We're told that Lehman Brothers will begin trimming the incoming analyst class tomorrow. Bank of America is also supposedly getting in on the pruning action, with at least a handful of employees* involuntarily taking off early today. One guy was told, rather ominously, by the head of his group, to "cancel Tuesday's meetings." We're just going to assume there's some sort of surprise involving Angelo Mozilo and a hot air balloon ride over the city which necessitated the cleared schedule. Who's with us?
*Non-newbies.
Posted by guest , Jun 09, 2008 9:21AM
wait a minute... so they're firing in-coming analysts with only a couple of days on the job?
Posted by guest , Jun 09, 2008 9:24AM
Are they reinstituting those proficiency exams in accounting and finance that all analysts have to take during the summer? I remember many banks did this after the tech bubble burst to cull the weakest from the herd.
Posted by Investorcluzo , Jun 09, 2008 9:25AM
@9:21 - I'm fairly certain no in-coming analysts have meetings set up for tomorrow. the newbies should just be ready for 12 person deal teams to prepare that "dividend vs. share buyback" analysis.
kenny boy should be ashamed of himself. imagine putting people out on the street on the hottest day in years (does this mean another earnings miss?)! at least he could let them sit in their offices and get some of that nice a/c.
Posted by guest , Jun 09, 2008 9:27AM
what about for lehman's in-coming class? what's the source?
Posted by guest , Jun 09, 2008 9:32AM
Which Divisions are you talking about? Is it across the board or more concentrated in IBD?
And could somebody back this up with numbers please?
Posted by guest , Jun 09, 2008 9:35AM
just to clarify, the boa layoffs are mostly incoming analysts in the ibd? nyc or charlotte? any idea?
Posted by guest , Jun 09, 2008 9:37AM
just to clarify, the boa layoffs are mostly incoming analysts in the ibd? nyc or charlotte? any idea?
Posted by guest , Jun 09, 2008 9:38AM
panic! panic!
Posted by Investorcluzo , Jun 09, 2008 9:41AM
@9:35 - what's with the double post? nervous twitch or is the coffee kicking in? it's only 9:30, so it's a little early to figure out if it's just IBD in new york. if charlotte doesn't get hit, I'd be surprised. how about the folks on the desk? has anyone seen the league tables lately?
Posted by guest , Jun 09, 2008 9:48AM
wow, that's really hard to say... the friends i met on _Riderlove.com_ obviously hold quite different opinions about this. just check out the horsey forum there u'll see.
Posted by Anal_yst , Jun 09, 2008 9:52AM
Potentially stupid question: Why the hell are banks still doing the incoming analyst program ( at least in any size), while they're axing thousands across the board? I could see hiring a few analysts here/there, but the programs aren't exactly cheap to run...
Posted by guest , Jun 09, 2008 9:53AM
must read for analysts: http://www.stuffinvestmentbankerslike.blogspot.com/
Posted by guest , Jun 09, 2008 10:00AM
i didn't realize that Dealbreaker's demographic was you peach-fuzzed frat boys.
why don't you go home and get real jobs. the gravy train is over.
Posted by HAM05 , Jun 09, 2008 10:01AM
must read for 9:53:
http://www.killyourself.sepuku.com/immediately
Posted by Investorcluzo , Jun 09, 2008 10:01AM
@anal_yst - they have to maintain a presence on campus. it's a cyclical business. if you miss a year on campus, you lose valuable support from the guys/girls who return for their sr year and had a "positive" experience. without a few people flying the company flag, you will only have a bunch of naysayers on campus. then when you finally return to campus (1 or 2 years later), your presentation will have more company reps than students. then there is the hope that with tighter labor markets, lower tier co's may be able to get a better quality candidate. just look back at the dot com bust...
Posted by guest , Jun 09, 2008 10:06AM
riiiiiiight, because all of a sudden kids who want to work in banking, trading, or whatever will be like, wtf is a morgan stanley? never heard of it.
Posted by guest , Jun 09, 2008 10:07AM
yeah, if Goldman takes a year off, no one will want to work there... try again @10:01
Posted by Investorcluzo , Jun 09, 2008 10:11AM
@10:07 - you need to try again. why would goldman stop going to campus? they MADE money. those aren't the companies that stop going to campus, do your homework. it was csfb, lehman and db. you better start saving your files now (may want to download your contact list too)...
Posted by guest , Jun 09, 2008 10:20AM
@IC true it made money trading mortgage credit, that does not mean that now there is any more investment banking business than there was last year. banks werent losing money in 2002 but they sure as shooting cut analyst classes.
Posted by guest , Jun 09, 2008 10:23AM
DB: thanks for the clarification on the "non-newbies".
any word on the Lehman in-coming class? are these newbs?
Posted by onetwo , Jun 09, 2008 10:24AM
@anal - also, think of this: a lot of the costs associated with the analyst programs are fixed. Whether you run an incoming class of 5 or 50 newbies the cost to train them is about the same. If MS hires STC to train their kids on-site then STC charges a big fee just for showing up and then a marginal fee per kid. You can trim the class size and save on books/mats, but the bulk of the cost is still there. After the summer you have a cheap (and hopefully loyal) enough analyst base to rehire from with little effort. Even if they just nixed the entire program i get the feeling the big costs (including the HR depts dedicated entirely to analysts) are already "in the system". They can shave at the margin, but killing an entire class--while an appealing thought--probably doesn't make economic sense. And I guarantee the fringe activities ("Team Building" at Chelsea Piers) have already been slashed.
Of course, the analysts also cost the least day to day (outside of backoffice...zing) and have no political ties to keep their heads from rolling if another leg down happens. Think of analysts as insurance: small up front premium that keeps the boat sailing should the banking market turn around.
Then again
Posted by guest , Jun 09, 2008 10:29AM
"killing an entire class--...probably doesn't make economic sense"
As lehman is showing us today, neither does hedging your cash portfolio just to get hammered by basis volatility, but they will not stop doing it.
There is also a certain need by managers to be seen as "doing something". Reducing headcount has always fit the bill. Plus, eventually you are stuck with a bunch of more senior analysts with zero deal experience. You and I both know that the real training comes from working on deals, not sitting in the seminar room learning corp finance 101.
Posted by Investorcluzo , Jun 09, 2008 10:36AM
@10:20 - I'm not going to back the decisions of exec mgmt/hr, banking is infamous for over-hiring (the numbers leading up to the bubble years of the dot com boom went up 50%+) and over-firing (2002 - 2003). then what happened in 2005? there was a shortage of sr. assoc/vp talent. pay got out of whack and guarantees were in vogue.
so yes, they were shooting folks b/c the payrolls had been artificially inflated b/c they needed bodies to take co's like pets.com public...
look at the league tables (c3 for those following at home) - note that M&A is the highest margin business followed by ECM. you now know why bofa and leh are swinging the ax for the 3rd time in 6 months. db and cs are sure to follow.
Posted by guest , Jun 09, 2008 10:40AM
when I was graduating college (2002), banks were maintaining presence on campus by interviewing but not hiring.
Posted by guest , Jun 09, 2008 10:55AM
err, more accurately less hiring
Posted by guest , Jun 09, 2008 11:41AM
Cluzo always seems to want the last word whenever anyone challenges him. Why is that cluzo? Is it because you're smarter than everyone else? Or is it because you're insecure?
Posted by guest , Jun 09, 2008 11:54AM
BofA laid off a lot of bankers a month ago, the 3rd round in less than a year. Their 2006 and 2007 classes are pretty much decimated. A 4th round is coming up as well, which is ironic because they are bringing in all these Bear veterans with little junior presence to support them.
Posted by guest , Jun 09, 2008 12:08PM
guest @ 11:41 am -- you sure seem to be interested in ragging on Cluzo. Why is that, guest? Is it because you're worried that you're not smarter than anybody else? Or is it because you're insecure? Or is it because you have other issues, like worrying where you left your white robes and peaked hat?
Posted by guest , Jun 09, 2008 12:09PM
any update on the rumor surrounding the lay-offs?
Posted by Investorcluzo , Jun 09, 2008 12:21PM
@11:41 - how so? I was merely clarifying my position b/c the poster had improperly assumed that I was suggesting gs/ms stopped going to campus. not to mention, there were two posts prior to yours, so I didn't get the "last word". in fact, you did. unfortunately, you posed a question (probably rhetorical, but I'll answer anyway). so maybe it's you who always needs the last word?
now, to your question. I would never say that I'm smarter than everyone else (who would?). and, as onetwo will tell you (from our field trip), I'm definitely not insecure. perhaps if you weren't so insecure, you would use a screen name so that general db pop could look back at all of your comments and see just how "smart" and/or "insecure" you are...there you have it, I anxiously await your "last words".
Posted by guest , Jun 09, 2008 12:35PM
white robes and peaked hat?
Posted by Anal_yst , Jun 09, 2008 12:38PM
@ 1-2
Wow, training is gonna be HORRIFFIC for these kids, between 100+ degree weather, zero off-sites, and the continued possibility that any day they could also get the axe.
Watch, the new HR policy is gonna be to get rid of anyone who shows up wearing the same clothes they had on the day before and reeking like a bar. Do not pass go, do not collect $200.
Posted by guest , Jun 09, 2008 12:47PM
@10:36
cs and db are surely to follow? does any expect these two banks to follow suit with the axe? hopefully, cs will not be reporting another "pricing error" in the next quarter
Posted by guest , Jun 09, 2008 12:52PM
cluzoster is actually a good guy who takes and gives shit in a fair and responsive manner.
so cluless,,hows the trade processing going? LEH options clear yet? Mine havent...hahaha
Posted by guest , Jun 09, 2008 1:29PM
Cutting the analyst class tomorrow is unlikely to occur.
Besides the extenuating circumstances of Bear Stearns, cutting incoming analysts before starting is not the way banks will go about trimming newbies. The agreements are for AT-WILL EMPLOYMENT. This means after the start date, the firm or the employee can end the agreement. Therefore, laying off the analyst now is a breach of contract. I was told that PriceWaterHouse Coopers laid off their analyst class around 4 years ago and a class action law suit was filed and won against them.
After the analysts complete one day, the firm has the right to lay them off. Due to these circumstances we will in fact see a harsher training period with record analysts cut.
For one, I've heard that JPM are "repositioning" their Investment Banking analysts to other parts of the firm with a promise to be placed into Investment Banking within the year. This is due to the dramatic decrease in I-banking deal flow.
Posted by guest , Jun 09, 2008 1:39PM
"Therefore, laying off the analyst now is a breach of contract"
okay n00b. tell me more about the details of your "contract" as a first year analyst.
Posted by guest , Jun 09, 2008 1:40PM
ubs most definitely rescinded offers .... about a month back.
Posted by guest , Jun 09, 2008 2:00PM
What about Merrill? There's noise from London are that there might be lay-offs in the incoming class in NYC.
Posted by guest , Jun 09, 2008 3:28PM
Merrill is working on their September layoff list now.
Posted by guest , Jun 09, 2008 3:32PM
Yeah, they have time till then to see how the other banks react ? If there are mass lay-offs all across the St., they won't look bad, particularly since everyone else would have done it.