. In December 2002, the group sold the retail and institutional asset management businesses of Rothschild Asset Management to Insight Investment Management, the fund arm of British bank HBOS. The redistribution of power means that the English and French sides of the family now have an equal stake in the company, and should mitigate some family friction in the complex network of clanrun private companies that controls Rothschild.
Going private With Baron David de Rothschild at the helm, Rothschild is now planning to make a run in private banking. The firm will try to capitalize its old guard reputation by emphasizing its commitment to long-term client relationships and trust. Plans are to expand its private bank by 50 percent over the next five years via acquisitions and the addition of private bankers. Rothschild has a client list of over 4,000, each with an average asset value of over $2 million. The company boasts that each of its private bankers take care of 30 clients or less while the typical private banker handles anywhere from 120 to 150 clients.
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Another sale In January 2004, Rothschild completed the sale of its Rothschild Asset Management (Singapore) subsidiary to Legg Mason. RAM(S) manages $1 billion in fixed interest and equity funds for institutional, retail and other clients. Baltimore-based Legg Mason plans to merge RAM(S) into its wholly owned subsidiary, Legg Mason Asset Management (Asia) Pte Limited. According to a Rothschild press release announcing the completion of the transaction, “all key employees of RAM(S) are expected to remain with Legg Mason.”
GETTING HIRED
Seeking mature, self-confident folks in the U.S. In the U.S., Rothschild, through Rothschild North America, recruits undergrads and grads for the following units: mergers and acquisitions, strategic advisory services, corporate restructurings, private placements, debt capital markets and project finance. For its two-year analyst program, Rothschild says it considers “candidates from all disciplines who have demonstrated both academic achievement and extracurricular excellence.” More specifically, the firm is looking for candidates with “a high degree of maturity” and “self-confidence” who are “highly motivated” and have “strong analytical, writing and communication skills and computer literacy.” If you fit the Rothschild bill and do land a job at the firm, as an analyst, expect to go through “an intensive six week training program,” in which you’ll be schooled in everything from “basic accounting” and “capital structures” to “valuation and M&A modeling.” Rothschild looks for associates who hold an MBA or equivalent advanced degree. To that end, the firm not only wants candidates with strong analytical skills, good grades and “polished written and verbal presentation skills,” but also wants those with “leadership and teaching skills.” In addition, the firm hints that it’s looking for speed. Rothschild says to succeed as an associate you’ll need to be able to “think on your feet” and be able to “move quickly from one priority to another.”
Overseas recruiting In Europe Rothschild also starts out undergraduates in a training program. According to the firm, for the first four months of employment, new hires will “gain experience 216
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in each area of [Rothschild’s] business,” which includes M&A, debt capital markets and equity capital markets. Near the end of the training period, employees will be placed into a specific group, based in part on the employee’s preference. Rothschild says it’s looking for recruits who are “good team leaders and good team players.” The firm is also seeking “good communicators with strong numerical skills,” and “proficiency” in Excel, Word and PowerPoint. For those still in college, the firm offers a summer internship program in the U.K. Rothschild hosts summer interns in the following four cities: London, Birmingham, Manchester and Leeds. The firm says interns “will spend [their] first week in a training course in London. Subjects covered include financial analysis and accounting, computer training and data research tools, as well as an introduction to our London office and the City of London.” After finishing training, interns will be placed into a specific group and “will be expected to work on live transactions and marketing projects, assisting in the research and analysis of different companies and sectors.” Undergrads interested in the internship program can apply online. Applications for summer positions are usually due in February.
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Thomas Weisel Partners
PRESTIGE RANKING
1 Montgomery Street San Francisco, CA 94104 Phone: (415) 364-2500 Fax: (415) 364-2695 www.tweisel.com
DEPARTMENTS Institutional Brokerage Investment Banking Merchant Banking Private Client Services
THE STATS Chairman & CEO: Thomas P. Weisel Employer Type: Private company Revenue: $237 million (FYE 12/03) No. of Employees: 500 No. of Offices: 4
KEY COMPETITORS Banc of America Securities Credit Suisse First Boston JPMorgan Chase Morgan Stanley
UPPERS • Entrepreneurial and team-like culture • Juniors get a ton of responsibility at the outset
DOWNERS • Small firm doesn’t have big training program • Still in recovery mode due to reliance on tech
EMPLOYMENT CONTACT Human Resources Thomas Weisel Partners One Montgomery Street Suite 3700 San Francisco, CA 94104
[email protected]
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “Getting there” • “Busted by the bubble” • “Are they co-managers on everything?” • “Needs to be bought”
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THE SCOOP
The little bank that could Thomas Weisel Partners bills itself as a merchant bank rather than an investment bank, choosing to highlight its strategy of investing in private companies through its private equity funds. In addition to its private equity and asset management practice, Thomas Weisel Partners provides investment banking, institutional brokerage and private client services. Founded in 1999 during the zenith of the Internet IPO era, the San Francisco-based bank was a top player out of the gate. The firm turned a profit just four months after being founded by former Montgomery Securities chairman and CEO, Thomas Weisel. In its first year of operation, the firm advised on 108 investment banking transactions worth a total of $23 billion, including 54 IPOs, lead-managing seven of those issues. The good news continued in 2000, as TWP advised on 140 deals, including 42 IPOs and 46 M&A transactions, for total revenue of $474 million. But in 2001, Thomas Weisel Partners became another victim of the technology bubble bursting, and crashed with a thud. The firm’s revenue fell to $346 million in 2001 and collapsed even further in 2002, as TWP banked just $237 million in revenue and severely reduced headcount, leading many to believe the young bank was destined to close its doors.
His-story Thomas Weisel (pronounced “Wize-ul”) founded Montgomery Securities in 1978 and sold it to NationsBank in 1997 for $1.3 billion. Weisel, who reportedly netted between $100 million and $120 million from the deal, originally planned to remain and run Montgomery after the sale. But his plan fell by the wayside when NationsBank merged with BankAmerica (now called Bank of America). After the union with BankAmerica, Weisel repeatedly clashed with NationsBank CEO Hugh McColl. “At NationsBank, in effect, they were taking the entrepreneurial spirit away,” Weisel would later tell Forbes. Specifically, after the NationsBank/BankAmerica merger, Weisel felt the bank was trying to fold Montgomery into the combined firm. This, Weisel told Red Herring, constituted “a violation of the merger agreement and of my employment contract.” (A little history: Montgomery narrowly escaped being merged with Robertson Stephens, because BankAmerica had purchased the Montgomery rival. Initially, NationsBank and Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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BankAmerica discussed combining the two I-banks when the parents merged, but decided against it. BankAmerica then sold Robertson Stephens to BankBoston and proceeded with its merger with NationsBank.) Weisel finally quit in September 1998. He told Red Herring: “It was very easy for me to say, ‘Fine, see you later.’ I had no interest in being around people who don’t keep their promises.” Weisel can enjoy the last laugh: McColl announced his resignation in January 2001 because of BofA’s lackluster performance, and in mid2002, Robertson Stephens was finally forced to fold due to the tech market fallout.
Montgomery theft? After the split from Montgomery, Weisel assembled a team of investors with the purpose of starting his own investment bank. Due to Weisel’s accumulated wealth and status, many observers believed that Weisel was simply trying to get back at Montgomery by forming his own bank. Motive notwithstanding, Weisel’s new venture recruited 150 former Montgomery employees, including 36 of the 70 partners currently at Thomas Weisel Partners. Bank of America struck back, withholding bonuses from investment banking analysts who left for Weisel in December 1998, and three months later BofA filed a lawsuit against TWP, charging the firm with unfair hiring practices. The lawsuit was settled in 2000, and BofA later restored most of the bonuses and Thomas Weisel Partners paid $20 million as part of the settlement, according to the San Francisco Chronicle.
Man on a mission Weisel himself has been described as intense and driven as they come, and his intensity has been evidenced since he was quite young. Weisel holds a BA from Stanford and an MBA from Harvard. He’s also a five-time speed skating champion who won his first title at the age of 14, and was rumored to have just missed making the 1960 Olympic team. Weisel has also served as chairman of the U.S. Ski Team and, more recently, sponsored Lance Armstrong and the U.S. Postal Service biking team in the Tour de France in 1999, 2000 and 2001. Weisel is also cultured; as a well-known art collector, Weisel is a frequent financial contributor to the San Francisco Museum of Modern Art, and a wing at the museum is named after him. Weisel’s business prowess has also been recognized. He was named “Executive of the Year” in December 1999 by the San Francisco Business Times and won a 1999 “Banker of the Year” award from Investment Dealers’ Digest.
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To learn more about the man behind the firm, check out Weisel’s autobiography, Capital Instincts: Life as an Entrepreneur, Financier, and Athlete, published in January 2003. Chapter one’s entitled, “Never Underestimate Thom Weisel.”
Hanging tough Despite a difficult climate for investment banks, TWP has still performed well. The firm had completed or announced 41 financing and M&A transactions in 2003, totaling nearly $7 billion in transaction value, according to a company press release. TWP’s M&A transactions during 2003 include Business Objects’ $820 million acquisition of Crystal Decisions, aaiPharma’s $368 million merger with CIMA Labs and Inktomi’s $280 million sale to Yahoo! TWP was also active in the IPO market in 2003, co-managing the $113 million offering for iPass, the $84 million offering for FormFactor and the $80 million offering for iPayment. TWP lead managed five follow-on offerings in 2003, including a $92 million offering for Select Comfort, a $78 million offering for Cache, a $52 million offering for IMPAC Medical Systems and a $1.2 billion offering for Seagate Technology. The firm also took advantage of the stronger debt markets, managing several convertible and high-yield offerings, including a $100 million offering for Corixa, a $400 million offering for Fair Isaac and a $345 million offering for Omnicare. TWP’s research and institutional brokerage division also has been on the uptick over the past year or so. TWP has improved its ranking to No. 16 among all investment banks in terms of numbers of companies covered, tracking 426 stocks as of the end of 2003, an increase of 17 percent since 2002. Moreover, TWP has continued its aggressive position by focusing on new growth stocks and sectors, and has plants to increase its coverage list to 500 stocks.
And then there were 500 In early 2000, Thomas Weisel Partners had 400 employees. By June 2000, after approximately 18 months in business, the high-flying firm had increased its staff to 630. And by February 2001, when other firms on the Street were downsizing, Weisel further fattened its staff to 830, more than double the size a little over a year earlier. But the hiring stopped by mid-2001 – and turned into firing. Thomas Weisel Partners announced in August 2001 that 80 employees, mostly investment banking professionals, would be let go. Chief Operating Officer Blake Jorgensen told the San Francisco Chronicle, “We’re still dead set on building relationships and business,”
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but added, “We’re making some prudent moves to keep costs in line with market realities. The market has been slower to come back than earlier expectations.” By 2003, Thomas Weisel Partners had gone through three additional rounds of layoffs, bringing the headcount down to about 500 by the end of the year. Moreover, several top partners at the firm had defected, leading to speculation in Investment Dealers’ Digest that TWP was sinking. According to IDD, David Castagna, a TWP partner who directed the technology investment banking group, left for a similar position in SG Cowen Securities’ San Francisco office in November 2003. Just a few weeks earlier, IDD reported that David Hedley, also a partner, left to join UBS as an executive director and head of the bank’s electronic supply-chain practice. Nonetheless, in a November 2003 wrap-up article on the firm, IDD reported several new 2003 TWP hires, including Morgan Stanley senior research analysts Scott Merlis, who focuses on the auto sector and proprietary capital, and Ian Somaiya, a senior biotech analyst. TWP also snagged former Goldman Sachs research sales chief Ron Ongaro, as well as Bob Krumme, formerly with Harris Nesbitt and Gerard. In trading, Patrick Quinn joined from Morgan Stanley, while Rick Hult and Chris Antipa jumped ship from BofA.
No-fault settlement? In February 2003, Thomas Weisel Partners became the final firm to agree to pay fines stemming from alleged conflicts of interest among investment banks’ advisory and research units. Putting an end to two months of negotiations, Thomas Weisel Partners said it would pay federal regulators $12.5 million to fund independent research. Originally, the firm was slated to pay $60 million in fines, but CEO Thom Weisel said the firm shouldn’t have to pay what the bigger companies ultimately paid (The fines ranged from $400 million for Citigroup to $32.5 million for Piper Jaffray).
Googles of dough Perhaps the best news that could get TWP back on track was the January 2004 announcement reported by industry trades that TWP would be involved with Google’s 2004 IPO. TWP is listed along with Citigroup, Credit Suisse First Boston, JPMorgan Chase and WR Hambrecht as joining lead managers Goldman Sachs and Morgan Stanley in bringing the much-heralded search-engine company to market, a deal expected to raise about $3 billion.
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GETTING HIRED
Mission: tough, but not impossible Of course, like any firm that’s gone through widespread layoffs recently, Weisel’s hiring practices aren’t what they used to be. Even so, the firm says it still has an “active undergrad and MBA recruiting program.” That said, insiders say the young and small Weisel Partners has toughened up its hiring standards. “Back in 2000, we would hire anybody. Now, we’re doing a better job,” says one source. One banker says it’s the firm’s “small size and selectivity of the partners” that makes it difficult to land a job at TWP. However, the firm’s small size can also work to a potential recruit’s advantage. “The number of interviews is extensive, but getting in is not all that difficult as long as you find one ardent proponent internally,” says one banker. Another source says, “Being small, the firm has the opportunity to make fast decisions. While Goldman requires 20 to 30 interviews over many separate days, we can make a decision after a recruit meets [a handful of] people,” usually eight to 10. One employee admits that landing a position at the firm is “challenging,” but says, “it’s an entirely possible place to find a job. We hire a wide variety of people and really focus on fit, not just on you being number one in your class.” The firm primarily searches for recruits at “Stanford and Harvard, but does go to other Ivy Leauge schools as well.” And the firm does have “an open screening process for campuses we don’t go to,” says one contact. The interview process is “typical of the Street, with three to four rounds of interviews,” say several insiders. Interview questions “focus on energy, drive, enthusiasm, as well as abilities and experience,” says one source. Another contact remarks that recruits can also expect “very technical banking skill questions.”
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OUR SURVEY SAYS
Playing nice Like its founder, TWP is an “entrepreneurial,” “aggressive” and “competitive” place to work with a “strong team atmosphere,” say most insiders. Common catch phrases such as “non-hierarchical” and “results-driven” are also frequently used in describing the firm’s culture. “It’s an absolute meritocracy,” says one current banker. “Only the best will thrive, but it’s a great place to build a career for those who consider themselves achievers.” TWP has a “hungry atmosphere with bulge-bracket experienced professionals,” says another employee. “It’s highly competitive, but not overbearing.” Another contact says at TWP “one’s individual efforts and achievements can really make a difference – and will be recognized.” However, some employees say slack managers create a less than ideal environment. One source says, “It seems as if many partners came to Weisel hoping for a payday, with most having done well during last decade’s bull market. So it’s frustrating for lower rank colleagues who are generating far greater revenues to the firm.” Another employee gripes, “Upper management’s lack of skills, sophistication and market savvy creates an odd air of apathy among employees.” At least one employee says that the firm’s newness might have something to do with the negative opinions. “We’re still moving a lot of pieces in an effort to develop a sustainable business, and the people side of our firm has lagged in its development.” For the most part, employees report good working relationships with their managers – and even better relationships with their peers or subordinates. “In general, top managers don’t beat on lower-level people like I’ve seen at other firms,” says one research analyst. “That really doesn’t fly here.” Another employee calls managers’ treatment of subordinates “excellent, unlike any other platform I’ve seen.” Yet another contact observes that relationships are “very close between all members of the team, and we often socialize together after-hours.”
Gotta have art CEO Thom Weisel is not only an athlete, he’s also an aesthete. Nearly all insiders agree that the firm’s offices are impressive, crowned by the chief executive’s own “fabulous” and “incredible” art collection. “Weisel has always splurged on pricy digs. All the offices double as a display for his art collection,” says one employee. “The office environment is a personal focus of Thom,” remarks another insider. It’s “very comfortable with a great collection of modern art and an excellent 224
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infrastructure,” says yet another source. However, Thom’s sense of aesthetic has its weak points. According to one contact, “Amenities are excellent, but non-partner professionals must share offices – which is a complete hassle.”
Close, but no cigars Although TWP tries to pay its employees “middle of the Street” salaries, the firm doesn’t always succeed, say insiders. TWP’s compensation has “generally been inline with industry averages, if not above,” says one source, who adds, “The firm is very conscious of making salaries and bonuses competitive with the rest of the Street.” Another contact remarks that TWP “strives to pay in Street ranges – not at the top of the range, but fairly in the range by class.” Some contacts, however, strongly disagree. TWP “has acquired a reputation of paying below the Street,” says one source. An associate gives specifics: “I was paid $25,000 to $50,000 below my peers last year.” The banker adds, “I verified this with people who had the same job and graduated from business school the same year I did.” (The firm questions those numbers, saying they may not be accurate.) One source gives the possible reason for the difference. TWP is a “smaller firm, so compensation is more volatile than larger firms. It’s better in the good times, but worse in the bad times.” There’s not much disagreement when it comes to benefits. As a result of the recent market downturn, TWP cut back on extras. “Perks are lame,” gripes one employee. “Meals and travel allowances are a pittance, down enormously from 2000 levels.” Another says, “Other than the gym membership, there’s fewer perks than at the big bulge bracket firms.” One insider even says it’s now become “expensive as a professional to travel, because you must pick up the difference between firm policy and actual expenditures.” At least one New York employee doesn’t find it a hassle. “Meal allowance is reasonable, but transportation is weaker than that of my peer group. However, it’s generally not a problem. It essentially means cabs, instead of car service in the City.” Atypical Wall Street perks include “investment in private equity funds” and “equity in the [TWP] partnership.” And the firm does have a business-casual-except-for-client-contact dress policy. “Which is nice,” says one employee.
Independent study Although employees consistently give Weisel Partners’ training program low marks, they report that the once non-existent program is showing improvement. “Training is very much needed. I was amazed that there was absolutely nothing in terms of
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training here when I joined two and a half years ago,” says one insider. “For the first one and a half years the firm had little time to develop a training program,” says another contact, who adds, “Gradually, though, they’re improving in this area.” Although the firm now has “a formal four-week training program, equivalent to the bulge bracket firms,” sources still admit, “There’s not tons of formal training” and TWP has “less training than other firms.” Says one insider, “The firm provides some training, but to be successful, you have to be a self-starter.”
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“In general, top managers don’t beat on lower-level people like I’ve seen at other firms. That really doesn’t fly here.” — Thomas Weisel insider
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Barclays Capital
PRESTIGE RANKING
5 The North Colonnade Canary Wharf London E14 4BB United Kingdom Phone: +44 (0) 20 7623 2323 200 Park Avenue New York, NY 10166 Phone: (212) 412-4000 www.barcap.com
KEY COMPETITORS Goldman Sachs Morgan Stanley UBS Investment Bank
UPPERS • Top name in fixed income
DOWNERS DEPARTMENTS Collateralized Financing • Global Financing • Global Markets • Private Equity • Research • Risk Management • Sales
THE STATS Chairman and CEO, Americas: Thomas L. (Tom) Kalaris Employer Type: Subsidiary of Barclays Bank PLC No. of Employees: 5,300 No. of Offices: 32
• Still a ways to go in the U.S.
EMPLOYMENT CONTACT Undergraduate and MBA students www.barcap.com/graduatecareers Experienced hires www.barcap.com/exphire
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “Big hitters in the debt world” • “Prestigious, but bad recruiting process” • “Great in the U.K., nothing anywhere else” • “Aggressively hiring; high payers”
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THE SCOOP
Debt dynamo Barclays Capital is the investment banking business of Barclays PLC, one of the U.K.’s largest financial institutions. Debt focused, Barclays Capital provides corporations and governments with fixed income products and services, including underwriting, research, derivatives, foreign exchange, financial advisory and private equity. For good reason, the firm brags about its fixed income research unit – which has picked up numerous accolades in recent years. In October 2003, Barclays Capital ranked among the top 10 firms in the U.S. investment-grade debt category of Institutional Investor’s All-American Fixed Income Research Survey. Each of the firm’s senior analysts received a ranking in the 2003 survey, and all improved their rankings over the previous year, when Barclays placed 12th overall. Additionally, in February 2003, the firm scored a bunch of top 10 honors in Global Investor’s annual rankings of fixed income research, including No. 2 in “Most Improved in Overall Research,” No. 7 in “Best Global Fixed Income Research Overall,” No. 6 in “Best Fixed Income Research Europe” and No. 10 in “Best Fixed Income Research North America.”
On the move Founded in 1997, Barclays Capital has had its hand in many deals – and worked with some big-time clients – in its young existence. In 2000, the firm lead managed 10 bond deals; in 2002, the firm led 37. So far, its client list includes household names such as McDonald’s, Kellogg’s, GMAC, Ford, Chevron Phillips and General Mills. In 2002, Barclays ranked No. 12 in the U.S. investment-grade league table, according to Thomson Financial. It also ranked in the top 10 in the credit card and auto industries of the asset securitization business. Also, during the year, according to the firm, it was the only investment bank to lead private placement transactions in nine different countries. In 2003, the firm ranked No. 5 on Thomson Financial’s global loan league table, trailing only JPMorgan Chase, Citigroup, Banc of Amercia Securities and Deutsche Bank.
Picking up the hardware Barclays Capital’s mantel is filled with other awards, too. In April 2003, Global Custodian named the firm “Best in Class” in three categories – securities lending, Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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reporting and technology – in its annual prime brokerage survey. In January 2003, Treasury Management International magazine named Barclays Capital “Best Commercial Paper Program Manager” for the second year in a row. Additionally, the firm has landed on “deal of the year” lists in several publications such as AsiaMoney, Project Finance and The Asset. More recently, in October 2003, Barclays Capital placed in the top five in 20 categories in Risk magazine’s annual derivative dealers survey, taking home top honors in two. In November 2003, the firm was named “Bank of the Year” at the first-ever European Private Summit, a 12-hour meeting that brought together business leaders, European policy experts and leading figures in the private equity industry. In another first, Euromoney named Barclays Capital the “Best Specialist Investment Bank” in July 2003. Commenting on the annual award’s first winner, Euromoney called Barclays Capital “a rarity,” explaining that the firm “has been climbing the bond league tables, is consistently top of the European loans league tables, is nurturing a niche equities franchise and its employees seem to like working there.” Indeed they do. In June 2003, Barclays Capital was named the “Best Place to Work on Wall Street” in Institutional Investor’s first annual employee survey. Barclays employees gave the firm an average score of 4.01 out of a possible 5.00 in the 28 different categories. In fact, of the 13 firms in the survey, Barclays was the only one with an overall score higher than 4.0. Second place UBS scored 3.67 overall.
Reshuffling – and stacking – the deck Barclays Capital was one of the few investment banks that expanded in 2002, and the firm’s focus on debt shielded its bottom line from the pain other companies felt in 2001 and 2002. But the firm began to suffer the pinch in 2003. In January 2003, Barclays Capital announced plans to lay off 200 London-based back-office staff. A few days later, Mark Arnold, the firm’s chief financial officer, suddenly left the company in what observers termed a reshuffling of upper management. In March 2003, Mark D’Andrea, the New York-based global head of prime brokerage, left the firm to pursue other business interests. But later in the year, the firm made several key additions. In August, Dominic Thwaites became director and head of Credit Trading IT. Thwaites previously worked at Lehman Brothers as a director of IT overseeing the delivery of IT solutions for structured credit trading, futures execution, firm financing and repo trading. In September 2003, Barclays tapped Nancy Gloor as global head of fixed income 230
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technology and chief information officer in the Americas. Most recently, Gloor had spent 17 years at Goldman Sachs, where she worked as managing director of the London-based fixed income, commodities and currency technology unit, and oversaw finance, operations and resources technology in Europe. Upon her hiring, Gloor said in a press release, “As a young and expanding company, Barclays Capital uniquely offers me the opportunity to create technology solutions that will shape the organization and maintain the forward momentum it’s built in North America.” Also in September, the firm named Inna Koren the new director and senior home equity analyst of the firm’s home equity loan research unit. Koren also has roots at Goldman. She began her career there in mortgage finance, but most recently ran Wachovia’s asset backed securities consumer research division. Koren’s appointment followed on the heels of three other key additions to the firm’s asset backed securities unit: Paul Menefee joined the firm as a whole loan banker, John Carroll as a whole loan trader and Mark Opila as part of the asset-backed sales team. Barclays made several other employee acquisitions during the year, including nabbing William Gleason, Marjorie Marker and Ray Thompson. Gleason, formerly at JPMorgan Chase, and Marker, previously at Ernst & Young LLP, joined the firm in October 2003 as managing directors in corporate risk management and derivates. In November 2003, Thompson, most recently at Salomon Smith Barney, became a director in the firm’s information technology unit, where he’ll oversee financial management and project planning.
GETTING HIRED
Not your typical process Barclays Capital’s web site, www.barcap.com, has detailed career sections for experienced hires and those in undergraduate and MBA programs. The site has application forms for all positions, including summer interns. The firm begins accepting applications from MBAs and undergraduates in September. In 2004, the firm concentrated its recruiting in New Jersey, New York and Pennsylvania, visiting several schools in the tri-state area, including Rutgers, Fairleigh Dickinson, Seton Hall, Villanova, Temple, Lehigh and Lafayette. According to the firm, its “recruitment process is different from many of the other investment banks,” as it has “tried to make [the process] as quick and effective as possible.” The firm’s “basic Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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route from application to job offer is as follows: complete a short five-minute online pre-screen, a 15-minute online registration process and an online preferred working style questionnaire; then register online for an aptitude test session, attend an aptitude test session, complete an online resume and attend a selection event.” Interested applicants can take sample aptitude questions on the firm’s web site. And it certainly pays to practice, as the firm rewards the top 50 test performers for analyst positions and the top 50 for associate spots with a cash prize of $1,500 each. While the firm is definitely looking for those strong in “numerical, verbal and critical reasoning,” Barclays notes that these are only a few of the aspects that “make a candidate suitable for [a job at] Barclays Capital.” The firm says it’s “also interested in how you interact with other people, how you think, make decisions and solve problems.” This they judge during their selection events, which “involve interviews, business simulations, group activities and presentations.”
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“[Our] recruitment process is different from many other investment banks. [We’ve] tried to make it as quick and effective as possible.” — Barclays Capital
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HSBC Holdings plc
PRESTIGE RANKING
World Headquarters: 8 Canada Square London E145HQ United Kingdom Phone: +44-020-7991-8888 Fax: +44-020-7992-4880 www.hsbc.com HSBC Bank USA 452 5th Ave. New York, NY 10018 Phone: (212) 525-5000 www.us.hsbc.com
DEPARTMENTS* Commercial Banking • Corporate, Investment Banking and Markets • Personal Financial Services • Private Banking *Lines of Business
THE STATS Group Chairman, HSBC Holdings: Sir John R. H. Bond CEO, HSBC Holdings: Stephen Green President, CEO, and Director, HSBC USA: Martin Glynn Employer Type: Public company Ticker Symbol: HBC (NYSE) Revenue: $56.08 billion (FYE 12/03) Net Income: $8.77 billion No. of Employees: 223,000 No. of Offices: 9,500
KEY COMPETITORS Barclays Citigroup
UPPERS • Growing presence in the U.S., especially in M&A • Monstrous firm – second-largest banking firm in world
DOWNERS • Still not a big name in the U.S. • Historically conservative
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
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EMPLOYMENT CONTACT For positions in the U.S., candidates can send their resumes to
[email protected] or can build a resume online at the firm’s website, www.hsbc.com, by going to “Inside HSBC,” then “Human Resources”
© 2004 Vault Inc.
Vault Guide to the Top 50 Banking Employers HSBC Holdings plc
THE SCOOP
No. 1 in the U.K., second in the world Measured by market value, London-based HSBC Holdings plc is the largest banking company in the U.K. and second-largest in the world. The firm owns the Hongkong and Shanghai Banking Corporation, France’s CCF (formerly known as Credit Commercial de France) and 62 percent of Hong Kong’s Hang Seng Bank. In addition to commercial banking services, HSBC provides asset management, leasing services and, primarily through HSBC Investment Bank, investment banking services. In the U.S., HSBC operates through HSBC Bank USA, which has more than 400 branches in New York and more than 20 across the country (in California, Florida, Oregon, Pennsylvania and Washington state). HSBC Holdings also provides financial services in the States through a joint venture called Wells Fargo HSBC Trade Bank. In 2003, HSBC Bank USA, which has 13,400 employees, contributed $4.6 billion in gross revenue and $941 million in net income to parent HSBC Holdings’ empire. A significant portion of HSBC’s markets business, credit derivatives, foreign exchange, precious metals and securities lending is part of HSBC Bank USA.
Movin’ up in M&A Lately, HSBC has been making a huge push in global merger and acquisition advisory. According to Thomson Financial, in announced worldwide M&A advisory, HSBC jumped from the No. 36 spot in 2001 to the No. 14 spot in 2002, announcing at least 70 deals worth more than $40 billion during the year. HSBC slipped somewhat in the category in 2003, falling two notches to No. 17, on 72 announced deals worth $27.4 billion. But in completed M&A, the firm went from the No. 21 spot in 2002 all the way to No. 13 in 2003, working on 66 deals worth $33.9 billion. On the U.S. tables, the firm took the No. 14 spot in announced M&A in 2002, which was certainly an impressive leap, considering that in 2001 HSBC wasn’t even among the top 100 advisors in U.S. M&A. However, the firm’s high ranking was attributed to only one deal worth $15 billion – its own acquisition of Household International. As a result of that deal getting completed the following year, the firm ranked No. 13 in U.S. completed M&A in 2003. Aside from the Household deal, the firm only completed two others during the year, for a combined worth of $19.7 billion. And in 2003, the firm failed to place in the top 25 in U.S. announced M&A.
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Adept in debt In 2003, HSBC ranked among the top 15 in numerous fixed income league tables, according to Thomson Financial. HSBC held on to the No. 15 ranking in global debt issues, underwriting 507 deals worth a total of $106.4 billion. The firm moved up a notch to take the No. 13 spot in global short-term debt, working on 95 issues worth $9.4 billion. HSBC also moved up one spot to grab the No. 15 ranking in global long-term debt, underwriting 415 issues amounting to $97 billion in proceeds. Additionally, the firm took the No. 16 spot in global IPO underwriting, working on six issues worth $1.2 billion, which represented a one-place fall from its No. 15 finish in 2002. HSBC did, however, break the top 15 in a few global tables, including global long-term straight debt (No. 11), global high-grade corporate debt (No. 9) and global emerging markets corporate debt (No. 10). In the 2003 U.S. tables, the firm’s results weren’t much different. HSBC placed No. 13 in U.S. short-term debt underwriting, working on 72 issues worth $8.5 billion. This was a slight jump from the firm’s No. 17 ranking in 2002. In U.S. long-term debt, HSBC ranked No. 18 in 2003, underwriting 60 issues for a total of $21 billion, a minor fall from its No. 14 finish the previous year. And in U.S. high-grade corporate debt, the firm placed No. 13, underwriting 22 issues worth $11 billion, which was a slight move up from No. 16 in 2002. In addition, the firm placed in the top 15 of several other U.S. league tables, including U.S. emerging markets corporate debt (No. 12), U.S. non-convertible preferred stock (No. 8), U.S. federal credit agency debt (No. 18) and U.S. agency sovereign and supranational debt (No. 12).
Hong Kong roots HSBC traces its history back to 1865 and the founding of the Hongkong and Shanghai Banking Corporation Limited, which opened offices in Shanghai and London. Thomas Sutherland, who at the time was the Hong Kong Superintendent of the Peninsular and Oriental Stream Navigation Company, saw a need for local banking branches in Hong Kong and along the China Coast. Through the next several decades, into the 20th century, the company opened branches in China and Southeast Asia, eventually expanding into the Indian sub-continent, Europe and North America. In 1959, the Hongkong and Shanghai Banking Corp. acquired the British Bank of the Middle East (originally the Imperial Bank of Persia, and which had a number of operations in the Gulf States) and the Mercantile Bank, which had operations in India and Asia. Six years after that dual purchase, the company bought a controlling
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interest in the Hang Seng Bank, which had been based in Hong Kong since 1933. Through the 1980s, the banking behemoth focused on moving into new markets, establishing the Hongkong Bank of Canada in 1981 and the Hongkong Bank of Australia five years later. In 1987, Marine Midland Bank, based in New York, became part of Hongkong and Shanghai Banking’s holdings, as part of the company’s U.S. operations. In 1991, the disparate and far-flung operations were brought together under the ownership and control of a new company, HSBC Holdings plc.
Looking to Europe; coming to America The acquisitive pace continued, and in 1992 HSBC bought Midland Bank, based in the U.K., and formed the HSBC Investment Bank, which tied together the company’s London merchant and securities banking businesses. Through the 1990s, HSBC expanded into Brazil and Argentina. In 1999, the company increased its presence in the U.S. and Europe with its respective acquisitions of Republic New York Corp. and Safra Holdings. In 2000, HSBC acquired Credit Commercial de France, headquartered in Paris, with a network of more than 700 branches across France providing investment banking and asset management services. Later that year, HSBC restructured its private banking operations, and formed a new holding company in Switzerland known as HSBC Private Banking Holdings (Suisse) S.A. More recently, in November 2002, HSBC Holdings purchased a majority stake in Grupo Financiero Bital for $1.14 billon. Bital, the fifth-largest bank in Mexico, had approximately 1,200 branches with 6 million customers and over 15,000 employees at the time of the acquisition. In its largest and most important acquisition since the Midland deal, in March 2003, HSBC finalized its monstrous $14.2 billion acquisition of Household International, a major provider of consumer finance and a top 10 issuer of credit cards in the United States. Household has operations in the U.S., Canada and Britain, with assets over $114.5 billion as of September 2003. In an interview with The Banker magazine in October 2003, HSBC Chairman Sir John Bond said, “The broad strategic decision [for the acquisition] is this: two-thirds of every economy in the world is based on consumer expenditure and the more you can get your organization to sit astride that, frankly, the better for your business.” The Banker cited more specific reasons for the decision, including “the need for a substantial U.S. presence in line with the bank’s global ambitions…and the use of consumer finance as a spearhead into new countries.”
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HBSC hires Studs In April 2002, John “Studs” Studzinski left his vice chairmanship at Morgan Stanley to join HSBC as co-head of investment banking. HSBC said the turn to an outsider, which was out of the ordinary for the historically conservative bank, would take its investment banking unit “to the next stage of its development.” If Studs’ inner circle and track record are any indication, there’s a good chance he’ll do just that. According to The Wall Street Journal, Studzinski “is known as much for his lavish lifestyle and glamorous social circle – which ranges from cabinet ministers to royalty and artists, including the rock star Sting – as he is for his role in building Morgan Stanley’s investment-banking operations in Europe over the past 20 years.” Upon the announcement of his new post, the 47-year-old American Studzinski said he would “redefine the business model” of HSBC’s investment banking unit and would make “targeted additions” to the unit. Unlike other huge global banks have done, or at least tried to do, HSBC is not planning to buy an investment banks to boost its operation in that area. In October 2003, The Banker quoted HSBC chairman Sir John as saying, “We are looking to build a relationship-minded investment bank and we will build it brick by brick. We don’t mind if it takes five years or 10 years. We will only recruit people who share the same vision.” Sir John added, “What we try to do is screen out avarice and screen out the star culture.” (Which seems a bit counterintuitive to hire the superstar Studs.) But, according to Sir John, “[Studzinski] believes in what I have described and he has done that at Morgan Stanley and that is why he is here. Another reason he is here is that he came to us and said, ‘You are sitting on top of an enormous opportunity to build an investment bank in an HSBC mold that is different, and I would love to do it.’” So far, with Studs on board, the unit has been doing well. According to The Banker, in the first half of 2003, HSBC’s investment banking results increased by 8 percent, “benefiting from a larger product range, revenue from refinancings, and record results from debt origination and structured financing.”
Private ops At the beginning of 2004, HSBC rebranded its global private banking business, giving it the moniker HSBC Private Bank. Previously, the business was called HSBC Republic, which the firm took in January 2000 when it merged with Republic New York Corporation and Safra Republic Holdings and, later, with CCF. According to the firm, “This initiative is designed to achieve full recognition for HSBC Private
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Bank as one of the world’s largest and most successful private banks.” Indeed, it’s currently the world’s fifth-largest private bank in terms of assets under management, according to Scorpio Partnership. The move also reflected the unit’s significant growth in recent years. In 1999, the unit employed 1,300 staff serving 27,000 clients from eight locations, and had $89 billion in assets under management. As of June 2003, the unit had 5,000 staff serving 100,000 clients from 55 locations worldwide. Funds under management in the unit were $169 billion as of December 31, 2003.
Getting respect HSBC has picked up several awards and honors in the past few years. Most recently, in January 2004, the firm ranked No. 41 in the Financial Times/ PricewaterhouseCoopers list of the most respected companies in the world, and took the No. 25 spot on the FT/PwC list of the most respected companies in the world for creating shareholder value. In November 2003, the firm received two big honors. HSBC was named the Retail Bank of the Year in the Lafferty Banking Awards, and Euromoney ranked the firm the second best cash management bank in the world. The firm also picked up some additional nods earlier in the year. The firm was named Best Global Bank by The Banker in September 2003. And in March 2003, in Fortune’s annual listing of the world’s most admired companies, HSBC took the No. 50 spot. More recently, in July 2004, HSBC ranked No. 33 in an annual listing of the world’s most valuable brands by BusinessWeek and Interbrand.
GETTING HIRED
Expect to be tested Interested applicants can visit HSBC’s web site at www.hsbc.com. There are links to specific regions, human resources departments and specific units, including Treasury and International Private Banking, Commercial Banking, Information Technology, and Investment Banking and Markets. Resumes can be submitted online. The site also lists details on the company’s graduate recruiting program, as well as a schedule of campus visits and other career-centered events. “The hiring process is pretty intense,” says an insider. “Normally an analyst is required to come in about three or four times before they’re hired.” Expect to meet with your “immediate senior, the group’s team leader and, at times, the EVP of the Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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entire corporate and investment banking group.” An international manager based in the U.K. says it’s a little different interviewing for his position. He says the process “first involves the application form, then some numerical and verbal tests before the first interview, which is a full day in London.” He adds that the day in London involves a “two-hour [test] assessing management savvy and approaches to problems – in particular, problem-identifying, problem-solving and prioritizing.” After this, you’ll go through an “hour-long interview with an experienced international manager.” Questions to expect include “What do you think are the strengths and weaknesses of the bank? Do you foresee any future problems for the industry? What other jobs have you applied for? Explain a situation in which you had to deal with a difficult person and a situation in which you had to deal with a different culture.” A source in IT reports not having to go through a formal interview process, explaining that she only “met with an HR employee and an IT manager.”
OUR SURVEY SAYS
Relaxed and looking to beef up One insider calls the firm’s culture “as laid back as you could imagine.” Another source says the firm has a “nice atmosphere.” And yet another contact calls HSBC “flexible,” adding that “there are people from all over the world working here.” In addition, says that source, “The company has merged two or three times in the last five years, so the corporate culture here is evolving.” One way the firm’s said to be evolving: focusing on the all-important U.S. market. “The company will be expanding in the U.S. over the next couple years,” notes one source, who adds, “It’s a good company overall, but like any other place, there are strengths and weaknesses.” Of course, one strength is HSBC’s “distribution network – the company is one of the largest banks worldwide.” But while HSBC’s largesse and reach makes for a “somewhat diverse” workforce, a New York-based source admits, “There is a need for more diversity in upper management.” That contact also reports a “business casual” dress code, but says opportunities for advancement are relatively formal. “There are some [opportunities],” he admits, “but you must put in your required years before you’re ‘eligible’ for a promotion.” To one mid-level contact, putting in your time on a daily basis means “getting in at 8:30 a.m. and leaving at 6:30 p.m.”
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Vault Guide to the Top 50 Banking Employers HSBC Holdings plc
“[The firm’s culture is] as laid back as you could imagine.” — HSBC insider
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Wachovia
PRESTIGE RANKING
301 S. College Street Suite 4000 Charlotte, NC 28288 Phone: (704) 374-6161 Fax: (704) 383-0996 www.wachovia.com
DEPARTMENTS* Capital Management Corporate and Investment Banking General Banking Wealth Management
KEY COMPETITORS Bank of America Citigroup JPMorgan Chase SunTrust
UPPERS • Carolina culture – “friendly,” “understanding” people • Great benefit package
DOWNERS
*Business lines
THE STATS Chairman and CEO: G. Kennedy (Ken) Thompson Employer Type: Public company Ticker Symbol: WB (NYSE) Revenue: $24.47 billion (FYE 12/03) Net Income: $4.62 billion No. of Employees: 80,778 No. of Offices: 3,229
• Pay, while improving, still could be better • Somewhat political environment
EMPLOYMENT CONTACT For opportunities at Wachovia and Wachovia Securities: Wachovia Corporation ATTN: Resume Processing 1525 West W.T. Harris Boulevard Charlotte, NC 28288-0970 www.wachovia.com/careers/
THE BUZZ
WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING
• “A Charlotte bank with New York compensation” • “Strong, large, reputable” • “Still living in BofA’s shadow”
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Vault Guide to the Top 50 Banking Employers Wachovia
THE SCOOP
From Wall Street to Main Street Despite being formed by a big, Wall Street-style merger, Wachovia knows its business is firmly entrenched on Main Street, U.S.A. Formed in 2001 when East Coast banking heavyweight First Union bought Wachovia and retained the smaller firm’s name, the company is the fourth-largest bank in the U.S. behind Citigroup, JPMorgan Chase and Bank of America. Currently, Wachovia has some 3,800 locations that offer retail and corporate banking services in about a dozen eastern states from Connecticut to Florida. Wachovia also offers wealth management (through subsidiary OFFITBANK), investment management (through Evergreen Investments), insurance and corporate finance, including debt underwriting and asset financing. Affirming the success of the First Union/Wachovia merger, the London based magazine The Banker named Wachovia the U.S. “Bank of the Year” in its September 2002 issue. In a press release upon winning the annual award, Wachovia President and CEO Ken Thompson said, “The award reaffirms that with the merger of Wachovia and First Union, we have built a company that is not only strong, but truly outstanding.” A year later came a few more honors. In September 2003, the firm was named one of America’s “Top 10 Companies for Working Mothers,” by Working Mother magazine, which also named Wachovia “Best in Industry” and “Best in Class for Family Friendly Culture.”
Another $14-billion deal In June 2004, Wachovia agreed to acquire Birmingham, Ala.-based SouthTrust Corporation for $14.3 billion. The deal, which will significantly add to Wachovia’s reach in the South, followed in the footsteps of JPMorgan Chase and Bank of America, both of which also announced huge acquisitions in the past year. At the time of the announcement, SouthTrust had $52.7 billion in assets and 712 offices. The acquisition, subject to regulatory and shareholder approval, is expected to close in the fourth quarter of 2004.
A new strategy Shortly after the consummation of the First Union merger, Wachovia began growing its business through a series of mergers and acquisitions. In November 2001, Visit the Vault Finance Career Channel at www.vault.com/finance — with insider firm profiles, message boards, the Vault Finance Job Board and more.
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Wachovia purchased the assets and business of Maryland-based Crawford, Slevin & Hicks (CS&H). The acquisition of CS&H, a group health insurance provider with annual revenues of $16 million, boosted Wachovia’s presence in Virginia, Maryland and Washington, D.C. In January 2002, the Wachovia Timberland Investment Management Group, a Wachovia unit, bought more than 147,000 acres of timberland from Bowater Inc. for $124.5 million. Later that year, in June, Wachovia announced the consolidation of its broker/dealer subsidiaries into a single unit called Wachovia Securities. Nonetheless, the company has streamlined its operations a bit; in February 2002, National Commerce Financial Corp. acquired 37 First Union and Wachovia branches based in North and South Carolina, Georgia and Virginia. And MBNA America Bank acquired a $1.3 billion credit card portfolio from Wachovia in April 2002.
Low interest rates, high earnings Wachovia’s lending business experienced heady growth during the first few months of 2003. In July, Wachovia reported that its second quarter net income grew by 36 percent from the previous year, to $862 million. Amid low interest rates, Wachovia has seen a jump in its mortgage and home refinancing business. Operating earnings at the company’s general banking operations (the segment that includes consumer lending) surged to $596 million. All told, at the end of 2003, the bank held total assets of $401 billion, according to data reported by the Charlotte Observer. The key to this success starts at the top, with former First Union CEO (and now Wachovia) CEO G. Kennedy Thompson leading the charge. In January 2004, BusinessWeek hailed him as the master architect on bank mergers, noting successful integration of Wachovia in 2001, and his 2003 integration with Prudential, which created a network of 12,000 brokers offering stock, bonds, mortgages, car loans and other products. Plus, the magazine noted Thompson’s savvy: when the mutual-fund scandals touched Prudential, the company was insulated from the fallout, having insisted that Prudential retain liability for any broker misdeeds that occurred before the merger deal.
More than just savings Wachovia’s most visible services are in consumer and commercial banking. Wachovia’s corporate and investment bank provides a full range of services, including asset securitization, debt financing, derivatives, fixed income and convertible research, international services, M&A advisory and treasury services. In 244
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July 2003, Wachovia and Prudential Financial completed the legal merger of their retail brokerage business. The resulting firm, Wachovia Securities LLC, is 62 percent owned by Wachovia and 38 percent owned by Prudential. The new Wachovia Securities serves clients through 3,400 brokerage locations, including more than 700 retail brokerage offices in 48 states and the District of Columbia, and brokerage locations in some 2,700 Wachovia Bank branches on the East Coast. With more than 12,000 registered representatives and client assets of $570 billion, as of September 30, 2003, the new firm is the third-largest securities brokerage in the U.S.
No needless acquisitions Wachovia didn’t grow the old fashioned way – it merged and acquired its way en route to becoming a large player. Nonetheless, despite megadeals occurring within the industry – such as Bank of America’s proposed FleetBoston merger – as well as the ripe climate for acquisitions, the Charlotte Observer reported in January 2004 that Bob Kelly, the firm’s chief financial analyst, told analysts at the January 2004 Citigroup Smith Barney Financial Services Conference in New York that Wachovia wasn’t going to acquire other banks simply for the sake of doing so. Nonetheless, the article noted that Wachovia might consider entering markets in higher-growth areas such as Texas, California, Nevada and Arizona, though Kelly reiterated that there aren’t any currently available targets in those markets.
Strong finish Nonetheless, Wachovia posted strong fourth quarter 2003 financials, with net income rising 23 percent to $1.1 billion from $895 million, according to a January 2004 Wall Street Journal report. For the year, Wachovia earned a record $4.3 billion, up from from $3.6 billion in 2002. However, the bank reported an 11 percent dip in its fee income within the retail and commercial division, due primarily to a drop in mortgage-related income. Wachovia CFO Robert Kelly told the Journal that the decline in refinancings were due to rising interest rates. Nonetheless, Kelly reiterated that he expected corporate loans to small to medium-sized business to increase over the next few quarters. Meanwhile, in its capital management unit, Wachovia saw revenues increase 80 percent to $1.3 billion, mostly due to the addition of Prudential’s brokerage operations.
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Vault Guide to the Top 50 Banking Employers Wachovia
Tiny scandals Despite the good news about Wachovia’s overall performance, the firm did have a mini-scandal on its hands. Wachovia and five other financial firms agreed to settle regulators’ claims that their brokers failed to give discounts promised to some mutual fund clients, according to a January 2004 article in the Charlotte Observer, citing people familiar with the situation. The National Association of Securities Dealers said that unnamed brokers at Wachovia, UBS, American Express, Legg Mason, Raymond James Financial, and Linsco/Private Ledger had failed to pass along $86 million in discounts in 2001 and 2002. The settlement comes amid state and federal investigations of misconduct in the $7.4 trillion mutual fund industry. Wachovia, in a November 2003 regulatory filing, said it expected to refund to customers up to $5 million, promising to refund the money with interest and saying it might face “administrative penalties.”
GETTING HIRED
Carolina recruiting To find available positions, you can check out the firm’s web site or other sites such as Monster.com for job postings. However, warns one employee, Wachovia “prefers referrals” to online applications. Of course, you can always just wait until Wachovia visits your campus. “Colleges in North Carolina are heavily hit for candidates,” offers one source. Another analyst notes that his “coworkers and bosses [are from] mostly top Southern universities,” with a few from the Ivies. In addition to job postings, the firm’s web site lists all on-campus recruiting events. And keep in mind, says another contact, if you get in on a summer position, you’ll find it “easier to apply” for a full-time one.
The typical and the targeted (the interview process) Candidates generally have an initial interview either on- or off-campus, depending on how they apply, followed by “a full day of interviewing” with a number of people. Explains a financial accounting employee, “I met with an SVP on campus for my first interview, then went to Winston-Salem for an on-site with four interviewers.” The contact adds that the “interviews were good – it was just a matter of getting along.” Another contact, a commercial banker in IT, reports going through “phone interviews
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Vault Guide to the Top 50 Banking Employers Wachovia
and in-person interviews with management, HR and technical folks.” That contact adds that there’s a “a document
