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CommentP&M Notebook

How to cope with the prospect of 'right-sizing' in ECM

Stock slingers fearing lean times ahead are making contingency plans

happy little girl with lasagne on table

The last couple of years have been good ones for equity capital markets bankers, as pandemic-induced disruption fueled spin-offs, public M&A, initial public offerings, rescue rights issues and a craze — absolutely the right word — for special purpose acquisition companies (Spacs).

But in conversations with GlobalCapital this week, ECM bankers and others seemed to suggest that the party was well and truly over. Tougher times may lie ahead.

As this column has previously pointed out, the recent, well publicised wave of exuberant hiring and generosity towards junior bankers may actually make the downturn more of a shock than it would otherwise be. As base pay becomes a bigger component of overall comp, it becomes harder to avoid lay-offs by cutting discretionary bonuses.

One ECM banker revealed his back-up plan to GlobalCapital. If he is shown the door, he intends to go into the restaurant business.

A recruiter pointed out that this was hardly an original idea, though that did not mean it was a bad one. In 2014, former Evercore M&A banker Patrick Philion established Italian restaurant Scarpetta in Canary Wharf. "It does a roaring trade," said the headhunter. "Maybe they'll try to mimic that one."

Italian cuisine is clearly a popular option for ex-bankers. Former Nomura, Merrill Lynch and Credit Suisse DCM banker, Sebastien Dupont, opened up a pizzeria in his native Belgium a few years ago after leaving the capital markets.

But if that's your dream, why wait until you are made redundant? Philion has shown that it is possible to fit entrepreneurship around a banking career, running the restaurant while working as a director at HSBC and then Nomura until 2020.

An ECM team that probably has less to be worried about than others is Deutsche's squad in New York — or what's left of it. More than one source this week pointed out that the colleagues of the four bankers recently expelled for expensing a strip club receipt could expect a reasonably high degree of job security as a result.

"They'll be probably quite happy with what happened," said one banker in London. "The misfortune and stupidity of their colleagues will put them in a very strong place this year."

Keep scrolling for all of the week's people and markets headlines from GlobalCapital.

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