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Introduction
Introduction
Introduction
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Introduction
4. Measure of Performance
Risk and Returns: Returns
Income sources
Underwriting spread
M&A fee
Trading profits
Prime-brokerage (interest and fee)
Market making (spread)
Research
Introduction
4. Measure of Performance
Industry Size:
Introduction
4. Measure of Performance
Industry Size:
Introduction
4. Measure of Performance
Industry Size: M&A
Introduction
4. Measure of Performance
Industry Size: M&A
Introduction
4. Measure of Performance
Industry Size: M&A
Introduction
4. Measure of Performance
Industry Size: M&A
Introduction
4. Measure of Performance
Industry Size: Equity Underwriting
Introduction
4. Measure of Performance
Industry Size: Equity Underwriting
Introduction
4. Measure of Performance
Industry Size: Equity Underwriting
Introduction
4. Measure of Performance
Industry Size: Equity Underwriting
Introduction
4. Measure of Performance
Industry Size: Debt Underwriting
Introduction
4. Measure of Performance
Industry Size: Debt Underwriting
Introduction
4. Measure of Performance
Industry Size: Debt Underwriting
Introduction
4. Measure of Performance
Industry Size: Debt Underwriting
Introduction
4. Measure of Performance
Industry Size: Loans
Introduction
4. Measure of Performance
Industry Size: Loans
Introduction
4. Measure of Performance
Industry Size: Loans
Introduction
4. Measure of Performance
Industry Size: Loans
Introduction
4. Measure of Performance
Risk and Returns: Returns
League tables
Ranking of investment banks in terms of
underwriting, M&A, fee earned, etc
Investment banks treat this very seriously
Many have specialist teams devoted to supplying
data to the firms that compile the rankings, and to
challenging the positions of rivals
Blamed in part for the sub-prime crisis
Introduction
4. Measure of Performance
League Tables:
Introduction
4. Measure of Performance
League Tables: M&A
Introduction
4. Measure of Performance
League Tables: M&A
Introduction
4. Measure of Performance
League Tables: Equity Underwriting
Introduction
4. Measure of Performance
League Tables: Equity Underwriting
Introduction
4. Measure of Performance
League Tables: Debt Underwriting
Introduction
4. Measure of Performance
League Tables: Debt Underwriting
Introduction
4. Measure of Performance
League Tables: Loans
Introduction
4. Measure of Performance
League Tables: Loans
Introduction
4. Measure of Performance
Risk and Returns: Risks
Market risk
Interest rate risk
Trading in fixed income securities
Price risk
Assets/securities price volatility
Forex risk
Forex exposure
Introduction
4. Measure of Performance
Risk and Returns: Risks
Credit risk
Counterparty default risk: swap, derivatives, credit
derivatives
Prime-brokerage: Hedge fund failures
Issuers default: MBS, bonds, commercial papers
In the light of the increasingly complicated securities,
who can really understand?
Introduction
4. Measure of Performance
Risk and Returns: Risks
Operation risk
Settlement and clearing
Entry errors
Legal
Tons and tons of regulations - other than all the
different acts: Dodd-Frank, fair disclosure, money
laundering, funding of terrorists, etc
Liability law suits: eg Enron, WorldCom
Introduction
4. Measure of Performance
Risk and Returns: Risks
Funding risk
Borrowing: capital and money market
Credit crunch
Credit squeeze
Liquidity risk
What is liquidity risk?
The inability to liquidate immediately at fair value
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Introduction
2007
2008
2009
Citigroup
29.1
63.4
30.7
7.3
$130.50
Bank of America
12.1
29.2
35.5
10.8
$87.60
4.0
73.4
HSBC
19.3
30.3
Merrill Lynch
25.1
38.6
Wachovia
UBS
$77.40
26.4
50.6
1.8
4.5
10.2
29.5
7.0
23.5
21.3
Washington Mutual
5.1
36.7
Barclays
7.0
16.5
12.7
Wells Fargo
3.5
8.7
18.2
12.5
14.0
Others
TOTAL
$76.00
$63.70
JPMorgan Chase
Lehman Brothers
2010 TOTALS
$52.40
7.9
$52.10
$51.80
$41.80
$36.20
5.3
$35.70
$26.50
$457.60
$1,189.30