Vault Guide to the Top 50 Banking Employers, 7th Edition

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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

THE VAULT 5O: 26-50

281

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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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

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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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.

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 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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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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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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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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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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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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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.


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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.

Vault Finance Job Board The most comprehensive and convenient job board for finance professionals. Target your search by area of finance, function, and experience level, and find the job openings that you want. No surfing required.

VaultMatch Resume Database Vault takes match-making to the next level: post your resume and customize your search by area of finance, experience and more. We’ll match job listings with your interests and criteria and e-mail them directly to your inbox.

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


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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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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


8.038

6

SunTrust Banks

7.932

7


7.882

8

UBS Investment Bank

7.534

9


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


6.647

2


6.120

3


6.100

4

CIBC World Markets

5.955

5

Goldman Sachs

5.826

6

SG Cowen

5.790

7

Lehman Brothers

5.758

8


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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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


7.593

3

Wells Fargo

7.565

4

TD Securities

7.273

5


6.750

6

Goldman Sachs

6.500

7


6.310

8

Lehman Brothers

6.000

9

SG Cowen

5.263

10


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


8.333

5

Lehman Brothers

8.300

6


7.944

7


7.500

8

UBS Investment Bank

7.496

9

TD Securities

7.455

10


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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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


8.250

5

Goldman Sachs

8.000

6

Lehman Brothers

7.821

7


7.359

8


6.778

9

SG Cowen

6.750

10


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


7.583

5


7.556

6

Wells Fargo

7.478

7

SunTrust Banks

7.163

8

SG Cowen

7.059

9


7.031

10(tie)


7.000

10(tie)

TD Securities

7.000

RANK


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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


7.417

3

SunTrust Banks

6.955

4


6.887

5


6.448

6


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


8.173

5

Lehman Brothers

7.742

6

TD Securities

7.364

7

SG Cowen

7.286

8

UBS Investment Bank

6.943

9


6.769

10


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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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


8.196

2

Goldman Sachs

8.174

3

Lehman Brothers

8.031

4

SunTrust Banks

7.625

5

TD Securities

7.364

6


7.360

7

UBS Investment Bank

7.250

8

Wells Fargo

7.191

9

SG Cowen

7.000

10


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


8.222

4

Goldman Sachs

8.105

5

SunTrust Banks

6.923

6

UBS Investment Bank

6.917

7


6.375

8


5.833

RANK


CAREER LIBRARY

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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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Vault Guide to the Top 50 Banking Employers Goldman Sachs

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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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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“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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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


• “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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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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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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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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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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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]


• “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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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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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.”

For more information on top banking employers and banking careers, go to the Vault Finance Career Channel • Detailed 40-page employer profiles on top employers like Goldman, Merrill, Morgan Stanley, UBS and more • Employer surveys on hundreds of top banking employers • Thousands of top finance jobs on the Vault Finance Job Board • Career guides to investment banking, investment management, venture capital and more

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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


• “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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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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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


• “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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Vault Guide to the Top 50 Banking Employers JPMorgan Chase

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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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


• “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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(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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V A U L T

7

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


• “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


• “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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Vault Guide to the Top 50 Banking Employers Citigroup

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

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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


• “Good firm, tough place to work” • “Falling apart; Exodus by top bankers” • “Best tech bank” • “These guys totally blew it”

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Vault Guide to the Top 50 Banking Employers Credit Suisse First Boston

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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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


• “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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Vault Guide to the Top 50 Banking Employers Lazard

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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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


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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Vault Guide to the Top 50 Banking Employers UBS Investment Bank

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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V A U L T

12

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


• “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

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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


• “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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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


• “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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Vault Guide to the Top 50 Banking Employers Banc of America Securities

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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V A U L T

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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


• • • •

“Best commercial bank out there” “Rising star” “Struggling to make the top tier” “Too big”

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Vault Guide to the Top 50 Banking Employers Bank of America

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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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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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


• • • •

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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


• • • •

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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Vault Guide to the Top 50 Banking Employers Rothschild

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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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.”

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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


• “Getting there” • “Busted by the bubble” • “Are they co-managers on everything?” • “Needs to be bought”

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Vault Guide to the Top 50 Banking Employers Thomas Weisel Partners

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


• “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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Vault Guide to the Top 50 Banking Employers Barclays Capital

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


• “Major international bank” • “Very well managed, but too cheap to run an investment banking arm” • “Failing to make a mark in the U.S.” • “Should be respected more – they own the world outside of the U.S.” 234

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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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“[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


• “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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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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and in-person interviews with management, HR and technical folks.” That contact adds that there’s a “a documented list of questions [that interviewers] choose from.” Another insider, in loan workout, says he only interviewed with one person, his current manager. “Wachovia uses a unique interview process called ‘Targeted Selection,’” explains one vice president. “This consists of at least two banking executives who ask five to seven pre-selected questions that relate to specific examples from [a candidate’s] past experiences.” The contact adds that each interviewee is asked the same questions under the Targeted Selection process. “Having to answer the same questions,” says the contact, “each candidate gets a fair and even opportunity to prove their experience, resulting in an equal opportunity for receiving an offer. At the same time, the bank gets a clear understanding of candidates’ personality traits, decision making process and daily work habits.” Those with little or no experience in the industry need not worry. An employee says the company “is very interested in ‘people’ people. You need to be a team player.” The contact adds that the interview process is “in between moderately relaxed to somewhat stressful.” One insider, who regularly conducts interviews, gives prospective applicants some basic advice for the interview: “Never answer a question with ‘I don’t know’ or ‘I can’t think about anything right now.’ Instead, ask for an opportunity to return to the questions later in the interview. Chances are the interviewer might forget about it, which gives you a golden opportunity to show initiative and focus by bringing it up yourself as the interview comes to a close.” For those interested in getting into asset management, the contact adds, “It helps out if you have a fundamental understanding of what a sale settlement is.”

OUR SURVEY SAYS

Post-merger: looking good An insider says Wachovia’s “corporate culture can be summed up in three words: friendly, understanding and challenging.” He’s also quite pleased that, at Wachovia, “you’re not treated like a corporate drone.” Another equally content employee says the firm is “aggressively pursuing business and fostering a culture of customer service.” She adds, “Technology is very cutting edge and years ahead of the competition.” 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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Insiders give very high marks to treatment by managers. “Value the individual, team over self and personal accountability are published core values of the firm,” says one banker. “And most managers and employees abide by these principles.” Another contact notes how the culture has changed since the merger between Wachovia and First Union. “First Union had more of an action-oriented culture,” he notes, “whereas the old Wachovia was more into planning. Fortunately for me, the former took precedence, and projects abound.” One analyst relays a common problem found in many larger banks. “There tends to be a little red tape when trying to get major things done,” he says. “Even though we support an open-minded policy, everything should go through your direct manager, who has to go to his or her direct manager, and so forth. With everyone’s busy schedule, sometimes you’re not heard, or you get put on the backburner.” However, the analyst concedes, “This seems to be normal at lots of corporations.”

Improving in the comp category Some employees think the firm could do better when it comes to salaries. “We should start acting like the top bank we are, and stop acting like a local bank when it comes to compensation,” suggests one source, who adds, “We should offer 401(k) investment from day one of employment, find better ways to manage those employees steadily working over 40 hours and be willing to hire someone other than contractors to reduce the workload.” Another employee notes, “I feel as though the cost of everything is going up and what little raise I receive, they take – and then some.” However, as the economy is slowly improving, so is the compensation. An insider notes that while the base pay for analysts remained static from 2002 to 2003, there was a slight increase in the sign-on bonus for the 2003 analyst class. Nearly all insiders agree that the perks are excellent. Some of the extras, says one employee, include “a 401(k) after year one, 100 percent matching up to 6 percent contributions, major investment opportunities, checking and savings account incentives, loan incentives, and reimbursement plans for health, day care and transportation – it can be pre-tax up to $6,000 for health, $5,000 for day care, $2,100 for parking and $780 for mass transit.” Other benefits include “vision, long-term care and legal assistance.” Plus, there are “daycare facilities on some sites at reduced rates,” “cafeterias and food courts on some sites” and “telecommuting” options. Advancement at Wachovia can be attained two ways, according to one analyst, who notes that “one is by title and one is by job.” He adds, “Title advancements are based solely on performance.” However, he cautions that “a title advancement does not 248

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mean a pay increase,” but “it does allow you to have extra days for time off, [and] a better severance package.” Meanwhile, “job advancement can only come about if the position you are interested in opens up.” However, the benefit of this system is that it will “eliminate the risk of having 20 mid-level managers and only three data analysts,” the contact says. Another contact explains that “as you move up, who you know in the company determines your fate.” As is the case with most companies, “Politics play a larger role the higher you go,” that insider says.

Mixing it up Insiders give the bank mixed reviews when it comes to minority hiring. The hiring of women seems to be strong, while the hiring of minorities, though not bad, seems to be less successful. “There is a good cross section of women in management and senior management,” says one banker. “My manager is a woman, and my team is 40 percent women.” Talking about minority hiring, the contact adds, “I would say we are slightly better than average in hiring and retaining minorities. I see some divisions with tremendous cultural diversity and others with very little. My team is 10 percent minority.” That said, this contact admits, “Diversity is very important to senior management.” One source, though, says Wachovia, at least his group at Wachovia, is “not diverse.” He adds, “The office where I work is only 1 percent minorities.” Another source says, “It seems to me more women and minorities are contractors, rather than in the general population of employees.” Even so, Wachovia seems to be making a big push to create a heterogeneous workforce. “Diversity is a very hot topic in the company right now,” explains a human resources employee, who adds, “The big push is to get more minorities into middle and upper management. For years, the company’s management was solely the land of old white males and now that is being rectified.”

Casual in their cubes The Charlotte headquarters setup consists of “cubicles, even for managers, with few exceptions,” says one employee. “The cubes are not too small and not too large. And there is storage space in the cubes more than adequate for most employees.” A source adds, “The general office environment is well lit and nicely decorated and carpets have colorful patterns and there are lots of plants and wall hangings.” When you’re enjoying the aesthetics from your cube, you’ll be able to do so comfortably. The dress code at Wachovia is “business casual with true dress down Fridays – jeans, sneakers, shorts and sandals,” notes one contact. Another confirms, “A liberal stance


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on casual is not frowned upon.” That said, according to the firm, the accepted level of casual varies from division to division.



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“There is a good cross section of women in management and senior management. My manager is a woman, and my team is 40 percent women.” — Wachovia insider


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V A U L T

22

PRESTIGE RANKING


1930 Century Park West Los Angeles, CA 90067 Phone: (310) 553-8871 www.hlhz.com

DEPARTMENTS Corporate Finance Distressed Transactions Financial Opinions and Advisory Services Financial Restructuring Merchant Banking Mergers and Acquisitions

THE STATS Chairman: O. Kit Lokey Co-CEO: Scott L. Beiser Co-CEO: Jeffrey I. Werbalowsky Employer Type: Private company No. of Employees: 500+ No. of Offices: 9

KEY COMPETITORS Blackstone Credit Suisse First Boston Jefferies & Co. Lazard Merrill Lynch Piper Jaffray

UPPERS • Great pay • Pleasant corporate culture, especially for an investment bank • A lot of responsibilities for junior bankers

DOWNERS • Small firm doesn’t mean short hours • Few senior female managers • Not the most well-known name in investment banking

EMPLOYMENT CONTACT recruiting.hlhz.com

THE BUZZ


• “Respected, but small” • “Great at what they do” • “Restructuring boutique”

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Vault Guide to the Top 50 Banking Employers Houlihan Lokey Howard & Zukin

THE SCOOP

Livin’ large in the middle-market Founded in 1970, Houlihan Lokey Howard & Zukin offers select investment banking services, including mergers and acquisitions advisory, financial restructuring, fairness opinions, financial opinions and advisory, financing and merchant banking to a predominantly middle-market client base. In delivering these services, Houlihan Lokey bankers operate out of specific industry groups such as health care, financial institutions, aerospace and defense, technology, and engineering and construction. The firm has eight U.S. offices, which focus on domestic clients, as well as a London office that caters to European markets such as the U.K., Germany and France. Houlihan Lokey is particularly strong in M&A, ranking among the top 20 U.S. advisors for the past 11 years. The firm also boasts the largest restructuring business of any investment bank in the world, claiming well-known clients such as WorldCom and Enron. Houlihan Lokey’s merchant banking group invests in private companies through two funds, and the bank also has a growing financing practice that has assisted companies in raising $4 billion of private capital over the last three years. While Houlihan Lokey does not lend money or underwrite security issues, the firm does have the luxury of avoiding the conflict-of-interest problems that have developed at some of its larger, full-service competitors. Aided by this reputation for independence, Houlihan Lokey managed to provide more transaction fairness opinions in 2000, 2001 and 2002 than any other investment bank.

Two executive decisions In January 2003, Houlihan Lokey’s CEO Franklin “Fritz” Hobbs stepped down from his post less than 14 months after succeeding current chairman and firm founder, Kit Lokey, who had been the bank’s CEO for more than 25 years. Taking over for Hobbs, as co-CEOs, were Scott Beiser, then-Houlihan Lokey’s COO and head of its Los Angeles office, and Jeffrey Werbalowsky, co-founder of the bank’s restructuring group. Hobbs, a former chairman of Warburg Dillon Read, agreed to stay with the company during the leadership transition, serving as special advisor to Houlihan Lokey’s board.


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Feel the dealflow Even with a change at the top, Houlihan Lokey had another strong year. While the firm may not normally nab blockbuster transactions, it is consistently at the top of the league tables when it comes to middle-market deal volume. In 2003, Houlihan Lokey ranked No. 1 in U.S. announced M&A deals under $200 million (with 67 transactions) and No. 4 in both deals under $500 million (72 transactions) and under $1 billion (77 transactions). Overall, Houlihan Lokey was an advisor on more U.S. announced deals in 2003 (108) than all but four firms (bulge brackets Goldman Sachs, Citigroup, Lehman Brothers and CSFB), and the firm’s deal value was $25 billion, good for No. 12 on the U.S. announced M&A league table (up from No. 16 and an increase of 93 percent over 2002’s $12.9 billion). Boosted by its very strong domestic performance, Houlihan managed to shoot up 13 spots to No. 18 on the worldwide M&A table, with 118 deals valued at over $25.3 billion. Deal highlights included Behrman Capital’s $303 million acquisition of a majority stake in ILC Industries, Stage Stores’ $222 million acquisition of Peebles and Blyth’s $65 million all-cash deal to acquire Miles Kimball Company. Houlihan Lokey’s restructuring business is also a cornerstone of the firm, and the group entered 2003 after a record year in 2002. The bank advised on 140 deals involving $150 billion of debt in 2003, including 15 of the 25 biggest U.S. bankruptcies. In addition, Houlihan Lokey has secured advisory roles in three of the largest U.S. bankruptcies ever: WorldCom, Conseco and Enron (the firm is advising unsecured creditors in each of these matters).

Growing up and overseas One of the reasons Houlihan Lokey has been so successful in getting new business is that the firm promises prospective clients more senior-level attention than they would otherwise expect to receive from larger investment banks. To maintain this advantage, the bank has been scrambling in recent years to recruit banking talent to keep up with its growing number of mandates. Amid the 2003 senior-level hirings made to support its consumer products and financial advisory expertise, Houlihan Lokey acquired Los Angeles-based Media Connect Partners in June, gaining three experienced bankers to head up its Media and Entertainment Investment Banking Group. And in building its nascent European practice, Houlihan Lokey showed it wasn’t afraid to lure experienced bankers from its competitors. The firm added two managing directors to its London office: Ansgar Zwick, a former top banker at Merrill Lynch, to capture German, Austrian and Swiss market share; and Francois

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Faure, a former head of French M&A at Deutsche Bank, to oversee Houlihan Lokey’s dealings in France, Belgium and Luxembourg. There is, however, one area where Houlihan Lokey got smaller in 2003. In January, the bank sold its wholly owned M&A data and content subsidiary, Mergerstat Holdings, L.P., to FactSet Research Systems. Mergerstat’s board hired Houlihan Lokey to advise, structure and negotiate the deal.

GETTING HIRED

Tough buy It’s no picnic to land a job at Houlihan Lokey. The firm is “extremely selective” and “the interview process is rigorous and typically highly technical,” says a second-year associate says. A first-year analyst agrees, noting that applicants “must demonstrate technical proficiency as well as an ability to integrate into the team environment.” According to a second-year analyst, “Campus interviews are technical and the whole ‘let me get to know you’ process is almost entirely skipped.” He adds that the “idea is to get people who have a solid technical base, as the training program is not very extensive.” Further up the chain, a VP confirms this, adding that Houlihan Lokey is “a small firm and has small class sizes” and “getting selected is tough.” “Houlihan Lokey is selective in that it wants to find intelligent and motivated individuals from strong undergraduate schools,” a financial analyst says. “In addition, it is looking for candidates who want to do a broad spectrum of corporate finance transactions, not just M&A.” In New York, “Houlihan recruits at only a handful of ‘core’ schools and roughly 5 percent of recruits interviewed eventually get offers,” according to a third-year associate. But if you’re not an Ivy League grad, don’t fret. A second-year analyst says Houlihan’s “Chicago office recruits at select Big 10 schools along with Notre Dame.” Nonetheless, he relates that the “school interview process is highly selective” and “it “appears to be easier to get an offer once official recruiting season is finished and there are still openings.” Another way to improve your chances of landing a full-time gig is to spend a summer at Houlihan. A VP says, “As a summer intern, you’re able to work along side the financial staff, and given the size of the firm, it’s easy to get quickly immersed into the workflow.” The firm offers a 10-week program and “usually offers two to three positions per office.” 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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Technically speaking To land a job at Houlihan Lokey, a strong technical background in finance is certainly helpful, if not required. Says an analyst, “In addition to the standard investment banking skill set – time management, attention to detail, ability to learn quickly, etc. – Houlihan requires candidates to have a high level of technical finance knowledge.” A third-year analyst agrees, noting that “tough technical questions” will be asked “before you get in the door.” A first-year analyst explains, “The firm’s focus on technical skill in the interviewing process may make it easier for well prepared career switchers, and more difficult for less technically skilled applicants with experience.” If you’re up for the technical challenge, Houlihan Lokey analysts generally are required to go through an initial interview to assess personality and fit, a technical examination to determine technical proficiency, a Super Saturday-style interview session usually consisting of six to eight interviews (four fit and two technical), sometimes followed by a dinner designed to assess interpersonal skills and social comfort. Says one associate, “I went through an extremely in-depth interview process: three separate phone interviews followed by a full day of in-person interviews.” Another contact explains, “Interviewers asked highly technical finance and accounting questions” and “the interview process was by far more difficult than it had been at the bulge bracket firm where I worked previously.” Another insider shares this opinion. The contact says, “I previously worked at Goldman Sachs and the process here [at Houlihan Lokey] was more intensive and demanding.”

OUR SURVEY SAYS

It takes three Insiders say Houlihan has “three different cultures.” The restructuring group and financial advisory group are “very technical,” while the “relatively new” corporate finance group (made up of M&A and refinancing) “has a bit more of a bulge bracket mentality.” One source calls individuals in the restructuring group “much more driven” than the financial advisory group but says both “have a homegrown, closeknit feel.” The contact adds that both have “a lot of live projects and people who are very focused on being efficient.” A second-year analyst agrees that the “corporate culture is mixed, with the firm comprised of a number of smaller groups.” He explains that “personalities within 256

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groups are very different and a key to having a good or tolerable work experience is to find a group that you can get along with and enjoy, and then get into that group.” That source adds, “Overall, the firm is trying to embrace it smallness and not lose its small firm culture as it grows. One office recently had an analyst and associate night where the senior officers were roasted. We are trying to do more things like this.” Another analyst says that the firm’s culture is extremely open and congenial. “There are multiple opportunities for interaction and relationships with staff at all levels, coupled with high expectations for performance,” he says. “The small nature of deal teams allows for increased responsibilities, but also increased expectations.” Another associate praises Houlihan Lokey’s “extreme professionalism and dedication” and says “bankers are extremely intelligent and dedicated, and tend to be more approachable than in larger firms.” An analyst characterizes Houlihan Lokey as “a very young firm with an entrepreneurial spirit.” Another associate concurs, adding, “Reliable people are definitely compensated and appreciated.”

The money train In general, Houlihan Lokey employees are compensated quite well. “It’s hard work but it’s a great learning experience that pays extremely well,” says one banker. A fourth-year associate notes, “The firm tries to pay above market,” and adds, “I have verified that by keeping in touch with several headhunters and other bankers.” An analyst relates that in addition to the “good pay,” Houlihan Lokey provides the typical slew of benefits, including dinners when working after hours or on weekends, discounted gym memberships and matching 401(k) plans. A first-year banker also notes the company’s “generous car service and cab” policy and “the ability to invest [and] buy into the partnership at the VP level.” Certainly, the perks don’t come for free. “The hours are long, but are generally what you would expect [in investment banking],” explains one analyst in the corporate finance department, who averages 80 to 90 hours a week. Most first-year and second-year analysts average 70 to 80 hours per week, with the hours rising along with responsibility and pay. Another associate agrees that “although hours tend to be extremely long, they are typical of the investment banking industry.” He adds, “There is less of a ‘face time’ issue than at other firms.” Still, there isn’t as much pressure at Houlihan to put in extra hours. A vice president comments that there’s “no peer pressure for staying longer than you have to.” He concurs that “face time is generally not an issue” and says “most officers are as flexible as any I’ve ever heard of at an investment bank.” An associate adds, “70- to 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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80-hour weeks are the average, with 90- to 100-hour weeks always possible. Officers are generally flexible enough that you can work at home at night and/or on weekends. Plan on spending at least one weekend day in the office and working more at home.” A satisfied first-year analyst says, “I work long hours, but this is not as bad as some of my counterparts.” He explains that “most” of his work is on “live transactions – not pitching – so it makes it much more enjoyable.”

Star treatment Analysts and associates also give high marks to the firm’s management and work environment. “My superiors are highly courteous and generally treat me with respect,” an investment banking associate relates. “I enjoy working with my colleagues and respect their knowledge.” A second-year analyst says, “I feel as if I have been treated fairly by my superiors and they have even showed concern for my learning and development.” He continues, “My second year I have felt less like a workhorse and more a part of the team with valued input into the process. I have been able to see deals I wanted to and the managers I currently work for care that I have some work/life balance – at least as good as it can be while involved in investment banking.” However, some analysts related that treatment by managers vary widely. A corporate finance associate notes, “My personal experience says that if you are reliable you will earn respect, but there are certain officers who, no matter what you do, will never give you respect.” He adds, “There is no single direct superior who any analyst or associate works with exclusively. Generally speaking, investment bankers are not noted for their ability to manage people, partially due to the uncertainty and unpredictability of the business and partially due to the nature of the people who are successful at this business.” The source admits, though, that “overall, Houlihan Lokey is average to slightly above average in management talent compared to other investment banks.” “In general, senior employees are very respectful and even friendly to junior staff,” an analyst says. However, motivation remains an issue, as “most officers have little to no management experience and are very poor at motivating people on a day-to-day basis. Managers treat you with respect as a person but have very little consideration for your free time. Taking vacation is not a problem, it’s just that late nights and weekends are treated as regular work hours.” Still, a first-year analyst remarks that “because of the entrepreneurial culture, superiors tend to accord everyone respect, and respect those in particular who bring something of unique value to the firm.” He

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adds, “Given that we have a matrix structure, I have no single direct superior. However, most of the superiors I work with are competent.”

Aesthetically pleasing Most Houlihan Lokey employees report working in pleasant surroundings. Houlihan Lokey “offices are well situated and nicely maintained, but not luxurious,” says an associate. A second-year analyst concurs, noting, “offices are nice and cubes are spacious. However, the Chicago office is much nicer than the LA office, which needs a lot of work.” An analyst in the Dallas office comments on his “nice chair,” which is “important when you spend this much time in it.” He adds, “We’re in a nice building and we have a great view.” Still, he laments that the “desks are small and there is little in the way of decor.” While in the office, casual dress is the norm, without plans to return to formal wear (with the exception of client contact). One associate even praises the “very lenient dress policy.” However, as the British tend to be more buttoned up, a third-year associate notes the “formal always” dress code in the U.K. office.

Solid training, say most Like many investment banks, Houlihan Lokey features a strong initial training program, but after that, it’s more on-the-job than classroom learning. “Houlihan Lokey’s training content is excellent; it’s highly rigorous and informative,” a thirdyear analyst says. “The duration of training, however, is far shorter than other firms’ programs, as the philosophy is that it’s important to hire people able to hit the ground running.” A first-year analyst adds that the firm’s “two-week formal training program [is] under continual development and improvement as the firm grows.” An associate expands, noting, “People at Houlihan are generally very good at training and are always willing to answer questions and teach.” But not all insiders agree. “The training program is not very extensive and serves more as a review than a formal teaching process,” contends a second-year analyst. “This leads to only hiring finance majors, as the firm does not want to take the time or effort to teach someone, and would rather just hire someone with knowledge already.” The contact adds, “On-the-job training is kind of a learn-as-you-go process and can separate analysts from those who succeed and those put on less desirable jobs.”


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Still, as with many things, training is what you make of it. “Formal training is minimal, but informal on-the-job training is exceptional,” explains an investment banking associate. Houlihan Lokey has a “great training program when you start, and there are a few other training programs to help with the programs we use. Everything else is learned on the job,” a first-year analyst comments. And another first-year associate notes that “formal training was very solid. The firm has a number of good resources if you look for them.”

What about the women? A female associate reveals that “Houlihan does well with respect to interviewing and considering women as junior candidates,” but complains that “there is no mentoring program, and senior women are extremely few in number.” She explains that, as in many investment banks, “there are no flexible work time programs or any other such initiatives to help retain women as they consider starting families. This is an unfortunate deficiency.” A male analyst concurs, noting, “When I began, there were no female analysts and only one female banker. Currently, there are two female analysts and the female banker has left.” However, he concedes that women are not treated unfairly. Another first-year analyst agress, noting that women who work at Houlihan Lokey “have never said anything to make me believe they have had any issues related to gender while working here.” Even so, with respect to both women and members of minority groups, another male analyst adds, “I think that banks in general have a long way to go. Our organization is about the middle of the pack with respect to diversity.” A second-year analyst says Houlihan Lokey is trying to become more diverse. He says, “The firm is dedicated to hiring the best candidates for its positions and, as such, has a reasonably good track record with interviewing and hiring minorities for certain positions, mainly administrative [ones].” The contact adds, “I have full confidence that the firm would add to its roster of minority employees if able to locate quality candidates.” Another second-year analyst agrees, noting, “Diversity within the firm is a result of the mixing of administrative roles and investment banking roles. The administrative staff is diverse while the investment banking staff lacks diversity and is entirely white.” However, a first year associate comments, “Unfortunately, like many banks, we have a lot of work to do with respect to gay and lesbian issues.”

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“In addition to the standard investment banking skill set – time management, attention to detail, ability to learn quickly, etc. – Houlihan requires candidates to have a high level of technical finance knowledge.” — Houlihan Lokey insider


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V A U L T

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Greenhill & Co.

PRESTIGE RANKING

300 Park Avenue New York, NY 10022 Phone: (212) 389-1500 www.greenhill-co.com

DEPARTMENTS Merchant Banking Mergers & Acquisitions Restructuring

THE STATS Chairman and CEO: Robert F. Greenhill Employer Type: Private company Revenue: $126.7 million (FYE 12/03) Net Income: $45.4 million No. of Employees: 107 No. of Offices: 3

KEY COMPETITORS Blackstone Citigroup Houlihan Lokey Howard & Zukin Lazard

UPPERS • Prestigious M&A boutique • Recent IPO should increase name recognition

DOWNERS • Little formal training • Average comp

EMPLOYMENT CONTACT www.greenhill-co.com/careers

THE BUZZ


• “Great young boutique with a bright future” • “Strong little firm” • “Another sweatshop in pinstripes, and not even that well known” • “Excellent where they play”

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Vault Guide to the Top 50 Banking Employers Greenhill & Co.

THE SCOOP

Declaration of independence Headquartered in New York City with additional offices in London and Frankfurt, Greenhill & Co. is an investment banking firm offering mergers and acquisitions advisory, financial restructuring advisory and merchant banking. Greenhill prides itself on its independence and does not issue research, lend capital or underwrite securities. Greenhill was founded in 1996 by Robert F. Greenhill, a former chairman and CEO of Smith Barney and a former president of Morgan Stanley, where he worked for over 30 years. Of the company’s 107 employees, 44 work in the London and Frankfurt offices. Historically, Greenhill has earned more than half of its revenue outside of the U.S. In 2003, Greenhill derived more than 95 percent of its $126.7 million in revenues from its financial advisory business, with the remainder coming from merchant banking activities. The firm dispenses M&A and restructuring advice to large and middle-market companies, and has established significant capabilities in the communications and media, consumer goods and retail, financial services, technology, energy and utilities, general industrial, and lodging and leisure industries. Deal highlights in 2003 included advising AMF Bowling Worldwide on its $653 million sale to Code, Hennessy & Simmons; Cable & Wireless on the $167 million reorganization and sale of Cable & Wireless America to Savvis Communications; Dynegy on its $6.1 billion restructuring; and AboveNet on its $3.6 billion reorganization. Greenhill has been busy in 2004 as well. It recently advised International Multifoods on its $840 million sale to J.M. Smucker Company. Greenhill characterizes its organizational structure as “partner-heavy,” and that’s for a good reason: the firm delivers a significant amount of senior-level attention to its clients. Overall, Greenhill has 22 managing directors, many of whom worked with Robert Greenhill while he was at Morgan Stanley. Ten of Greenhill’s partners have been at the firm for at least five years, and since Greenhill’s inception, only one managing director has left the firm.

Little big bank Notwithstanding its small size, Greenhill has made big headway on Thomson Financial’s M&A league tables. In 2003, Greenhill jumped 16 spots to No. 19 overall on global completed M&A, with 19 deals valued at $21.2 billion. In the U.S.,


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Greenhill ranked No. 24 in announced M&A, with 11 deals worth $6.1 billion, up from No. 33 in 2002. The bank did slip a bit in U.S. completed M&A, falling from No. 18 to No. 24, with seven deals valued at $4.1 billion.

Investing greenbacks Greenhill’s merchant banking activities are run primarily through Greenhill Capital Partners, which currently manages a $424 million fund ($85 million of which came from Greenhill partners and employees). The fund normally invests $10 million to $50 million in companies with proven business models (revenues of $50 million or more) and seasoned management teams. In 2003, Greenhill invested $47.5 million in Republic Insurance Group, a property and casualty insurance provider; $16.5 million in United States Exploration, an energy company; and $10.2 million in EXCO Resources, another energy concern. Greenhill also has a relationship with Barrow Street Capital, a real estate merchant banking firm run in part by Robert F. Greenhill Jr., the son of Greenhill CEO Robert F. Greenhill. Greenhill (the company) has committed capital to Barrow Street funds, and plans to invest more in future funds Barrow Street establishes. Barrow Street is currently investing its second real estate fund, which has raised $110 million.

Seeking publicity Until recently, Greenhill had been a privately owned investment bank. But things changed in 2004. In May, the company went public, raising $87.5 million (5,000,000 common shares at $17.50) in an offering run by Goldman Sachs. A week after the IPO, Greenhill raised some $13 million more, selling an additional 750,000 common shares at the same price, pursuant to an option granted to the initial offering underwriters. Greenhill’s ticker symbol is GHL, and the company’s stock trades on the NYSE. As of July 2004, Greenhill had a market capitalization of approximately $615 million. According to the prospectus, managing directors retained more than 80 percent of the company’s stock. Some Greenhill observers wonder if the bank’s decision to go public was driven by a desire to acquire another firm with publicly traded shares, or even sell itself to another bank. Others claim that, given a resurgence in the M&A market, Greenhill needs capital to hire more bankers. According to Greenhill’s registration statement, however, the bank intends to use the proceeds to repay debt, meet selected merchant banking investment commitments and establish new merchant banking funds.

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GETTING HIRED

Small, selective, several interviews As a small investment banking boutique, Greenhill is somewhat selective in its recruiting. “In general, the firm looks for the best employees possible,” says a second-year associate. According to a first-year associate, the firm looks for candidates at “Harvard, Yale, Wharton, the University of Virginia and UT Austin.” Even though the firm is selective, it might be looking to hire more people than usual these days. “There’s an increasing amount of people leaving the firm,” explains another insider, “so we’re now faced with a shortage of staff.” Expect “many, many interviews” if your resume passes muster. Says one associate, “I met with nearly every professional in the office I interviewed for – everyone from Bob Greenhill [the chairman] and Scott Bok [CEO and president] down to the analysts.” The contact does admit that “given how much bigger firm is now than when I started, you probably don’t meet with everyone anymore.” Another contact agrees that you should expect to meet with a bunch of bankers before getting the nod. “The firm will try to get as many employees as possible to conduct interviews.” That source adds, “The final decision always rests with the partners and managing directors.” Speaking of managing directors, one says he went through “five rounds” of interviews to land his spot.

OUR SURVEY SAYS

The lean, Greenhill machine Insiders characterize the firm’s culture as “close knit, conservative and teamoriented,” as well as “entrepreneurial and results driven.” As far as interaction between offices, one source says, “The U.S. and European offices don’t interact very much and there isn’t really any possibility to transfer offices.” He adds, “Other than the yearly holiday party and ‘leaving’ drinks, there are no other significant social occasions, and certainly no company off-sites have ever been organized.” However, in New York, young bankers can expect to experience “tons of interaction with everyone in the office, from Bob Greenhill on down.” One associate knocks the quality of this interaction. “Generally speaking, unless you are quite senior, your 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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opinions and views are rarely taken into consideration.” He adds, “Relationships with colleagues remain very professional in general.”

Comp needs improvement; hours and perks just fine Compensation receives average marks from insiders. A first-year associate reports making an “$85,000” base salary, with an expected bonus of “$115,000.” A secondyear associate says he pockets “$95,000” a year in salary and, this year, should take home a “$120,000” bonus. The contact adds, “Earnings potential is very low in this firm unless you’re a partner or managing director, and limited stock options were allocated when the firm went public.” The source says those options “vest over a five-year period.” As far as perks, the firm seems to provide all the basics, plus a little more. Explains one associate in New York, “There’s a gym at the office that’s stocked with workout clothes – all you need to bring is sneakers.” Additionally, he says, “You get a $25 meal allowance and a free car service or taxi if you work late. And the company provides cereal for breakfast, free sodas and beverages, designer coffee and snacks.” A managing director adds that there’s “equity participation for officers,” and an associate points out that the “modern” New York office has a “new floor” and “nice chairs and desks.” As far as dress code, it’s “banker blues and grays only,” which means formal attire. The firm does go casual on Fridays. Another associate is happy to report that there’s “no face time. You only stay if you’re busy.” He adds, “Hours fluctuate widely due to the small size of the firm – when you’re working on something important, you work very hard, but when you’re not, hours can be light.” Another contact notes that “hours are less than in bulge bracket firms.” Most insiders, from associate on up, report working between 60 and 70 hours per week, which usually includes one weekend office visit a month. Although there’s “not as much formal training [at Greenhill] as at bigger firms, it’s very adequate,” says one young banker. In addition, he notes that “there’s lots of onthe-job training.” Others, though, aren’t as pleased with the firm’s training practices, rating the firm well below average in this area. Diversity hiring practices also receive below average marks. “There’s still not many women working here,” says one source, “but we’re very fair and ready to hire more.”

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“Hours fluctuate widely due to the small size of the firm – when you’re working on something important, you work very hard, but when you’re not, hours can be light.” — Greenhill insider


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Jefferies & Company, Inc.

PRESTIGE RANKING

520 Madison Avenue 12th Floor New York, NY 10022 Phone: (212) 284-2550 www.jefco.com

DEPARTMENTS Asset Management Convertibles Sales & Trading Equity Sales & Trading High-Yield Sales & Trading Investment Banking International Research

THE STATS CEO: Richard B. Handler Employer Type: Public company Ticker Symbol: JEF (NYSE) Revenue: $829.6 million (FYE 12/03) Net Income: $84.1 million No. of Employees: 1,700 No. of Offices: 20

KEY COMPETITORS Banc of America Securities Bear Stearns Citigroup Credit Suisse First Boston JPMorgan Chase Lazard Lehman Brothers Morgan Stanley UBS

UPPERS • A lot of responsibility for junior bankers • Solid pay and perks

DOWNERS • Bulge bracket hours • Lack of on-the-job structure can be intimidating

EMPLOYMENT CONTACT For Investment Banking opportunities: East Coast Kieran Healey, Recruiting Coordinator Phone: (212) 284 8119 E-mail:[email protected]

THE BUZZ


• • • •

“The small high-yield specialist” “Growing firm” “Decent boutique” “The 80s was its decade”

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West Coast Dee Dee Bird, Recruiting Coordinator Phone: (310) 575-5252 E-mail: [email protected] Europe Christina Hall, Recruiting Coordinator Phone: +44 020 7968 3756 E-mail: [email protected]

© 2004 Vault Inc.

Vault Guide to the Top 50 Banking Employers Jefferies & Company, Inc.

THE SCOOP

Middle-market masters Jefferies & Company, Inc., the principal operating subsidiary of Jefferies Group, Inc., is a global investment bank and institutional securities firm that knows its place in the market. Jefferies offers financial advisory, capital raising, mergers and acquisitions, and restructuring services to small and mid-cap companies, rather than to large firms. Jefferies provides trade execution in equity, high-yield, convertible and international securities, as well as investment research and asset management capabilities. Particularly strong in high-yield, Jefferies was ranked No. 13 in U.S. high-yield debt underwriting in 2003, a two-place jump from its previous year’s No. 15 finish. According to Thomson Financial, Jefferies worked on 15 high-yield issues in 2003 worth a total of $2.4 billion. The firm also offers correspondent clearing, prime brokerage, private client services and securities lending. Jefferies’ wholly owned subsidiary, Helfant Group, Inc., executes approximately 10 percent of the daily reported volume of the NYSE, and has helped to position Jefferies as a respected player on the Street. Founded in 1962 by UCLA graduate Boyd Jefferies, the firm made its mark in the 1960s and 1970s as a third-market trader (trading listed stocks over the counter). Later, Jefferies leveraged its trading operations to grow its corporate finance and research divisions. Although Jefferies is most known for its trading in equity, highyield, convertible and international securities, the firm is committed to growing its advisory services, which include capital raising, M&A and corporate restructuring. In fact, in the past five years, Jefferies has more than tripled its banking staff. Currently, the firm employs approximately 1,700 people in 20 offices worldwide, including Atlanta, Boston, Chicago, Dallas, Houston, London, Los Angeles, Nashville, New Orleans New York, Paris, San Francisco, Tokyo, Washington and Zurich.

From middle market to top performance Due to its focus on middle-market clients, Jefferies hasn’t been hit as hard as some of its bulge-bracket brethren. According to the firm, Jefferies has not had an unprofitable year in approximately 30 years, not even in 1987 or 2001, the two years in which the markets tumbled. In 2003 the firm posted record year-end results, with net earnings up 34 percent to $84.1 million, compared to $62.6 million for 2002.


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Total revenues increased 23 percent to a record $927 million in 2003, compared with $755 million the previous year. Led by the firm’s ever-increasing investmentbanking division, the firm was able to overcome a shaky start in 2003. The acquisition of Quarterdeck Investment Partners LLC helped push investment banking revenues to $229.6 million, an increase of 64 percent compared with $139.8 million for the prior year.

Broadening its view One of the most important deals of 2003 for Jefferies didn’t concern one of its clients, but Jefferies itself. In December the firm acquired Broadview International, the boutique investment bank that specializes in technology M&A. According to a New York Times article published just as the deal was announced, Jefferies chairman Richard Handler noted that in order for Jefferies to fulfill its goal as a top player in the middle market, it needed technology expertise, and Broadview fit the bill. In the five years preceeding its acquisition, Broadview had completed 321 M&A transactions worth $54 billion, making it an excellent target for Jefferies, which wasn’t particularly strong in technology. Founded in 1973, Broadview employs more than 75 investment bankers in New York, Silicon Valley, Boston and London. According to Mergerstat, the number of M&A deals completed by Jefferies and Broadview combined would rank ninth among all investment banks for the first 10 months of 2003 and fourth for all deals under $500million for 2003. To complement its international banking efforts, Jefferies has also recently expanded its restructuring practice to Europe.

Onward and upward Jefferies isn’t letting success go to the firm’s collective head. In February 2004, the firm announced it had hired Sean Sullivan as a managing director in the investment banking group, joining the firm after working for Schroders, JPMorgan and, most recently, Banc of America Securities, where Sullivan worked as a principal in the industrials division. Sullivan joined three other managing directors, all of whom joined the firm in 2003. CEO Richard Handler noted in a press release that this expansion of its investment banking business dovetailed nicely with Jefferies’ core focus on small and mid-cap companies in the industrial sectors.

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GETTING HIRED

Where’s your dedication? A relatively small firm with few openings, Jefferies runs a “selective hiring process at a limited number of universities.” The firm tends to hire most of its first-year employees from top colleges and business programs, including Wharton, Stanford, UVA, UC Berkeley, UCLA, the University of Michigan and the University of Texas at Austin. Insiders say that candidates for Jefferies jobs generally go through two or three rounds of interviews. For those subjected to only two rounds of scrutiny, the first round is normally conducted on campus by two Jefferies employees, usually “one senior and one junior” banker. The second round is held at Jefferies’ offices, as candidates meet with several senior bankers, mostly managing directors. An analyst in San Francisco says his office “typically [conducts] three rounds of interviews in our hiring process. We first hold on-campus interviews, then second-round interviews with junior bankers and then a ‘Super Saturday’ format with senior bankers.” One source says recruits can expect “a mix of questions – quantitative, modeling, personality and opinion.” Another contact says he was also asked “both technical and fit questions.” And one New York banker says Jefferies “likes to see experience on a resume. People here are very dedicated, and they like to see that in candidates.”

OUR SURVEY SAYS

As much as you can handle Those thinking about joining Jefferies’s ranks will be pleased to note that insiders say the firm has a “laissez-faire” attitude and is “laid back,” “more informal” and “less rigid than other banks.” This said, recruits looking for structure might find working at Jefferies an unpleasant experience because the firm is geared towards those hungry for “a lot of responsibility and client contact” under limited supervision. “Jefferies has an entrepreneurial atmosphere where you can take on as much work as you are willing to,” says a third-year analyst. Another analyst who, before joining Jefferies, worked a summer at a bulge bracket firm adds that “Jefferies people tend to be much 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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less white shoe and more relaxed around each other [than those at bulge bracket banks], but they expect more when it comes to working. At the bulge brackets, you can hide from the work and you really don’t have to have as high a level of knowledge. However, since Jefferies is small, you’re expected to contribute quickly and the responsibility level is very high.” One insider, however, cites one negative caused by the lack of structure: “There’s no cohesion. It just seems like a random assortment of smart people.” Another source says, “It’s a great place for junior bankers to get a broad experience,” but admits, “the slight lack of structure has its pros and cons.” This contact believes, however, that “although office politics exist, they do not impede progress.” A New York banker says Jefferies has a “flat management structure and respects its employees.” Others agree that treatment by upper management is “one of the high points of working at the firm,” but one downside is that “senior guidance and mentoring is nonexistent.” However, one contact notes that Jefferies is “currently in the process of beefing up our training program.” Overall, Jefferies employees seem very content. Some of the best parts of the job, according to Jefferies personnel, are “the people,” “breadth and intensity of experience,” “responsibility,” and “client contact and deal exposure.” “I’m very happy with where I am and the opportunities presented to me,” offers a contact. “There are always some things that can be done better, but in this economic environment, you can’t complain.” Another banker adds, “If I stay in investment banking, I wouldn’t be anywhere else.” Also agreeing with the sentiment is a third source who matter-of-factly states, “I wouldn’t switch Jefferies for Goldman if they paid me.” And an experienced Jefferies banker when asked about his level of satisfaction has this to say: “I worked at five firms before Jefferies, never longer than three years. I’ve been at Jefferies 12 years so far and hope to retire here. Does this answer your question?”

Good pay but long hours Jefferies is “very competitive” with other firms when it comes to compensating its employees, and in general, “compensation is right on par with any bulge bracket, and the firm is not chintzy with expenses.” A few insiders even claim “analysts are compensated near the top of the Street.” Almost universally praised are the perks, which include a “well-stocked kitchen,” “free soda and snacks throughout the day,” gym memberships, “large” meal allowances, “the opportunity to choose which office to work in” and an employee stock purchase plan – “which has given great returns.” 272

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Another lauded perk is the firm’s profit sharing program. “At the end of each year,” says an analyst, “the firm allocates shares among employees. Allocation is based on your salary at the firm. In past years I have received approximately 5 to 7 percent of my base salary from this plan.” Analysts and associates say they often work weekends and put in some long hours – about an average of 80 per week for analysts, approximately 70 per week for associates. “Hours are difficult, but better than most places. And senior people are usually flexible with the hours junior people work,” says a New York employee. Another insider says, “As a junior banker, it’s similar to working at other investment banks.” A junior staffer who puts in 90 to 100 hours per week agrees that the hours are the same as “any other bank on the Street.” As for face time, one banker volunteers, “Bankers work hard when there is work to do. But there is very little face time. You leave when the work is done.”




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CIBC World Markets

PRESTIGE RANKING

425 Lexington Avenue New York, NY 10017 Phone: (212) 856-4000 www.cibcwm.com

DEPARTMENTS Commercial Banking Debt Capital Markets Global Equities Investment Banking M&A Advisory Merchant Banking

THE STATS Chairman and CEO: Gerry McCaughey Employer Type: Division of Canadian Imperial Bank of Commerce Revenue: $3.5 billion (FYE 10/03) Net Income: $373 million No. of Employees: 2,300+ No. of Offices: 30

KEY COMPETITORS Bank of America Bear Stearns Jeffries & Co. Wachovia

UPPERS • A lot of responsibility and client contact for junior bankers • Team-oriented, collegial atmosphere

DOWNERS • Poor “brand-name recognition” • Hours can be bad because of thin junior ranks

EMPLOYMENT CONTACT www.cibcwm.com/careers If CIBC does not recruit at your school, you may indicate areas of interest and submit a resume to [email protected].

THE BUZZ


• • • •

“The Goldman of Canada” “Not a major U.S. player” “Moving up” “Second-rate; disorganized”

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Vault Guide to the Top 50 Banking Employers CIBC World Markets

THE SCOOP

Ministering to the middle-market As the investment banking unit of Canadian Imperial Bank of Commerce (Canada’s third-largest bank), CIBC World Markets (CIBC) offers a full suite of capital markets, research, mergers and acquisitions advisory, investment and merchant and commercial banking services throughout North America, with select service offerings in the U.K. and Asia. Headquartered in Toronto, CIBC focuses on middlemarket clients, and the firm is especially strong in underwriting and M&A advisory within Canada. CIBC’s 2003 revenue of $3.5 billion was up $565 million over 2002 due to increased capital markets business (particularly equity structured products, fixed income, and Canadian equity agency) and diminished debt and high-yield portfolio write-downs. While CIBC’s top line was strong, the firm narrowly missed its goal of $400 million to $600 million in annual net income with $373 million in 2003.

Big deals, groundbreaking deals According to Canadian Imperial’s annual report (covering the year ending October 2003), CIBC was first in new Canadian equity issues, helped by the $1.0 billion IPO for the Yellow Pages Income Fund. Other 2003 CIBC capital markets deals included Tyco International’s $2.5 billion convertible offering and Timken’s $165 million follow-on offering. CIBC also got to show off its full array of available investment banking services as the bank was co-lead arranger, syndication agent, and acquisition advisor on Jarden Corporation’s purchase of Lehigh Consumer Products Corporation, funded by a $150 million senior secured term loan. Early in 2004, CIBC took a risk in becoming the first investment bank to underwrite an income deposit security (IDS) issuance in the U.S. when it brought out Volume Services’ $252 million offering (an IDS is a hybrid of debt and stock, and an investor can receive interest payments on the loan portion of the security and dividend payments on the equity component). The Volume Services deal was hailed as a success, and CIBC is hoping it can leverage the first U.S. IDS mandate to emerge as a major player in what is expected to be a growing market.


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Tops in Canadian M&A CIBC World Markets is also a strong M&A market participant. In 2002, the firm ranked No. 1 on the Canadian announced M&A league tables, according to Bloomberg Financial Markets. In 2003, CIBC dropped to the No. 4 in the same rankings, but remained the top Canadian-based bank in Canadian M&A, trailing only Morgan Stanley, Goldman Sachs and Lazard (all U.S.-based firms). In terms of number of Canadian M&A deals, CIBC worked on more transactions in 2003 and 2002 than any other market participant. In fact, in 2003, CIBC worked on the same number of transactions (30) as Morgan Stanley (11), Goldman Sachs (11) and Lazard (8) did combined. In the 2003 U.S. M&A league tables, CIBC leaped to No. 14 in the rankings, up six spots from its No. 20 finish the previous year. CIBC had the highest ranking of any of Canadian investment bank in 2003 and was also the only Canadian investment bank to place in the top 20 in both 2002 and 2003.

Feeling fines Many investment banks have faced increased regulatory scrutiny in the last few years, and CIBC is no exception. After failed energy concern Enron declared bankruptcy, the SEC brought charges against financial institutions and individual executives for their roles in manipulating Enron’s financial statements. Eventually, CIBC found itself in the SEC’s crosshairs as the bank was accused of participating in 30 loan-like transactions that were structured to avoid debt classifications. The result, according to the SEC complaint, was that Enron’s profits were inflated by more than $1 billion and more than $2.6 billion in debt was hidden from 1998 to 2001. By late 2003, CIBC had placed over $80 million in reserves to deal with Enron-related issues. In December 2003, CIBC was forced to dip into its Enron reserves to end all of the Enron investigations. The bank announced an $80 million settlement with the SEC and the U.S. Department of Justice under which CIBC agreed to engage a law firm to oversee the bank’s compliance procedures and to cease many of its structured finance activities with U.S. companies for the next three years. CIBC also settled with the Federal Reserve Bank of New York and the Office of the Superintendent of Financial Institutions (Canada), agreeing to honor the settlement the bank had made with the SEC and the Justice Department. The SEC has also sued three CIBC executives personally for their Enron connections. Two of these individual suits have

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resulted in over $620,000 in settlement payments, and the third case is still being contested. CIBC also finds itself embroiled in the ever-broadening mutual funds scandal. In January 2004, The New York Times reported that the New York Attorney General’s office and the SEC may file suits against CIBC for providing more than $1 billion in financing to assist investors who engaged in illegal mutual fund trading practices. In February, former CIBC executive Paul Flynn was arrested by the DA’s office on charges of stealing more than $2 million in an illegal mutual fund trading scheme. Flynn, who has also been charged with civil fraud by the SEC, had been fired from CIBC’s equity investment arm in December 2003 after allegations surfaced that he might have known that hedge funds he financed engaged in improper market timing and illegal late trading of mutual fund shares. Flynn’s departure was followed in January by the exit of Flynn’s superior and the former head of CIBC’s U.S. arbitrage and derivatives trading business, Robert Deutsch. It is unclear whether regulators will seek to prosecute Deutsch, but for Flynn, the potential civil punishment of an industry ban probably doesn’t seem so bad in comparison to the 25 years in prison that could result from a guilty verdict in the New York case.

There’s a new head mountie in town In February 2004, CIBC Chairman and CEO David Kassie left the firm as Gerry McCaughey, vice chair of wealth management, was named head of CIBC World Markets. According to a CIBC press release, Kassie left to pursue other interests, but many observers believe that Kassie was fired as a result of Canadian Imperial’s desire to repair its subsidiary’s image. While Kassie is credited for leading CIBC to strong market positions in various investment banking categories, he also received much of the blame for CIBC’s heavy exposure to depressed equity markets and regulatory investigations. In addition to the Enron outlay, CIBC was ordered to pay $52 million to investors on a 1997 Renaissance Cosmetics bond offering underwritten by the Canadian investment bank before the issuer went under in 1999. CIBC also had significant equity investment in and loans outstanding to Global Crossing when the telecommunications company filed for bankruptcy protection in 2001. Canadian Imperial has not confirmed that the selection of Gerry McCaughey as CEO is part of a larger reputation-boosting plan, but McCaughey’s low-risk wealth management background is believed by many to be the main reason for his appointment.


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GETTING HIRED

Customary for banking Like its competitors, CIBC runs a “very competitive” hiring process, targeting undergraduate students at top schools in the U.S. and Canada (think University of Michigan, Williams, Cornell, Columbia and other Ivies) and MBA candidates at select programs such as Wharton and Columbia. Interviews are conducted by professionals of all levels and normally span two rounds with a preliminary oncampus interview followed by “four to five” back-to-back meetings at CIBC’s offices. One contact who attended a “non-core” school was more closely scrutinized, sitting through “an additional four to five interviews.” Summer interns reveal that it is generally “easier to get hired after completing an internship” at CIBC, but the bank still weeds out unwanted would-be full-timers. One source reports that after his summer stint, only four of 12 summer associates received offers (the contact was one of the four). “CIBC looks more for a personality fit than someone with the best corporate finance skills,” says one source, but another contends that “more and more, CIBC is finding that it needs to recruit people with a finance background, because we don’t have the long, training programs of the bigger banks.” (CIBC’s full-time new hire training program lasts three weeks.) “Fit” questions may include “Why banking?” and “Why CIBC?” as well as seek to determine a candidate’s “strengths and weaknesses.” One analyst applicant adds that his “interviewers wanted to know that I could handle the hours” and also “looked for passion about the markets.” Technical questions are “customary for banking interviews” and may test a candidate’s “basic understanding of accounting,” “valuation” and “financial statements.”

OUR SURVEY SAYS

The CIBC fraternity CIBC can be an “intense” “meritocracy” where “good teamwork” is the norm and “people on a whole are good to work with and personable.” One employee who works “in a satellite office” calls the atmosphere “very frat-like,” and says his coworkers “are very cool to one another, and we all get along very well.” Perhaps a

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reason the fraternity analogy is fitting is that CIBC’s male-to-female ratio is extremely male-heavy. “The ratio is astonishingly bad,” says a banker who estimates that there are 10 men at the firm for every one woman. Another says that while balancing the workforce is on the firm’s to-do list, CIBC is “no worse than the rest of the industry.” CIBC expects its junior staffers to be “hard working” and to take on “a lot of responsibility,” and a contact adds that CIBC is “not a place where title restricts your responsibilities or ability to have an impact.” A former summer associate says that he “was treated like any other deal team member, although I was typically staffed with another full-time associate.” CIBC’s relatively thin junior ranks are a big reason why young bankers can take on so much, but a lot of responsibility often means a lot of hours. One banker who logs 80 to 90 hours per week says that hours at CIBC can be “brutal at times.” “If you are free,” he says, “they’ll give you more work because the firm is so understaffed.” Others report constant weekend work but not a lot of pressure to put in “face time.” Still, one contact has “noticed that some have the attitude that they stay longer than others because it is some sort of badge of honor.” Overall, however, the general sentiment is that the hours at CIBC are “very unpredictable” but “typical for banking.” Junior CIBCers find that “for the most part, all senior bankers are very understanding and respectful to juniors, but there are those who feel it necessary to give people a hard time.” And, says one source, while “senior bankers say they treat junior bankers better here than at other banks,” his experience “is that it’s the same as other banks.” In other words, “there is no consideration for a junior banker’s outside life.” Another insider opines that it “depends entirely on the individual manager’s style, but regardless, junior people are worked very hard – and sometimes for no reason.” One associate who calls his relationship with his superiors “collegial and friendly” admits that his “direct superior is employed because he’s a great banker, not because he’s a great manager.” Overall, though, the treatment of junior staffers at CIBC is “generally acceptable” with “some management” doing “a better job at mentoring and teaching than others.”

Not by much According to some CIBC employees, the bank pays “consistently below” the Street average but “luckily not by much.” One associate, however, thinks that pay is “higher than average” even though he works “lower than average” hours. The bank’s 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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perks are standard for the industry and include a late night and weekend meal allowance and car service. The firm also has a 401(k) program whereby it will match 50 percent of an employee’s contributions up to 6 percent of salary; CIBC’s matched contributions vest over three years. Summer interns are paid at the same rate as first year full-timers and may receive an end-of-the-summer bonus.

Now and later CIBC’s current New York offices are not particularly esteemed (one contact says the bank has “hole in the wall facilities”), but the firm “will be moving into its new U.S. headquarters at 300 Madison by the end of 2004.” The new “state of the art” building, in the words of one staffer, will be a “huge improvement and morale booster.”



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TOP50 FINAN EMPLO THE VAULT 5O:

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Wells Fargo & Company

PRESTIGE RANKING

420 Montgomery Street San Francisco, CA 94163 Phone: (800) 411-4932 www.wellsfargo.com

DEPARTMENTS* Audit Services Business Banking Services Community Banking Corporate Finance Corporate Human Resources Corporate/Wholesale Banking Internet Services Technology and Operations Wholesale Finance *Professional development programs offered through these departments

THE STATS Chairman and CEO: Richard M. Kovacevich Employer Type: Public company Ticker Symbol: WFC (NYSE) Revenue: $28.4 billion (FYE 12/03) Net Income: $6.2 billion No. of Employees: 143,000 No. of Offices: 5,900

KEY COMPETITORS Bank of America Bank One Citigroup U.S. Bancorp Wachovia Washington Mutual

UPPERS • Integrity of co-workers • Job stability

DOWNERS • Conservative credit culture • Average pay (for commercial banking)

EMPLOYMENT CONTACT www.wellsfargo.com/jobs

THE BUZZ


• “Strong commercial bank” • “No investment banking presence” • “Old, respected, stable” • “Big Midwest presence

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Vault Guide to the Top 50 Banking Employers Wells Fargo & Company

THE SCOOP

Swelling Wells Fargo In 1850 Henry Wells and William Fargo were among the New York businessmen who founded American Express, a mail delivery service that was the precursor to today’s financial services behemoth. According to legend, Wells and Fargo were excited about the prospect of expanding west but couldn’t convince their partners at American Express. As a result, the two started their self-named firm in 1852, providing banking, stagecoach and pony express delivery services. Wells Fargo separated its banking business from its express service in 1905 and has remained with financial services since. Wells Fargo is now the fourth-largest bank in the U.S. thanks in large part to its penchant for acquisitions. In its 152-year history, the financial services giant has merged over 1,500 times, including its $34 billion combination with Norwest in 1998 (a deal that brought along star CEO Richard “Dick” Kovacevich). The bank currently operates its approximately 80 businesses through three main divisions: Community Banking (consumer offerings including banking, investment, insurance, and trust services); Wholesale Banking (corporate banking options including treasury management, insurance, capital markets, and real estate); and Wells Fargo Financial (offering consumer and commercial financing and leasing as well as credit cards).

Doin’ Wells, thank you In the fourth quarter of 2003, Wells Fargo again brought in record revenue and profits – it was the tenth consecutive quarter the bank had done it. For the full year 2003, Wells Fargo banked $28.4 billion in revenues and $6.2 billion in net income. The year’s strong results were largely driven by the bank’s robust lending business and a decrease in nonperforming loans. The fourth quarter of 2003 was so good that Wells Fargo even saw its first significant gains from private equity investments ($143 million) in three years. Taking note of Wells Fargo’s consistently strong performance, Moody’s Investor Service upgraded the bank’s debt to Aaa in September, giving Wells Fargo the distinction of being the only U.S. bank rated so highly.


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The urge to merge Over the years, Wells Fargo has followed a targeted acquisition strategy designed to improve particular product offerings. In August 2003, for example, Wells Fargo added to its investment management services with its purchase of Benson Associates, an Oregon asset management company with $1.3 billion in equity assets under management. The next month, Wells Fargo expanded its restructuring business by buying Trumbull Associates LLC from The Hartford Financial Services Group. Focusing on assisting companies in bankruptcy, the newly named Trumbull Group LLC now operates out of Wells Fargo’s Corporate Trust Services’ Customized Fiduciary Services arm. The niche acquisition strategy allows Wells Fargo to selectively improve its geographic reach as well. In May 2003, Colorado bank holding company Two Rivers Corporation joined Wells Fargo as the company looked to improve its presence and distribution network in the state. The deal was a precursor to a larger Wells Fargo expansion plan announced in October that, among other things, will create 20 to 25 new Denver branches in the next five years. Wells Fargo expanded further west with its November acquisition of Seattle-based Pacific Northwest Bancorp, enhancing the firm’s business banking footprint in Washington and Oregon. The purchase added $2.9 billion in assets, 57 banking locations, and 760 employees not to mention half of the $2.2 billion commercial loan increase that Wells Fargo later recorded in the fourth quarter of 2003. Heading into 2004, industry analysts are wondering if a larger merger is in Wells Fargo’s future, especially in the wake of the mammoth Bank of America/FleetBoston and JPMorgan/Bank One deals. Some believe a big merger would make sense for Wells Fargo because it could provide even greater cross-selling opportunities for the bank. Wells Fargo, however, seems reluctant to enter into a massive merger. In January 2004, the bank’s CFO Howard Atkins told CNBC, “We like the markets that we’re in, which is principally west of the Mississippi. Our acquisition strategy is really focused on those markets, and doing small and mid-sized deals at the right price … that’s the strategy we’ll continue to pursue.”

Do you have ID? In February 2004, Wells Fargo announced a plan to open 25 branches and hire more than 400 people in Los Angeles. In particular, Wells Fargo is focusing on improving its offerings to the area’s Hispanic population, a market many of Wells Fargo’s competitors are also targeting. In November 2001, Wells Fargo became the first U.S.

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bank to engage in the practice of accepting the matricula consular, an ID card granted by the Mexican government to Mexicans living in the U.S. Since then, more than 155 banks have also agreed to accept the matricula consular, and more than 250,000 Wells Fargo accounts have been opened with it.

Mortgaging, the future In February 2003, Wells Fargo’s mortgage practices caused the bank some headaches. Citing a California state law prohibiting interest charges more than one day before a mortgage is recorded, California’s Department of Corporations (DOC) wanted Wells Fargo to stop its practice of calculating interest accruals as soon as loan proceeds are received by homeowners. In keeping with the state law, the DOC wanted Wells Fargo to reimburse borrowers for overpayment of interest. Wells Fargo, however, relied on a conflicting federal law that allows financial institutions to collect interest as soon as proceeds are given to a borrower, and the bank refused to accede to the DOC’s demands. The dispute forced Wells Fargo to bring suit, claiming that federal law superseded California’s law and therefore allowed Wells Fargo to continue its mortgage practices. Meanwhile, the DOC attempted to revoke Wells Fargo’s state mortgage license. After some legal wrangling, a federal judge ruled in favor of Wells Fargo in May 2003. The decision allowed Wells Fargo to avoid an expected $18 million internal audit. “As we’ve said time and again over the past several months, charging interest beginning when a loan is made to the borrower is just common sense,” said CEO Kovacevich. “Customers expect to begin paying interest as soon as they get the money. That’s the fair and most practical way to do it. Forty-nine other states and our regulators all agree.”

Awards for one and all Wells Fargo’s success has not gone under the radars of industry observers. Fortune ranked the big bank in the top 10 percent of America’s most admired companies, and Global Finance named Wells Fargo the best and safest bank in the U.S. The firm has also been recognized for its diversity efforts. In 2003 Wells Fargo received the Professional BusinessWomen of California’s Pacesetter Award for supporting the advancement of women in the workplace and landed a spot on Working Mother magazine’s top 100 best companies to work for. US Banker specifically praised two of Wells Fargo’s female executives, putting them on its list of the 25 Most Powerful


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Women in Banking. And in 2002, DiversityInc had Wells Fargo at No. 17 on its rankings of the Top 50 Companies for Diversity. Wells Fargo’s chief executive got his due, too. BusinessWeek named Dick Kovacevich one of the Best Managers of 2003, noting Wells Fargo’s double-digit growth in quarterly sales and earnings for more than two years and the bank’s success at cross-selling (the average Wells Fargo customer buys four products from the bank, twice the industry average). American Banker also gave rave reviews of Kovacevich’s performance, giving him 2003 Banker of the Year honors. Kovacevich was selected because of his effectiveness in driving Wells Fargo’s retail consumer banking and cross-selling, and for his outspokenness about controversial issues such as ATM fees and privacy concerns.

GETTING HIRED

Selling skills required Insiders say Wells Fargo is “very selective and thorough in terms of researching candidates” and “avoids hasty decisions.” Although a credit analyst who’s been with Wells Fargo for three years explains that “there’s a wide variety of jobs that meet up with a variety of skill and education levels,” applicants to corporate/wholesale banking’s credit management training program must be able to “demonstrate ability” in both sales and analysis throughout the interview process. Case in point: A firstyear credit analyst was posed this question during her interview: “You’re in the desert; sell me sand.” (In addition to the corporate/wholesale banking training program, which this profile focuses on, Wells Fargo offers several other programs for undergrads and MBAs; check the firm’s extensive “employment” section of its web site at www.wellsfargo.com/jobs for more information.) Another analyst says she had “four interviews over a two-week period.” She adds that “out of 60 qualified applicants, only two were hired” and “interview questions focused on understanding of accounting, prior experience, strengths and weaknesses, as well as personality questions to determine whether the candidate would be a good fit for the team.” Like many applicants, a second-year credit analyst faced situational questioning throughout the interview process, including, “Describe what a Super Bowl commercial about me would look and sound like.” Other “tricky” questions include “Explain the interrelationships of the four principal financial statements as if

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I were a five-year-old,” and “Explain the impact on the financial statements of SFAS 133 and SFAS 141/142.”

Are you experienced? Analysts at Wells Fargo report three rounds of interviewing, with the final rounds being conducted by director-level executives. One first-year analyst highlights Wells Fargo’s desire to hire those who have some prior experience. “For an analyst position, the firm requires a vast knowledge of accounting,” she says, noting that Wells Fargo will focus on hiring “well rounded individuals” with some sort of professional experience. A strategy for ensuring that the top directors see you in later interviewing rounds is to put your “friendly personality” on display, “without any hint of an ego.” A “strong background in finance and accounting” also helps, because without it, “it’s hard to get hired into one of the training programs.” Of course, finance and accounting backgrounds are not required for programs in tech and operations, Internet services and corporate HR, among others.

A back door? One way to get that elusive relevant experience is to get an internship at Wells Fargo. One analyst, who was selected for a position after beating out 48 other applicants, notes that her two-year internship that rotated her through all of the departments of community banking helped her land her current position. She stresses that in addition to the experience, the “knowledge of the culture of the company gave me the edge needed to get the job.” Another intern who was later hired by Wells Fargo agrees that “understanding the culture” was a big help in landing a full-time spot.

OUR SURVEY SAYS

Conservative culture club Wells Fargo’s credit culture is more conservative than other commercial banks, say insiders, but “that discipline has helped us to stay away from the companies that have had corporate scandals,” notes a second-year credit analyst. She adds that Wells Fargo likes to do business with familiar companies, and the firm “does a good job of recognizing and rewarding hard work and successes.” Another banker agrees that Wells Fargo is rather conservative, saying it’s “conservative in its underwriting activities” as well. He adds that the “quality of life is very high” at Wells Fargo, 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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the firm is “concerned with people, not just the work that needs to be done.” A contact in Dallas expresses a similar opinion: “People are the main focus at the firm.” “Strange culture” is how a first-year credit analyst located in Portland describes the working environment at Wells Fargo’s Northwestern offices, noting that you’ll see someone don a tie “maybe once a week.” Formality aside, one banker notes that “communication from senior management is prevalent,” and another calls the culture “competitive, change-oriented and customer focused.” Still, despite working with a “friendly” group of people, one third-year credit analyst believes that “development is really incumbent upon the individual, and there’s no consistent guidance or direction from bosses.” But another banker notes Wells Fargo’s “open” culture of allowing cross-department “pollenization” to allow the exchange of ideas, and the company’s policy of “promotion from within” wherever possible. A management trainee feels “fortunate to work on a team where each person is highly valued and respected regardless of job title.” A relationship manager says the culture is “very fair and results oriented. Subordinates are given much responsibility and held accountable.” A second-year analyst also cites the responsibility given to juniors. He says, “I am given every opportunity to perform and take on additional responsibility and receive excellent deal exposure as a result. I am an active participant in conference calls with senior management and in meetings with customers.” Finally, one source sums up the experience of working Wells Fargo as this: “It’s provided me with many opportunities for advancement, a great salary, a good network and great exposure to senior management.”

R-E-S-P-E-C-T Respect seems to be the watchword at Wells Fargo, regardless of one’s background. “Can you believe it? I’m the only woman at my level in the office, and I’m treated extremely respectfully,” says one credit analyst. Another female analyst agrees that Wells Fargo is a good environment for women, noting that Wells Fargo “stresses diversity, and more and more woman are in top management.” A second-year analyst says, “I feel that there is a strong effort to bringing more women in, and there are good models of women who have done well within the company.” For minorities, however, there still seems to be a glass ceiling. One senior credit analyst comments that Wells Fargo is “good at hiring and mentoring, but few are promoted to very senior positions in company.” Another relationship manager agrees, saying, “There is a commitment [to hire minorities] but it still seems very white higher up.” According to Wells Fargo, minorities make up 28 percent of its 288

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workforce, as compared to 25 percent of the total workforce in the U.S. The firm also notes that minorities make up 22 percent of its management committee One first-year analyst seems to support these statistics. “The bank is focusing on increasing its hiring of minorities and also has a diversity council to help move in a direction of more acceptance of diversity,” he says. “These are good steps, and they are paying off. Of the four MBAs recruited last summer into my group through oncampus recruiting, two are African-American women.” According to Wells Fargo, over the past three years, 40 percent of the hires into our professional development programs have been minorities, and 7 percent have identified themselves as AfricanAmerican.

In the middle of the pay pack At Wells Fargo, analysts “aren’t going to be the highest paid people in the industry,” but they will get other perks, such as a 100 percent matching 401(k), up to 6 percent of salary and 25 days of personal time off. Some employees will also get a gym discount, commuter benefits and a company car. There are other, less common perks as well. The firm “offers a pregnancy kit to expectant mothers and fathers, which includes two books, an outfit and a bottle cooler.” Additionally, notes an analyst, the firm is “committed to continuing education” through “tuition reimbursement.” A second-year analyst admits that “the pay is somewhat disappointing, but it’s not like other banks where your entire department could be laid off next week.” Another source says, “While the culture is laid back and supportive, and job security is better than many other institutions, the pay is lacking.” That said, hours are “average,” and “face time doesn’t seem to be a big issue if you get your work done and you produce,” says a corporate VP. The “number of hours generally is based on what you need to get done,” according to a relationship manager. “Face time is not a big deal.” Another relationship manager adds, “A lot of my job is trying to bring in new business, so we’re expected to get out of the office often.” Most respondents say they work an average of between 40 to 50 hours a week, with a few noting slightly higher average hours of between 50 to 60 hours per week. Another analyst agrees, noting that he works “about 55 hours per week.” He adds, “I could easily get away with not working on the weekends.”


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Teaching them well Training remains one of Wells Fargo’s strengths. An analyst explains, “The firm is very focused on training, as our vision is ‘people as a competitive advantage.’” A 10year relationship manager veteran agrees, noting, “The training is overseen by my supervisor as well as a specialized group in the company that handles special events, including forms of training, off-sites and speakers.” “Almost every relationship manager within corporate/wholesale banking has gone through the bank’s six-month training program in San Francisco,” explains a secondyear analyst, who describes the process as very comprehensive. “You stay in a corporate apartment just south of the financial district, across the street from the office,” he says. “The curriculum involves lecture-type classes on credit risk, underwriting criteria, industry analysis, corporate finance and several other topics, as well as several case studies that were once live deals.” According to the firm, trainees also have the option of attending an 18-month modular program in Scottsdale, Ariz. Once the program is over, employees typically are given the option to decide on location and group. But, as one insider explains, “You usually have to be flexible on one or the other,” because not all functions are offered in every location. For example, if you want to focus on real estate, then it’s more likely you’ll end up in LA, San Francisco or New York rather than Houston. The contact adds, “The training program is a feeder system, and it seems to work pretty well.”

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“Can you believe it? I’m the only woman at my level in the office, and I’m treated extremely respectfully.” — Wells Fargo insider


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V A U L T

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SG Cowen & Co., LLC

PRESTIGE RANKING

1221 Avenue of the Americas New York, NY 10020 Phone: (212) 278-4000 Fax: (212) 278-4284 www.sgcowen.com

DEPARTMENTS Corporate Finance Equity Capital Markets Equity Research Merchant Banking Mergers & Acquisitions Private Equity Sales & Trading

THE STATS President and CEO: Kim Fennebresque Employer Type: Subsidiary of Société Générale No. of Employees: 550 No. of Offices: 8

KEY COMPETITORS Deutsche Bank Goldman Sachs Morgan Stanley UBS Investment Bank

UPPERS • Great contact with senior management and direct access to clients

DOWNERS • Not as well known as the top firms

EMPLOYMENT CONTACT See the “career opportunities” section of www.sgcowen.com.

THE BUZZ


• • • •

“Tier below CIBC and Piper” “Impressive people” “Difficult personalities” “Booming”

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Vault Guide to the Top 50 Banking Employers SG Cowen & Co., LLC

THE SCOOP

A focused firm A subsidiary of French bank Société Générale, SG Cowen & Co., LLC is a U.S.based investment bank focused on the health care, technology, consumer, aerospace and defense and media and entertainment sectors. A relative newcomer to the Street, SG Cowen was formed in 1998 when Société Générale acquired Cowen & Co., a New York investment banking boutique founded in 1918. After paying $540 million for Cowen, Société Générale expanded the boutique’s focus beyond its three core industries and transferred the asset management and mutual fund businesses to SG Asset Management, another one of its subsidiaries.

Admiral advisors SG Cowen’s advisory unit started out strong in 2003. In February alone, the firm had a part in five announced M&A deals. SG Cowen advised Enzon Pharmaceuticals on its $767 million merger with NPS Pharmaceuticals, Dendreon on its $80 million acquisition of Corvas International, InVision Technologies on its $52 million purchase of Yxlon International Holding, ANSYS on its $21 million purchase of CFX, and Corechange on its sale to Open Text, for an undisclosed amount. The firm continued to have success in the technology sector throughout 2003, despite not ranking near the top of the investment banking league tables. This, however, is largely to the bank’s modest size. Still, SG Cowen lead-managed InterVideo’s successful July 2003 IPO, which ended up raising $39.2 million, as well as Digital Theater Systems’ foray into the public markets, which came about a week before InterVideo. The DTS issue raised about $65 million when it sold 3.84 million shares at $17 apiece, according to Thomson Financial. For the year 2003, the firm’s parent, Société Générale, did end up placing No. 14 in Thomson Financial’s worldwide announced M&A league table, a healthy move from its No. 35 finish in 2002. Additionally, Société Générale took the No. 20 spot, up from No. 29 in 2002, in worldwide completed M&A, and finished the year No. 15 in U.S. announced M&A, working on 23 deals worth $14.9 billion. This was an even bigger leap than it made globally, as Société Générale finished No. 45 in the U.S. table in 2002. In 2004 SG Cowen returned to its traditional strength of bringing biotech companies to market. The company co-managed Targeted Genetics’ $25.5 million offering in 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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January, and followed that deal with the registration of Metabasis Therapeutics’ $86 million IPO.

Personnel additions In November 2003, Investment Dealers’ Digest reported that David Castagna, a partner with Thomas Weisel Partners who ran TWP’s technology investment banking group, left for a similar position in SG Cowen’ San Francisco office. This follows on the heels of two other high-profile TWP defections: Founding TWP partners Lisa Westley and Owen Hart joined SG Cowen in May 2003. According to IDD, Westley had served as co-head of the consumer group and head of information technology and business services, while Hart led the consumer business services and semiconductor M&A practices at TWP. Although the firm didn’t command a top rankings in Thomson’s investment-banking league tables, it still received recognition from another venerable Street publication. According to Institutional Investor magazine’s 2003 All-America Sales survey, SG Cowen took the top spot in the magazine’s annual rankings of the best sales force for U.S. health care equities.

GETTING HIRED

If the culture fits… Personality and fit are quite important to SG Cowen, in addition to the traditional backgrounds required for I-bank work. A fourth-year associate notes that SG Cowen looks for people who “not only have the appropriate academic background, but fit in well with our ‘small-bank’ culture.” The contact adds that successful candidates “need to possess the ability to speak freely and confidently to senior bankers, as they will have frequent exposure to managing directors.” A second-year analyst concurs, noting that SG Cowen only hires a “handful” of people each year, and cultural fit is emphasized. “Technical skills – finance, accounting, modeling, etc. – are advantages,” he notes, “but you can never get in if you do not fit within the culture.” A fourth-year associate adds that SG Cowen is “looking for the right combination of quantitative skills and interpersonal skills, given that junior professionals are placed in front of clients at a very early stage.”

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Insiders say it’s not easy to land a spot. A first-year notes that “although SG Cowen considers itself a peer vis-a-vis the larger banks on the Street, the actual head-count is rather low. Therefore, the hiring process is very competitive as a result of small classes.”

Name-brand required Like all investment banking firms, SG Cowen bases it selection on the university a candidate has attended, GPA and the results of the interview process. Says a corporate finance employee, “This system usually makes getting hired difficult if you did not attend a top name university or have a top GPA, even if you are qualified and would be good at the position.” A banker notes that SG Cowen “tends to recruit at only top schools,” which, of course, include the Ivies, “so getting a job straight out of college is tough.” The source adds, “The firm is less selective – but still selective – when it comes to summer positions, so that’s the best route in.” Indeed, the key to getting hired is to complete a summer internship. A first-year analyst recalls that “my summer at Cowen was a great experience and helped me get my foot in the door to land a full-time position. I was paid the same compensation as a first-year analyst over the 10-week program.” Another former intern agrees with the positive benefits of being an intern. “As an intern, you will be paid as an analyst, you work as an analyst and you have a great shot of actually becoming an analyst,” he says. “The catch is that spots are rare, and 99 percent of the time you have to know someone or just be in the right place at the right time.” He stresses, “Internships at SG Cowen are second to none; there’s a huge payoff financially and from an experience standpoint.” SG Cowen uses a “Super Saturday” interview process on campus, and then invites candidates in for three to four more rounds of interviews, with increasingly senior managers. Questions ranged from “What are your hobbies?” to “Explain a balance sheet,” according to one fourth-year associate. Another associate notes that even after he received an offer, he still had to interview for group placement.


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OUR SURVEY SAYS

Smells like team spirit SG Cowen is “small enough that at the monthly banking meetings you can look around and know everyone’s name in the room,” according to one banker, “but large enough that each group has its own culture – and group cultures certainly do vary.” The overall environment is characterized by a second-year banker as “friendly, but execution oriented,” with self-starters everywhere. Although there is respect for colleagues, regardless of title, “you have to perform and deliver.” A second-year associate praises the “great team spirit” and the ability to take on many responsibilities while at a junior level. “As a first-year analyst, I do associate and even VP level work,” says one young banker. Another first-year analyst notes he’s also given the “ability to work with higher-level bankers.” Overall, a second-year associates says SG Cowen is a “great place to work,” and there are more responsibilities, better client interaction, and more teamwork than at bulge bracket firms. A first-year banker agrees, noting “SGC is a tough culture to work in, but in the long run it is one that is very beneficial to junior bankers. I like the people I work with, which is pretty impressive to me considering the amount of time I spend with them.”

Managing its people Despite the investment-banking culture, one analyst praises the good treatment by his bosses: “I believe that the managers here treat the analysts and associates with more respect than they would receive at a bulge bracket.” But, the contact adds, “This is an investment-banking culture, so you can’t expect to have the same treatment you would in a 9-to-5 corporate culture. In other words, you are expected to work weekends and late into the night.” Depending upon one’s direct superior’s work style, the actual day-to-day experience could vary. “Some managers are exceptional and encourage that all levels of employees participate in all aspects of a transaction,” says an analyst. “Other people have the style that a manager gives work to a director, who in turn passes the message on to a VP or associate who, in turn, passes the message on to an analyst.” Meanwhile, a second-year analyst notes the “relationships with senior managers are respectfully friendly. With immediate superiors, peers and subs, the relationships are very informal.” A fourth-year investment-banking associate adds, “Superiors attempt

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to create a team environment. Having worked at other growth-focused banks, senior bankers [at SG Cowen] take much better care of junior professionals.” Giving high marks to the nurturing treatment given by SG Cowen managers, a first-year analyst explains, “They take considerable efforts to ensure your development as a junior banker. I think this is the obvious advantage over working at a bulge.” However, a few first-year analysts are less enthusiastic. One analyst notes that his boss is a “great banker; [she] knows her finance and industries like the back of my hand.” However, she “has no idea how to treat and manage people. I’d sell her out for $1.95 and a book of stamps.” Another first-year analyst notes, “I get respect from most managers, but some are unwilling to have you sit in on meetings or even when they are reviewing your work. This makes the ‘learning’ part of my job difficult. I want to understand where my work goes so that I can make better choices when making assumptions on models or putting books together, or even what the thought process is behind certain comments.”

Punching the clock Some insiders complain about the somewhat long hours, and feel they’re not compensated as well as other firms. “A lot of time is spent at the office waiting for the person senior to you to finish their portion of the assignment,” says one associate, who notes that he frequently works both weekend days. Another analyst quips, “Here’s a hint for any first-year analyst: never calculate your hourly wage, because you might find you’ll get paid more at McDonald’s.” However, a more experienced analyst puts it into perspective, noting that although investment banking requires more time than a typical corporate job, “with good time-management skills, it is possible to catch six hours of sleep every night – of course, there are exceptions – and stay away from the office one weekend day a week.” Still, employees note that despite the hard work, perks have survived. One banker gave high marks to the company’s discounted stock purchasing plan, 401(k) plan and discounted gym memberships. Another insider notes that although some workers aren’t getting these perks, “management is making significant steps to ensure that this becomes a better environment in which to work.” Though many analysts praise SG Cowen’s casual Friday dress code, some analysts in the New York office note that dress is certainly formal. “It is seen as poor form to not wear a jacket and tie to work every day,” says one analyst. Another analyst gives this warning: “If the CEO catches you without a tie on, you better just pray he thinks you are a messenger.” 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 SG Cowen & Co. LLC

No more, no less diverse than average Like many investment banks, at SG Cowen, about 20 percent of the analyst force is made up of women, according to one analyst. “In terms of promotion, there are very few women on the top, but one must evaluate if that is because of the firm or the idea that women choose to pursue other careers with more flexibility in terms of personal life.” A fourth-year associate concurs with this figure, but adds that SG Cowen is “very receptive to minorities and women,” noting that there are many female group heads or managing directors.



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Vault Guide to the Top 50 Banking Employers SG Cowen & Co. LLC

“They take considerable efforts to ensure your development as a junior banker. I think this is the obvious advantage over working at a bulge.” — SG Cowen insider


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FleetBoston Financial

PRESTIGE RANKING

100 Federal Street Boston, MA 02110 Phone: (617) 434-2200 www.fleet.com

DEPARTMENTS Commercial Financial Services Investment Management Personal & Small Business Services

THE STATS Chairman: Charles K. Gifford Employer Type: Public company Ticker Symbol: FBF (NYSE) Revenue: $11.5 billion (FYE 12/03) Net Income: $2.6 billion No. of Employees: 47,700 No. of Offices: 1,750

KEY COMPETITORS Citigroup JPMorgan Chase Wachovia

UPPERS • Well-respected retail and commercial banking franchise • Expanded reach with BofA merger

DOWNERS • Uncertainty amid ongoing integration with BofA • Lacks investment banking prestige

EMPLOYMENT CONTACT www.fleet.com/aboutfleet/careers

THE BUZZ


• “Good bank, good merger” • “Strong commercial lender” • “Do they still do investment banking?” • “Future brighter – now part of BofA” 300

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Vault Guide to the Top 50 Banking Employers FleetBoston Financial

THE SCOOP

Big on banking and benefits FleetBoston Financial (Fleet) is the seventh-largest bank in the U.S. and offers a wide range of financial services, including retail banking, corporate banking (investment banking and commercial finance) and asset management. Given its size and market presence, it’s no surprise that Fleet is the leading retail bank in New England and New Jersey, the No. 1 home equity lender in New England, and one of the top five cash management service providers in the U.S. Fleet is also a bastion of workplace satisfaction. In 2003, for the fifth consecutive year, the Boston-based giant was on Working Mother’s list of the 100 Best Companies for Working Mothers. During the year, Fleet also made it on to DiversityInc’s Top 50 Companies for Diversity and Top 10 Companies for Recruitment and Retention surveys, coming in at No. 14 and No. 6, respectively. Business Ethics magazine also recognized Fleet, ranking the firm No. 38 on its list of the 100 Best Corporate Citizens. The product of many mergers (including the 1999 combination with BankBoston), Fleet isn’t afraid to grow through acquisition. In October 2003, the bank paid $1.3 billion to acquire Circuit City’s bankcard portfolio, which included the store’s Visa and MasterCard receivables and cash reserves. In February 2004, Fleet completed its $211 million acquisition of Progress Financial, a Pennsylvania-based bank with $1.2 billion in assets and $766 million in deposits. The addition of Progress Financial’s 21 Philadelphia-area branches increases Fleet’s Pennsylvania presence to 127 stores. Of course, these transactions seem insignificant when compared with the October 2003 announcement that Bank of America would acquire Fleet for a whopping $47 billion, creating one of the three largest banks in the U.S.

Mergin’ on up In a deal driven by both banks’ desires for scale, Fleet announced in October that it would combine with Bank of America (BofA) to (temporarily) create the secondlargest bank in the U.S. (the subsequently announced JPMorgan Chase/Bank One merger will make the new BofA/Fleet combination the third-largest domestic bank). The transaction, which is expected to close some time in 2004, is valued at $49 billion and allows BofA to gain access to Fleet’s 1,500 branches and affluent New England client base.


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The combined firm (which will be known as Bank of America) will have just under 10 percent of all banking deposits in the U.S. and will hold the top three market share positions in 21 of the 29 states in which it has a presence. Over half of the new company’s revenue will be derived from consumer and small business banking, with corporate banking (25 percent), commercial banking (11 percent) and wealth management (8 percent) providing the remainder. Current Fleet Chairman and CEO Charles Gifford will become chairman of Bank of America, and current BofA Chairman and CEO Kenneth Lewis will take the CEO post of the banking giant. “We decided that Bank of America provided the perfect complement to our franchise for our customers,” Gifford explained as he outlined the rationale behind the transaction. “While Fleet has established leading market shares in New England and the Northeast, Bank of America has similar positions in the South, West and Midwest. Together, these two companies will clearly be the number one financial services provider for consumers and businesses of all sizes with market-leading product and geographic capabilities.” Analyst opinion, however, was mixed, as some questioned the growth prospects of the combined company and the high price BofA paid to get its Northeastern rival. A shocked analyst at Credit Suisse First Boston wrote, “To say we were surprised would be an understatement … Bank of America was a premier franchise before this deal and, best we can tell, executing at the top of its game for not having the distraction of acquisitions/integration. And the price is high.” The high price – a greater than 40 percent premium over Fleet’s share price at the time of the announcement – seemed especially steep when compared with the 14 percent premium JPMorgan Chase later agreed to pay for Bank One. Still, even with the relatively expensive transaction cost, many analysts believe the firm will be a powerhouse, benefiting from a strong balance sheet and from cross-selling the new BofA’s full array of financial products and services.

Bad timing Fleet had some good news and some bad news when the it reported its 2003 results in January 2004. The good news was that Fleet’s net income more than doubled in 2003 from $1.2 billion to $2.6 billion, driven by a decrease in nonperforming assets (bad loans) and strong earnings across Fleet’s main domestic businesses. Fleet also disclosed, however, that two of its subsidiaries had received “Wells” notices from the SEC – dreaded indications that the SEC would soon bring enforcement actions. In this case, the notices were handed out for improper market timing practices related to the sales of shares of certain mutual funds over a period of five years (1998 to 2003). 302

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In late February 2004, Fleet’s Columbia Management Advisors and Columbia Funds Distributor were formally charged for their mutual fund practices. Not only were the abuses reputed to be more widespread at the Fleet firms than elsewhere on the Street, but the wronged clients of one of the funds involved in the scheme, the Columbia Young Investor Fund, were children. In response to the charges, Fleet put eight portfolio managers and executives on leave, and the bank has discussed a settlement with the SEC whereby Fleet would refund investors as much as $25 million. Fleet has not yet discussed any possible settlement with the New York Attorney General’s office, which has also filed suit against Fleet for the same offenses. In addition to possible refunds and fines, Fleet risks losing some business. After previously telling investors to withhold additional capital from Columbia Funds, Morningstar (the influential mutual fund research firm) let it be known that given the particularly egregious nature of Fleet’s offenses, the company may recommend that investors sell their shares in Columbia. “We are reassessing the Columbia situation as this seems to be the worst yet,” disclosed one Morningstar analyst. As bad as the situation is for Fleet, it could be worse; unlike many of its rivals, Fleet has thus far not been accused of late trading, a practice considered by most legal experts to be a more serious offense than market timing (market timing is not illegal, but the practice can be used improperly to jack up the costs of investing in mutual funds; late trading is illegal trading of fund shares after hours). In a separate legal entanglement, Fleet announced in March 2004 that its Fleet Specialist Inc. subsidiary had agreed to pay a hefty $59.4 million in restitution and fines to the SEC and NYSE to end investigations into possible trading abuses. Along with four other firms, Fleet had been the subject of a probe looking into allegations that traders had traded ahead of customer orders on the floor of the NYSE. Essentially, the investigated traders were accused of buying stock for themselves and then selling to buyers for a higher price, instead of directly matching buyers and sellers and profiting only from the bid/ask spread. Along with the monetary penalty, the settlement included a censure and a cease-and-desist order, but Fleet did not have to admit or deny the allegations.


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GETTING HIRED

Netting New England’s finest FleetBoston actively recruits at 11 Northeastern colleges and universities, including Babson College, Bentley College, Boston College, Boston University, Brown University, Bryant College, Morgan State, Providence College, SUNY Albany, the University of Massachusetts and Worcester Polytechnic Institute. Interested students attending schools at which Fleet does not actively recruit should send a cover letter and resume to [email protected]. Fleet lists job openings in the career section of its web site. In general, Fleet is looking for students in good academic standing with GPAs of 3.0 or higher. Depending on the requirements of the job, a candidate may also need a degree in a relevant subject such as accounting, economics or finance. During the interview process, applicants may be asked about their experiences working in teams as well as about their involvement and leadership in extracurricular activities.

OUR SURVEY SAYS

Choice of seven Incoming Fleet employees participate in one of seven training programs: business analyst, corporate banker, finance, global markets analyst, human resources, investment banker and operations and technology. The programs last anywhere from three months to two years and cover basic skills the bank deems necessary for success on the job. In addition to formal training, Fleet offers various continuing education and professional development courses as well as organized leadership and mentoring programs. On the job, Fleet has historically been “overall a decent place to work,” opines one insider who cautions that the atmosphere has changed a bit in the throes of the merger with Bank of America. “Because we’re being taken over by Bank of America,” says the contact, “there’s a lot of anxiety.” The source adds that merger-related stress has created “politics that turned many decent people into savages.” Still, the majority of the managers at Fleet are “pretty good” and “fair.” In Boston, perks of the job include gym memberships as well as discounts on Fleet banking products (such as favorable rates on loans) and reduced-price museum passes. 304

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“Because we’re being taken over by Bank of America, there’s a lot of anxiety.” — FleetBoston insider


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Piper Jaffray & Co.

PRESTIGE RANKING

800 Nicollet Mall Suite 800 Minneapolis, MN 55402-7020 Phone: (800) 333-6000 www.piperjaffray.com

DEPARTMENTS Capital Markets Investment Research Piper Capital Piper Jaffray Ventures Private Client Services

THE STATS Chairman and CEO: Andrew S. Duff Employer Type: Public company Ticker Symbol: PJC (NYSE) Revenue: $786.7 million (FYE 12/03) Net Income: $26.0 million No. of Employees: 2,991 No. of Offices: 123

KEY COMPETITORS Deutsche Bank JPMorgan Chase SG Cowen

UPPERS • Good pay and benefits • Spin-off gives firm new life

DOWNERS • Cost-cutting culture • “Homogenous” workforce

EMPLOYMENT CONTACT Employment Services Representative 800 Nicollet Mall Minneapolis, MN 55402-7020 Phone: (800) 333-6000 E-mail: [email protected] www.piperjaffray.com/recruiting

THE BUZZ


• • • •

“Doing well after spin-off” “Nothing special but research” “Good shop” “Nice people, but not leaders in the market”

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Vault Guide to the Top 50 Banking Employers Piper Jaffray & Co.

THE SCOOP

Minnesota middle-market maven With offices in 23 states and London, Minneapolis-based Piper Jaffray & Co. concentrates on providing investment banking, research, venture capital and private client services to middle-market companies. The bank has a large footprint in the western U.S. and considers its capital markets and private client services departments to be its core businesses. The firm’s independent investment research division supports clients of both arms and had two equity analysts ranked on the 2003 Institutional Investor All-American Research Team. Piper Jaffray also provides investment options for institutions and high-net-worth individuals through its private capital group. Piper Jaffray Ventures is the bank’s venture capital subsidiary with four funds focusing primarily on health care and biotech companies.

You spin me… Founded in 1895, Piper had 103 years of independence before U.S. Bancorp acquired the firm in 1998 in an attempt to create a one-stop financial services outfit that could take advantage of cross-sell opportunities. Unfortunately, the $730 million acquisition didn’t achieve desired synergies as culture clashes and regulatory crackdowns plagued the combined company. U.S. Bancorp also grew more riskaverse after the acquisition, disliking the unpredictable economics of investment banking, and was displeased that Piper Jaffray’s earnings added only 1 percent to the parent’s total bottom line in 2003. So on December 31, 2003, then-named U.S. Bancorp Piper Jaffray lost its parental reference and regained its independence as the investment bank was spun off to U.S. Bancorp shareholders as a public company traded on the NYSE. For its part, Piper Jaffray seems relieved to have formally separated from its former owner. Andrew Duff, Piper Jaffray’s chairman and CEO, said, “It’s a very exciting time for us, with this unique dynamic of getting to take a 109-year history and legacy out to the marketplace as a new, independent securities firm raising and investing capital, rather than being a financial services cross-sell.” Piper Jaffray will continue to refer business to U.S. Bancorp, but Duff believes that his company’s stand-alone status will allow it to refocus on its target middle-market clients, companies with valuations of $100 million to $5 billion. And an independent Piper now seems better positioned to gain market share as once-major competitors like Hambrecht & Quist, Alex. Brown, Robertson Stephens and Montgomery Securities are no longer 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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effectively serving Piper’s core client base; according to Duff, they’ve “all been acquired, and subsequent to their acquisition have been largely pulled ‘up-cap’ to serve their parents’ much larger corporate clients or in some cases rationalized dramatically or closed altogether.” As a new publicly traded company, Piper Jaffray will not immediately pay a dividend on its shares and will instead use profits to grow its business or repurchase shares. The bank does plan on rewarding employees with shares, as Duff believes ownership provides recruitment and quality of service incentives.

Pipe down Notwithstanding a $24 million charge in the fourth quarter to compensate employees who lost U.S. Bancorp stock options as a result of the spin-off, Piper Jaffray showed $26 million in profits for the 2003 fiscal year. The firm brought in $786 million in revenue, a 7.9 percent increase over 2002, driven by strong equity underwriting and fixed income sales and trading. Approximately 55 percent of Piper Jaffray’s revenue came from its investment banking business with the remainder provided by private client services. However, 2003 was a somewhat disappointing year overall for Piper Jaffray. The bank’s normally strong municipal underwriting business struggled. On transactions of $10 million or less, the bank slipped from No. 1 to No. 3 among U.S. underwriters; Piper’s 336 transactions totaling $1.3 billion equated to a 1.5 percent decrease in market share (to 4.2 percent), the largest decline among the top 10 underwriters. And in the final quarter of 2003, Piper lost $3.3 million as revenues were down over 4 percent from Piper’s third quarter performance (though the firm’s revenue of $210.7 million was an improvement from $179.3 million in the fourth quarter of 2002). Looking to 2004, Piper Jaffray is keeping its chin up. Management believes that the association with U.S. Bancorp was a drag on Piper’s earnings, and things should improve now that Piper is free to focus on its core businesses. Included in its optimistic prospects are a large number of stock offerings that were in registration at the end of 2003. In late January 2004, Piper’s CFO Sandra Sponem put her firm’s results in perspective: “We’re pleased with the performance we had. We’ve obviously only been a public company for three and a half weeks.”

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The Piper pays For a small bank, Piper seems to get in a disproportionately large amount of trouble. In December 2002, the SEC, the NASD, the NYSE and the New York Attorney General’s office entered into a $1.4 billion settlement with 10 securities firms under investigation for research and investment banking conflicts of interest. While tiny in comparison to Citigroup’s $400 million payout, Piper Jaffray’s penalty of $37.5 million was a big hit for the little bank. Also in response to the investigation, Piper Jaffray moved its research group into a separate division reporting directly to the CEO. The NASD is still investigating whether Piper Jaffray ever engaged in “spinning,” the practice of preferentially distributing the shares of hot IPOs to gain investment-banking business. The SEC was at it again in August 2003, fining the now defunct Piper Capital Management unit $2 million for fund disclosure violations that resulted in large losses for investors almost 10 years earlier (the fund had invested in complex financial instruments notwithstanding fund officials’ assurances that they had maintained a conservative investment approach). In addition to levying the fine, the SEC revoked Piper Capital’s investment adviser registration even though the unit had dissolved in 1998. In October, Piper dealt with Montana state charges that a broker, Thomas Neill, had engaged in the practice of “churning” (driving up commissions through unauthorized trades); in this case, 6,100 trades for 38 customers resulting in over $600,000 in commissions between 1997 and 2001. As part of a payout of $2.6 million, Piper Jaffray paid $1 million for its alleged unethical securities practices (the largest state fine ever for excessive and unsuitable trading) and $1.5 million in restitution to Montana investors. Neill, who was fired from Piper Jaffray in April 2001, paid $10,000 and agreed to a lifetime ban from the securities industry. As in the December 2002 settlement, Piper did not admit or deny guilt in the Montana agreement. The Montana mess isn’t over, either. The NASD has not only subsequently charged Neill for the same offenses, but it’s investigating claims that Piper willfully ignored Neill’s churning even after the firm determined the broker’s trade rate was suspiciously high. In addition, Piper Jaffray will likely have to deal with numerous civil suits brought by many of the individual Montana investors. And mutual fund practices may have caught up with Piper as well. As part of a larger investigation involving many securities firms, the SEC and NASD are probing to determine if Piper Jaffray should be disciplined for engaging in excessive market timing (quick trading of funds to take advantage of market inefficiencies) and late 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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trading (trading of funds after the market closes). In fact, Piper disclosed in December 2003 that it had already disciplined two employees for potential market timing violations. The NASD is also concerned that many of Piper’s clients did not receive “breakpoint” sales discounts when they met the requisite investment levels in front-end load mutual funds. However, if Piper compensates the breakpoint-deprived investors, the NASD will not take steps to further punish the firm.

GETTING HIRED

Joining the ‘fray In investment banking, Piper’s analyst recruiting covers about 25 major colleges and universities. Analysts should have at least a 3.3 GPA, coursework in finance and accounting, experience working with spreadsheets and strong analytical skills. Associate recruiting has generally been focused on the top 10 business schools. The associate recruiting process includes on-campus presentations and interviews with dinners for pre-selected candidates. Piper also conducts summer analyst and associate programs with the goal that stellar summer staffers will become full-time employees upon graduation. For its equity research group, Piper seeks college graduates and MBAs to fill associate and analyst positions. In addition to having an undergraduate degree and at least a 3.3 GPA, would-be equity research associates should demonstrate strong quantitative skills as well as an interest in the stock market. Piper looks for similar backgrounds in MBA candidates pursuing equity analyst spots. Piper provides a recruiting schedule on its web site at www.piperjaffray.com. The site also allows interested candidates to search and apply for open positions. Piper Jaffray interviews can be challenging. A current trading analyst went through two rounds of interviews, the first with “mid-level management mostly to determine fit, industry understanding, desire to work in the industry, and to gauge knowledge level.” The source reports a more “intense” second round conducted by “four to five senior level/management committee members.” The contact was presented with “multiple analytical problem solving questions” and was expected to respond quickly.

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OUR SURVEY SAYS

Not a factory Piper Jaffray has an “entrepreneurial, growth-oriented, open-minded, and spirited” culture, reports one contact. The source also believes there are “very strong” opportunities for advancement given the expectation of faster growth after the spinoff from U.S. Bancorp. Also, “the firm typically prefers organic growth rather than hiring from the outside, so advancement can be quick.” One contact doesn’t offer as positive a spin on the firm. The insider believes that “employees are viewed more as commodities than assets” and also notes that “‘cost-cutting’ is the mantra” at Piper (even “Post-it notes have been outlawed”). Hours at Piper are “typical” across the board, with average workweeks of 50 hours for traders, 60 to 80 hours for those in research, and 80 to 100 hours for investment bankers. As for the actual work, Piper Jaffray is unique because “associates don’t do any modeling; analysts do all the modeling,” reports one insider. “It’s great for an analyst, because you do all the models, including the complex ones.” The dress code depends on the group. An associate in research conforms to a business formal code with casual Fridays; a financial analyst wears business casual clothing. The analyst also reveals a failed attempt to get particularly casual on Fridays: “When a mid-level manager mentioned that some employees had inquired about reinstituting a ‘jeans day’ on Fridays, he was told, ‘If they want to wear jeans, tell them to work at a factory.’”

Generous pay and perks The firm offers “healthy salaries” that tend to vary with the performance of the stock market and “some of the best employee benefits” in the industry, including an “unbeatable” employee stock ownership program. When it comes to starting pay, the firm isn’t all that different from the big boys back east. According to the firm, firstyear associates get paid the same as what they’d make in New York. “Where it gets skewed is after four or five years,” according to an insider. “But here, people can buy a huge house for $250,000 10 minutes out of town.” An associate research analyst reports a salary of around $40,000 with the potential for a 25 percent bonus, a package the source calls “relatively generous pay in Minneapolis.” In addition to decent monetary compensation, Piper Jaffray offers its employees a host of benefit programs, including health insurance, life insurance, tuition reimbursement, a 401(k)


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plan with a dollar-for-dollar company match up to 4 percent of salary, a profit sharing plan, an employee matching gift program for charitable contributions and employee discounts on Piper Jaffray financial services. Insiders comment that Piper, “like Minnesota itself, is homogenous, with few minorities,” though “it is an open environment and the only criteria for advancement is hard work.” However, says that I-banking contact, “I think they’re very good with the male/female ratio. They’re not 50/50 at the top, but they definitely have some strong women there.”



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“When a mid-level manager mentioned that some employees had inquired about reinstituting a ‘jeans day’ on Fridays, he was told, ‘If they want to wear jeans, tell them to work at a factory.’” — Piper Jaffray insider


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Bank One

PRESTIGE RANKING

1 Bank One Plaza Chicago, IL 60670 Phone: (312) 732-4000 www.bankone.com

DEPARTMENTS Card Services Commercial Banking Investment Management Group Private Client Services Retail Banking

UPPERS • Merger with JPMorgan broadens exposure and product offerings • Relaxed, “Midwestern” culture

DOWNERS • Job uncertainty because of merger • Middle management can be disorganized

EMPLOYMENT CONTACT THE STATS

www.bankone.com/careers

Chairman and CEO: James “Jamie” Dimon Employer Type: Public company Ticker Symbol: ONE (NYSE) Revenue: $16.0 billion (FYE 12/03) Net Income: $3.5 billion No. of Employees: 72,000 No. of Offices: 1,810

Card Services Business Associate Program Attn: College Recruiter 201 N. Walnut Street 3 Christina Centre Mail Code DE1-1053 Wilmington, DE 19801

KEY COMPETITORS Bank of America The Bank of New York Citigroup Comerica

THE BUZZ

National Retail Management Development Program Attn: College Recruiter 1111 Polaris Parkway Mail Code OH1-0610 Columbus, OH 43240 All Other Programs Attn: College Recruiter 1 Bank One Plaza Mail Code IL1-0989 Chicago, IL 60670


• • • •

“Stronger with JPMorgan deal” “A Dimon in the rough?” “Who knows after the merger?” “Good commercial bank”

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Vault Guide to the Top 50 Banking Employers Bank One

THE SCOOP

Tipping the scale Heading into 2004, Chicago-based Bank One was the sixth-largest bank in the U.S., with $326 billion in assets and leadership positions in credit card issuance and retail banking in the Midwest, Texas and Arizona. This wasn’t bad by any means, but Bank One was still less than half the size of rival JPMorgan Chase, with close to $800 billion in assets, and both of these pretty big banks were far behind Citigroup, the country’s largest bank at $1.2 trillion in assets. To make competitive matters worse, the expected 2004 close of Bank of America’s $47 billion merger with FleetBoston Financial was going to create another huge bank, bumping JPMorgan Chase out of its second place spot, and making Bank One seem even smaller when compared with its “truly” big competitors. But on January 14, 2004, Bank One announced its plan to catch up: a $58 billion merger agreement with JPMorgan that would create the nation’s second biggest bank with $1.1 trillion in assets. The new firm is expected to thrive on cross-selling its vast array of financial products as it takes on longtime rival Citigroup.

Chase-ing Dimon The $58 billion merger of corporate-focused JPMorgan Chase and retail-centric Bank One was almost universally applauded by industry analysts. The new JPMorgan will have 2,300 branches in 17 states in addition to leadership positions in retail banking, investment banking, asset management, private banking, treasury and securities services, middle-market, private equity and credit cards. (JPMorgan Chase is the world’s No. 3 issuer of MasterCard plastic, and Bank One is the largest issuer of Visa cards). In addition to becoming the second-largest credit card issuer (behind Citigroup), JPMorgan will also be the fourth-largest mutual fund company with approximately $700 billion in assets under management. Overall, the new and bigger bank anticipates its major sources of earnings will be investment banking (about 40 percent), retail banking (33 percent) and credit cards (16 percent). The remainder of the firm’s profits will derive from other businesses such as asset management. The merged company will keep the JPMorgan Chase name and have headquarters in New York, although the firm’s retail business (excluding credit card operations) will be based in Chicago. Critics of the deal note the propensity for large financial services mergers to fail to realize the desired efficiencies and benefits from scale that drove the deals in the first 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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place. In fact, the $30 billion JPMorgan/Chase Manhattan combination is often cited as evidence of what can go wrong as top managers departed and investment banking business suffered. But executives at Bank One and JPMorgan Chase believe this big merger is different. For one thing, there’s the price. JPMorgan Chase’s 14 percent premium over Bank One’s share price stands in stark contrast to many high priced financial services mergers, including the recently announced Bank of America/FleetBoston combination that involved a 41 percent premium. In addition, executives at the banks will not be getting merger-related bonuses when the transaction is completed (something JPMorgan Chase CEO William Harrison was criticized for after the JPMorgan/Chase merger).

Dimon’s return Bank One’s CEO, James “Jamie” Dimon, has gained a reputation for succeeding where others might falter. Dimon will be the president and COO at the new JPMorgan Chase until 2006, when he is expected to succeed William Harrison as CEO (Harrison will, however, keep his role as chairman). The current Bank One CEO is perhaps best known as the star ex-Citigroup banker once considered the successor to Sandy Weill. However, Dimon’s 15-year relationship with his mentor soured to the point where Dimon was forced to leave Citigroup in 1998. Dimon’s next move (after a year of weighing his options) was to take the top post at Bank One, where he has been credited with turning a sinking ship burdened by poor lending decisions into a retail banking powerhouse (and attractive acquisition target). In his three years at the helm, Dimon led Bank One from a $544 million loss to more than $3.5 billion in profits in 2003. Although both Citigroup and Bank One maintain that the rivalry between Dimon and Weill is exaggerated, many outsiders view the JPMorgan Chase/Bank One merger as Dimon’s chance to prove his ex-employer wrong. Dimon will also bring with him to JPMorgan a legion of ex-Citigroup (but current Bank One) managers who are ready to take on their old company. Dimon’s comment on the impending clash with his former firm was polite: “We do hope to give Citi a little bit of a run for its money.” As it battles its rival, JPMorgan Chase hopes to leverage Dimon’s rainmaking charisma to attract the bigger investment banking deals the firm has too often lost to the likes of Citi, Morgan Stanley and Goldman Sachs. Analysts are optimistic, too. Fox-Pitt, Kelton financial analyst Reilly Tierney opined that Jamie Dimon’s presence will bring “instant credibility” to JPMorgan Chase, as the firm focuses on positioning itself as an elite global investment bank.

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Allow me to introduce my good friend, attrition Much of Bank One’s metamorphosis under Dimon was accomplished through a large number of layoffs. Likewise, the Bank One/JPMorgan merger’s expected cost savings of $2.2 billion over the next three years will be brought about primarily through headcount reduction. But although the combined company foresees the loss of 10,000 employees, Dimon doesn’t believe he’ll have to resort to layoffs this time. “Attrition is our friend,” Dimon said after the deal was announced. “We’re going to try to do this painlessly.”

Earnings, yes. Revenues? Well… At the same time that Dimon has been lauded for his cost cutting and profit making ways, he has been criticized for Bank One’s inconsistent top-line results and inability to grow organically. Bank One’s 2003 revenue was down 3 percent on a year-overyear basis, with banking fees and commissions stagnant at $1.76 billion and credit card revenue down 2 percent to $3.7 billion (in contrast to the 7 percent gain that rival Citigroup’s credit card business recorded). Dimon was also panned for betting that interest rates would rise in early 2003 only to see them fall along with Bank One’s revenue in the first quarter of 2003. Still, the same analysts that doubted Dimon are now lauding the potential of the new JPMorgan for its Citigroup-like ability to cross-sell every financial product imaginable. And ardent supporters of Dimon hold that Bank One’s fortunes were on the rise even before the promise of rapid growth from the merger; fourth quarter credit card revenues, for example, were actually up 4 percent on an annual basis, and the business made $347 million in the period, an 8 percent jump over 2002’s fourth quarter. Overall, the bank saw record new income of $3.54 billion in 2003. For what it’s worth, Jamie Dimon seems to agree with Bank One’s rosy prospects: “We are ending 2003 in excellent condition, with common and upgraded systems, a fortress balance sheet, and noticeable growth across most lines of business. We have the tools we need to be effective. Most importantly, our recently announced merger with JPMorgan Chase will create a company that will be a leader in every business in which it competes.”

We, uh, had some other M&A activity, too Although its recent acquisitions probably seem insignificant when compared with the scale of the JPMorgan deal, Bank One made a few smaller purchases in the last year, specifically in the areas of real estate, insurance and credit cards. Bank One added 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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to its real estate financing offerings with the September 2003 acquisition of Security Capital Research & Management Incorporated from GE Real Estate. Managing $3.5 billion in real estate investment products, the Chicago-based target offers advice and real estate products to institutional investors. Also in September, Bank One acquired certain assets of Zurich Financial Services Group’s U.S. life and annuity business, Zurich Life, for $500 million, enhancing the bank’s life insurance and annuity offerings. Excluding revenue synergies, Bank One expects the purchase to add $50 million in net income in 2004. And in January 2004, Bank One augmented its credit card offerings with the purchase of Circuit City’s private-label credit card operation, which includes the Circuit City credit card accounts as well as the co-branded Circuit City Plus Visa credit card accounts. Bank One was also a seller in 2003, divesting some assets the firm deemed non-core. In May 2003, the Chicago bank decided it would concentrate solely on direct consumer residential lending when it sent its wholesale first mortgage and broker home-equity origination business (along with 200 employees) to RBC Mortgage for an undisclosed price. And in another deal just six months before their parents got together, JPMorgan Institutional Trust Services acquired Bank One’s Corporate Trust Services unit in July 2003 for $720 million, a sum which included a 10 percent contingency based on business retention. After the bigger JPMorgan/Bank One merger was announced in January 2004, however, Bank One disclosed that it did not expect to collect the additional $72 million retention bonus.

The feeling is mutual In addition to a suite of financial product and service offerings, JPMorgan Chase stands to inherit Bank One’s mutual fund problems as well. In September 2003, New York Attorney General Eliot Spitzer announced an investigation into improper mutual fund practices at a hedge fund and four mutual funds, including Bank One’s Banc One Funds, stemming from allegations of illegal late trading (trading after hours to take advantage of an earlier price) and improper market timing (frequent trading to increase commissions and exploit fund share prices). In October 2003, two Bank One mutual fund executives left the firm, reportedly to avoid an internal probe, and then in December, the bank fired two other executives as a result of the probe’s findings. The bank also unveiled its revamped mutual fund practices in late 2003, including the appointment of a new compliance officer and more employee training to avoid future transgressions. Bank One has not been formally charged by Spitzer’s office, however, and the firm is still discussing the possibility of a settlement. In advance of any payout related to the mutual fund probe or other potentially adverse

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judgments, the bank increased its litigation reserves by $100 million in the fourth quarter of 2003.

GETTING HIRED

One bank, many programs Bank One offers a host of formal undergraduate programs, including the Card Services Business Associate Program, the In-Store Sales Management Program, the Finance & Accounting Program, the Middle Market Development Program, the National Retail Management Program, two technology related programs, and the Bank One Scholar Program (a program where participating employees earn MBA degrees from either the University of Chicago or Kellogg while they work at Bank One). The firm also hires summer employees to fill slots in formal internship programs in card services, finance and accounting, middle market, IT and operations. Each of the firm’s programs, many of which are limited to a particular location, is described in detail on the firm’s web site at www.bankone.com/careers. The site also provides the bank’s recruiting schedule and allows prospective employees to search and apply for open positions. According to insiders, Bank One recruits “like most Wall Street firms” and puts candidates through multiple interviews before making hiring decisions. “My initial interview was at a recruiting center,” remembers one source. Later, “I was interviewed by the current manager of the department and by my now current supervisor and a former supervisor. Questions involved my work ethic, compatibility with others, and educational goals.” Sources also tell applicants to expect a personality/intelligence test and a drug test.

OUR SURVEY SAYS

Merger mentality Insiders say Bank One is “not an intense firm” and has a “laid back” atmosphere because it’s “primarily a commercial bank by culture, not an investment bank.” An associate in New York who calls the firm’s culture “friendly and team-oriented” says, “I think the company still has a ‘Midwestern’ approach to its way of doing business


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– despite the fact that Wall Streeters have migrated over in droves over the past few years – which is less cutthroat than other I-banks.” But the contact notes, “There is kind of a ‘CYA’ approach when it comes to procedures that various product areas have established. Everything needs senior banker approval, so one can waste an immense amount of time signing off on ridiculous matters that operations can handle themselves.” Making matters a bit more stressful is the merger with JPMorgan, which has hurt morale “because people’s futures are uncertain.” One contact warns incoming employees to expect many of their co-workers to be laid off in the coming years as the two companies integrate. The firm has a “formal feedback system twice a year” that facilitates discussion between junior employees and their superiors. Some junior staffers feel, though, that their managers don’t do the best job of providing guidance or developing careers. One source, a former portfolio manager, says that while CEO Jamie Dimon provides strong leadership at the top of the organization, “management from the second level down was lacking in direction and had an inability to resolve issues or carry out orders of the CEO.” In addition, given the organizational changes caused by Dimon’s “re-engineering” of the company over the last few years, “at no time did anyone feel their job was secure.” Insiders find the compensation to be adequate for the commercial banking industry. “The firm pays below Wall Street firms for new employees,” though it does “pay senior people market levels.” Bank One employees receive benefits that, in the words of one Chicago-based source, are “what one should expect when working for a top Fortune 500 company: health, disability, life, pension, 401(k).” Under the 401(k) plan, “the bank will match 100 percent of the first 3 percent of your before tax income and 50 percent of the next 2 percent,” explains a contact. The source adds, “Matched contributions are in Bank One stock.” Staffers can also take advantage of discounted Bank One products and services as well as a stock purchase plan. Employees generally feel the hours are reasonable but “it truly depends on which group you’re in and how heavy the [workflow] is.” The dress code is also groupdependent, but in general, Bank One maintains a business casual policy.

Every day is diversity day Bank One gets high marks for its diversity efforts. “This is a wonderful place that embraces diversity,” says a New York source, who adds that the office has an annual “Diversity Day” party “where employees get together to taste international delights (employees volunteer to bring home-cooked food of their nationality), learn about other cultures (there are presentations by employees), and experience the arts and 320

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music from around the world.” Another contact calls Bank One a “fairly diverse” organization but notes that there are “very few minorities in the upper management.” Bank One provides a schedule of diversity recruiting events on its web site.




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Legg Mason

PRESTIGE RANKING

100 Light Street Baltimore, MD 21202 Phone: (877) 534-4627 www.leggmason.com

DEPARTMENTS* Asset Management Capital Markets Private Client *Divisions

THE STATS Chairman, President and CEO: Raymond A. “Chip” Mason Employer Type: Public company Ticker Symbol: LM (NYSE) Revenue: $2.0 billion (FYE 3/04) Net Income: $287.8 million No. of Employees: 5,290 No. of Offices: 136

KEY COMPETITORS A.G. Edwards Bear Stearns Goldman Sachs Merrill Lynch Morgan Stanley

UPPERS • Friendly culture • High level of responsibility for junior staffers

DOWNERS • Reputation not as strong outside of footprint • Regional salary

EMPLOYMENT CONTACT www.leggmason.com/careers

THE BUZZ


• • • •

“Good regional bank” “Retail shop” “Getting better” “Solid”

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Vault Guide to the Top 50 Banking Employers Legg Mason

THE SCOOP

George and John Legg Mason traces its beginnings back to 1899, when George Mackubin founded an eponymous brokerage firm in Baltimore. Mackubin soon hired 19-year-old John Legg Jr. for a low-level position. Legg became a partner by 1904 and gained sole control of the firm 45 years later. In 1970, Legg & Co. (the firm was renamed when Legg and Mackubin split and again after Legg’s death in 1963) merged with Mason & Co., a brokerage founded by Raymond “Chip” Mason. Today, Chip Mason heads the Baltimore-based Legg Mason, which provides asset management, private client, securities brokerage, investment banking and real estate services to corporations, institutions, governments and individuals. With $286.4 billion in assets under management, Legg Mason’s asset management unit is a major revenue producer for the firm, providing various investment management services and products including the company’s proprietary mutual funds (one of which, the Legg Mason Value Trust, has outperformed the S&P 500 for 13 consecutive calendar years). The private client and investment banking businesses are run out of the Legg Mason Wood Walker subsidiary, which has more than 1,400 financial advisors in 140 offices, including a significant presence in the eastern and southern U.S. Legg Mason offers real estate financing and consulting services through its Legg Mason Real Estate Services subsidiary.

Setting records – again For the second fiscal year in a row, Legg Mason posted record net revenues, net earnings and diluted earnings per share. For the fiscal year ended March 31, 2004, the firm reported net revenues of $1.9 billion, a 29 percent increases over 2003 figures, and net earnings of $297.8 million, a rise of 56 percent. Diluted earnings per share for the year were $4.06, a 46 percent jump from 2003’s record of $2.78. The firm also posted records in the same categories for the quarter ended March 31, 2004. Net revenues increased 49 percent over the 2003 fourth quarter to $559.6 million, net earnings rose 89 percent to $91.9 million, and diluted earnings per share grew 70 percent to $1.21. Assets under management ended the latest fiscal year at a record $286.4 billion, up 49 percent from March 31, 2003, and up 8 percent from December 31, 2003.


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Investment banking’s fortunes improved in fiscal 2004 as well. The group’s revenues of more than $155 million during the year represented a 36 percent increase over previous year’s numbers. The positive results were helped by strong underwriting and M&A activity. Some of the 2003 deals that Legg Mason’s investment bankers worked on included the $245 million acquisition of Whitman Education Group by Career Education Corp., ArQule’s $30 million purchase of Cyclis Pharmaceuticals, a $1.98 billion common stock issuance by Accenture, a $798 million common stock offering by Maguire Properties and a $450 million private placement by Nextel Partners. Overall, Legg Mason’s recorded $1.2 billion in investment advisory and related fees, exceeding its goal of $1 billion. In 2004 Legg Mason garnered a couple of noteworthy awards. Forbes named Legg Mason one of America’s Best Managed Companies within the diversified financials category, and J.D. Power & Associates gave Legg Mason Wood Walker the award for Highest Investor Satisfaction with Full Service Brokerage Firms. In the J.D. Power survey, Legg Mason had the top ranking in four of the six graded categories of account management, integrity, cost, information resources, customer services and investment advisors.

Managing assets Legg Mason’s CEO Chip Mason has long believed in the profit potential and risk profile of the asset management business, and the firm has consistently made strategic acquisitions in this area. In January 2004, Legg Mason continued to strengthen its arsenal, announcing a deal to buy the Singapore asset management arm of The Rothschild Group for an undisclosed price. The acquisition, undertaken by Legg Mason subsidiary Western Asset Management Co., added $1 billion in equity and fixed income assets to Legg Mason’s portfolio. Mason was excited about the opportunity to expand the firm’s Asian business, saying, “Building our presence in the Asian markets is of substantial strategic importance to the global vision we have in asset management. This acquisition, with its highly regarded management team and a business that appears very compatible with our own, gives us the solid and leverageable platform we have been seeking to expand our capabilities and client base in Singapore and other Asian markets.”

Settling up Legg Mason was unable to escape from the federal mutual fund probe conducted by the SEC and the NASD. Along with 14 other financial institutions, the bank agreed

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to a $21.5 million settlement in February 2004 for its failure to honor bulk commission discounts (known as “breakpoints”) on purchases of mutual fund shares. The firms will also refund investors for what is estimated to be $86 million in overcharges. Legg Mason’s share of the settlement was $2.3 million, and the firm will reimburse investors an additional $4.3 million. Legg Mason was not, however, forced to admit or deny guilt as part of the settlement.

GETTING HIRED

Kickin’ it with Legg In addition to targeting the “top 15 to 20 schools,” Legg Mason typically focuses its recruiting efforts “on regional schools” such as University of Maryland, Villanova and the College of William and Mary. The firm provides a full investment banking recruiting schedule on its web site, www.leggmason.com/standout. Applicants can also submit resumes through the site. Would-be Legg Mason employees can expect to have at least one on-campus or equivalent interview, followed by a Super Saturday-type of interview for those who pass muster. And be prepared to meet with at least “three members of senior management” in the second round, says one source. That said, to have a chance of getting in, you “must have had other business experience,” says one insider. Says another, “Previous sales or background in accounting and finance” also helps. “And you must score in the upper quartile in a couple of pre-interview tests.” Overall, the firm is “highly selective,” says one insider, who cites “character, integrity, and values” as the “key issues.”

OUR SURVEY SAYS

Professional friends The culture at Legg Mason is “great” say insiders. It’s described as “independent,” “integrity-driven,” “values-oriented” and “friendly but professional.” “I’m very happy with the people I work with,” beams one insider. “Everyone gets along. We go out on weekends together. It’s one of the things that drew me here.” That source cites the “level of responsibility you get on deals” as another great thing about Legg


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Mason, and adds, “Because we have a very small analyst pool, analysts get a lot of associate-level work.” Another insider notes the competitiveness is toned down at Legg Mason. “There isn’t the cut-throat culture of bulge-bracket firms [here].” And insiders agree that they’re treated well by their seniors. “The firm is very peopleoriented,” says one source.

Regional remuneration Compensation at Legg Mason isn’t as high as its Wall Street cousins, but the firm does pay “on par with the regional investment banks.” Working in Baltimore softens the blow of the “regional bank salary,” as the cost of living is much less than investment banking hubs like New York or San Francisco. One contact, though, wishes compensation were based strictly on performance and “not purely on personal relationships.” Legg Mason also offers typical perks such as “401(k) with matching, stock-purchase plans, profit sharing and deferred compensation plans.” There is a corporate gym available for employees in Baltimore and Owings Mills (where the firm’s Corporate Technology and Operations Divisions are housed). The dress code is formal, but the firm does have casual Fridays. Hours vary, but 55 to 80 per week seems to be the range.

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“Because we have a very small analyst pool, analysts get a lot of associate-level work.” — Legg Mason insider


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BNP Paribas Group

PRESTIGE RANKING

16, Boulevard Des Italiens 75009 Paris Cedex 09, France Phone: +33-1-4014-4546 Fax: +33-1-40-14-69-73 www.bnpparibas.com 787 Seventh Avenue The Equitable Tower New York, NY 10019 Phone: (212) 841-2000 Fax: (212) 841-2146

DEPARTMENTS Asset Management • Corporate and Investment Banking • Private Banking • Private Equity • Retail Banking

THE STATS CEO: Michel Pebereau Employer Type: Public company Ticker Symbol: BNPQY (OTC) Revenue: €17.95 billion (FYE 12/03) Net Income: €3.76 billion No. of Employees: 8,500 worldwide No. of Offices: 2,200

KEY COMPETITORS Goldman Sachs Merrill Lynch Morgan Stanley UBS Investment Bank

UPPERS • Full range of banking services

DOWNERS • Not a major presence in the U.S.

EMPLOYMENT CONTACT BNP Paribas Human Resources 787 Seventh Avenue The Equitable Tower New York, NY 10019 E-mail: [email protected]

THE BUZZ


• • • •

“Getting better in some locations” “Very French and mismanaged” “Bigger in Europe” “Will become a serious player”

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Vault Guide to the Top 50 Banking Employers BNP Paribas Group

THE SCOOP

La grande banque BNP Paribas is one of the largest retail banks in France, distributing its products and services to more than 6 million individual customers and 450,000 businesses through its 2,100-plus branches and its new Internet and telephone distribution channels. With a presence in more than 80 different countries, BNP Paribas operates through three core businesses: corporate and investment banking; retail banking; and private banking and asset management. The corporate and investment banking unit offers advisory services for mergers and acquisitions and primary equity market transactions, as well as syndicated loans, acquisition financing, leveraged buy-out financing and a host of other industryfocused financing. The firm’s private banking and asset management unit offers a range of products and services tailored to the financial and wealth management needs of a private clientele. BNP Paribas’ approach is heavily weighted towards advisory services and personalized management. Falling under the private banking and asset management unit, the firm’s securities services division targets companies and financial institutions, including banks, brokerage houses, pension funds, asset managers and insurance companies, while the BNP Paribas Capital unit spearheads the private equity business. Despite the weak economic climate in Europe, BNP Paribas posted solid results for the fiscal year 2003. The bank posted 2003 net revenue of €17.935 billion, a 6.8 percent increase above previous year’s levels, and recorded operating income of 5.29 billon, a 21 percent jump from the €4.37 billion in 2002.

150 years of French banking history BNP Paribas, which can trace its roots back to the mid-1800s, is the result of a merger between two French banking companies with rich histories. The story begins in 1848 with the creation of the Comptoir National d’Escompte de Paris (National Paris Discount Agency), a government-backed financial institution created to ease a national banking crisis. Nearly a quarter-century later (1872, to be precise), a banking consolidation frenzy led to the formation of Banque de Paris et des PaysBas. The two firms grew through the late 1800s, surviving wars and economic downturns to stay near the top of the European financial sector.


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In 1965 Comptoir National d’Escompte de Paris merged with Banque Nationale pour le Commerce et l’Industrie, established in 1932 by the merger of two banks struggling with the worldwide depression. The new institution was called Banque National de Paris (BNP). Meanwhile, Banque de Paris et des Pays-Bas was nationalized and renamed Banque Paribas in 1982. These two French banking powers finally came together in 1999. Paribas agreed to a merger with Société Générale; BNP promptly launched a takeover bid for both companies. The proposed mega-merger survived regulatory scrutiny, and thus BNP Paribas Group was born, creating a major European banking group with a strong base in its domestic French market, assets of ∈1.3 billion, and operations in 83 countries worldwide. BNP assumed control of 65 percent of Paribas and approximately 35 percent of Société Générale.

More combinations In September 1999, BNP Paribas strengthened its position through the acquisition of the securities division of AXA Banque, which raised BNP Paribas’ value of securities under management to over €100 million, making it the sixth largest holding bank in the world. Less than two years later, the firm announced intentions to make another big purchase. In May 2001, BNP Paribas said it would spend $2.45 billion to buy the 55 percent of BancWest it didn’t already own. BancWest was created in 1998 through the merger of First Hawaiian and the Bank of the West. In April 2002, BNP Paribas went shopping again, completing the $2.4 billion acquisition of United California Bank. UCB subsequently became part of BNP’s BancWest unit, which today boasts 1.5 million customers and more than $30 billion in assets. In the same year, BNP Paribas acquired Cogent, the U.K. investment administration arm of AMP, the Australian-based financial services group. The deal, which was rumored to have a value of approximately €363 million, rendered the French bank as the sector leader in the U.K. Paribas’ purchase not only heightened its U.K. position, but also provided further access to continental European markets and Australasia, where Cogent also has operations. In early December 2002, Paribas won an auction to gain the French government’s 10.9 percent holding in Credit Lyonnais. Paribas, which outbid favorite Credit Agricole, quickly began purchasing more Lyonnais shares on the open market, bringing its stake up to 16.5 percent in a week, rendering the bank the firm favorite to eventually take full control of Lyonnais. However, BNP’s growing interest in Credit Lyonnais took a blow the following week when Credit Agricole’s board accepted its friendly €19.5 billion bid for Lyonnais, which ultimately accepted. 330

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In late 2003, BNP Paribas Peregrine launched a China investment banking business, a joint venture with Wuhan-based Changjiang Securities. In a press release, BNP Paribas said that the joint venture would be among the top 10 underwriters in China within two years.

Alternative strategies At the end of January 2004, BNP Paribas announced that its asset management unit launched three new hedge funds, two in France and one in Ireland. The target market will be mainly institutional investors, private banks, and funds-of-funds; the funds will be managed out of Paris by a specialist team. These funds add to the $15 billion in alternative and structured investments that BNP already manages. Additionally, a January 2004 report in eFinancial News noted that BNP Paribas has hired David Mandel, a former director with Merrill Lynch and Deutsche Bank, to head up its asset-backed securities business in the U.S. According to the eFinancial News report, Mandel’s hiring is a key strategy in establishing BNP Paribas as a bookrunner in the growing ABS marketplace.

GETTING HIRED

Log on to see what’s required The firm recruits candidates into its corporate and investment banking area, the retail banking segment, asset management and various support areas. The careers section of the firm’s web site (www.bnpparibas.com) notes the types of background and skills required for each area. The firm also posts several case studies highlighting individuals who work at the firm, which include descriptions of what they do at their jobs, and the types of skills, education and background used to help land a job with BNP Paribas. Internship programs are offered in all industry segments and are highly recommended by current BNP Paribas employees. Opportunities abound throughout the firm, as more than 300 possible positions are available to choose from, spanning every core business in which BNP Paribas operates. To apply for a position, candidates must send a cover letter and resume to the respective regional office in which they want to work; BNP Paribas provides a full list of contacts online.


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RBC Capital Markets

PRESTIGE RANKING

Royal Bank Plaza 200 Bay Street Toronto, Ontario M5J 2W7 Phone: (416) 842-2000 Fax: (416) 842-8033 www.rbccm.com

KEY COMPETITORS CIBC Scotiabank TD Securities

UPPERS DEPARTMENTS Capital Markets Services Equity & Debt Underwriting Hedge Funds Global Treasury Services M&A Advisory Private Equity

THE STATS Chairman: Anthony S. Fell Employer Type: Public company Ticker Symbol: RY (NYSE) Revenue: $18.82 billion (FYE 10/03) Net Income: $2.3 billion No. of Employees: 59,549 (approximately) No. of Offices: 1,100

• Friendly culture, diverse workforce

DOWNERS • Large firm bureaucracy

EMPLOYMENT CONTACT For career information, please see the firm’s web site at www.rbc.com/uniquecareers

THE BUZZ


• “The best in Canada” • “Wannabe player” • “Commercial bank unsuccessfully trying to be investment bank” • “Getting better”

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Vault Guide to the Top 50 Banking Employers RBC Capital Markets

THE SCOOP

The Great White North’s greatest RBC Financial Group is one of North America’s largest diversified financial services companies and Canada’s largest company, as measured by assets and market capitalization. The Toronto-based company serves more than 12 million personal, business and public sector clients worldwide. RBC Capital Markets is the latest incarnation of the corporate and investment banking business of RBC Financial Group. Prior to November 1, 2001, the company had been known as RBC Dominion Securities, which was founded in 1901 and purchased by the Royal Bank of Canada for C$385 million in 1988. After the acquisition, RBC Dominion consistently dominated the Canadian investment banking market. However, despite Canada’s geographic size, the Royal Bank of Canada wanted to expand in terms of assets, and in 2000 and 2001, the company acquired several regional and boutique financial services firms, including Minneapolis, Minn.-based Dain Rauscher Wessels and Boston-based Tucker Anthony Sutro. The two investment banks were combined with RBC Dominion in November 2001 to form RBC Capital Markets. Today, RBC Capital Markets provides capital markets services (including M&A advisory, equity and debt underwriting, equity research, sales and trading), global credit (corporate lending), global financial products (fixed income products like syndicated loans and asset securitization, as well as equity derivatives), global treasury services (including foreign exchange services and money market funds) and alternative investments (private equity and hedge funds). The firm concentrates its capital markets services in the following areas: telecommunications, technology, health care, energy, consumer products and mid-sized financial institutions. In addition to its Toronto headquarters, the firm has major offices in New York, Minneapolis and London, and operates smaller offices in 27 other cities.

Staying out of the penalty box Unlike its New York-based competitors, RBC Capital Markets avoided the major conflict-of-interest scandals that swept across Wall Street throughout much of 2002 and 2003, and instead focused on continuing to acquire complementary businesses. According to Datamonitor, RBC announced in July 2003 that it would acquire the Florida branch operations of Ohio-based Provident Financial Group, to shore up its


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business in the southeastern U.S. RBC also acquired The Sterling Capital Mortgage Company, headquartered in Houston, with 110 branches across 16 states. RBC didn’t forget its Canadian roots, either. In November 2003, RBC announced it would acquire the Canadian branch operations of Provident Life and Accident Insurance Company, a U.S.-based disability insurer and subsidiary of UnumProvident Corporation. RBC Capital Markets was also busy acquiring its most important asset – human capital. In March 2004, The Daily Deal reported that David Weiner, a banker who was responsible for Lazard’s structured and derivative products and equity-linked origination, joined RBC Capital Markets as a managing director in global equity derivatives.

League play RBC Capital Markets moved up one place to No. 4 in the completed Canadian M&A League Tables, according to Thomson Financial, completing 25 deals to edge Credit Suisse First Boston. However, RBC Capital Markets saw a marked decline in the rank value to just $6.0 billion, down from the $13.3 billion recorded in 2002. Even so, RBC’s drop-off in rank value was consistent with the overall market climate, which saw the rank value of deals drop approximately 48.9 percent from 2002 to 2003. In Canadian announced M&A in 2003, the RBC Capital Markets fell two spots from No. 3 to No. 5, advising on 26 deals worth a total of $5.95 billion. The firm did, though, hold on to its No. 1 ranking in Canadian syndicated loans, far outdistancing No. 2-ranked CIBC. RBC Capital Markets worked on 21 issues worth $11.3 billion, as compared to CIBC’s 17 issues worth $6.0 billion. In U.S. common stock underwriting, the firm fell two spots, coming in at No. 15 in 2003. RBC Capital Markets worked on 12 issues worth $599 million during the year. In 2002, when the firm took the No. 13 spot, it underwrote six issues worth a total of $867 million. Globally, the firm fared well. In Thomson Financials’ 2003 global equity league table, RBC Capital Markets leaped five spots to No. 14, underwriting 33 issues worth a total of $2.9 billion. And in the 2003 global follow-on offering league table, the firm moved up two spots to No. 13.

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GETTING HIRED

Human capital RBC Capital Markets recruits undergraduates and MBAs in the U.S., Canada and the U.K. to fill slots in the firm’s training programs, which differ somewhat depending on the country. In the U.S., RBC Capital Markets hires undergraduates for its twoyear investment-banking analyst program (some analysts end up staying for three years and are sometimes promoted to associates). While not formally required by the firm, analysts typically have business-related degrees. In addition, RBC Capital Markets looks for strong academics and analytical abilities. For those pursuing graduate business degrees, RBC Capital Markets hires MBAs as investment-banking associates, equity research associates and institutional sales associates. The bank also runs summer programs for both analysts and associates. In Canada, RBC Capital Markets hires for programs similar to those in the U.S.; in addition, undergraduate and graduate candidates can participate in the firm’s dealer training and generalist programs. In the U.K., the firm offers training programs for those who wish to pursue a career in sales or trading. The firm’s web site, www.rbccm.com, includes a detailed career section with contacts, campus recruiting schedules, application deadlines, descriptions of various programs and days-in-the-life of current employees. Students attending schools at which the firm does not formally recruit can search for jobs and submit resumes online. Although it is not easy to get hired by RBC Capital Markets, at least one source thinks the firm is taking its reputation as a “leading Canadian investment bank” for granted. The contact believes the firm “no longer employs the best and the brightest. It recruits people who are ‘yes men’ and those who prefer to churn out basic products and not those who push the envelope.” The interview process varies by office and group. A risk manager in Canada says candidates will go through “four interviews” before getting hired, while a trader in the U.K. says only “two interviews” are required before getting the nod.


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OUR SURVEY SAYS

Friendly and diverse Insiders at RBC Capital Markets find the firm’s culture to be “professional” but “friendly and relaxed.” In fact, one RBC trader says the “friendly, relaxed culture” is the best thing about working at the firm. Consistent with the relaxed mentality, the firm has a business casual dress code. One downside to working at RBC Capital Markets, says a source, is that the “bureaucracy of a large organization is somewhat of a detriment with compliance and administration taking up a considerable amount of time.” As for workforce diversity, RBC Capital Markets has made significant efforts, including establishing a Diversity Council in 2001 and a Student Advisory Council at the University of Toronto in 2003 (the latter council’s mandate is “to advise RBC Capital Markets on how best to attract a diverse applicant base and connect with students who are not aware of the opportunities available in our industry and our firm”). In addition, the bank holds yearly recruitment sessions at three Canadian schools to attract female applicants. RBC Capital Markets also works with INROADS and the Women in Capital Markets association. Given the number of diversity initiatives, it comes as little surprise that one contact believes that at RBC Capital Markets, “It doesn’t matter if you’re a man or a woman, or what your color or ethnic background is. It’s your production that gets you a nice paycheck.”

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“It doesn’t matter if you’re a man or a woman, or what your color or ethnic background is. It’s your production that gets you a nice paycheck.” — RBC Capital Markets insider


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Gleacher Partners

PRESTIGE RANKING

660 Madison Avenue 19th Floor New York, NY 10021 Phone: (212) 418-4200 Fax: (212) 752-2711 www.gleacher.com

DEPARTMENTS Asset Advisory Services M&A Advisory Services Restructuring Advisory Services

THE STATS Chairman: Eric J. Gleacher CEO: Timothy Shacklock Employer Type: Private company No. of Employees: 40 No. of Offices: 2

KEY COMPETITORS Broadview International Houlihan, Lokey, Howard & Zukin Keefe, Bruyette & Woods Putnam Lovell NBF Securities

UPPERS • Entrepreneurial culture • Exposure to clients and new capital markets products

DOWNERS • Branding effort in U.S. picking up speed, but not at the level it should be • Not as overflowing with deals as other top I-banks

EMPLOYMENT CONTACT Gleacher Partners LLC 660 Madison Avenue 19th Floor New York, NY 10021 Attn: Associate Recruiting Phone: (212) 418-4200 Fax: (212) 752-2834 [email protected]

THE BUZZ


• • • •

Attn: Analyst Recruiting Phone: (212) 418-4200 Fax: (212) 846-4910 [email protected]

“Great boutique” “Will be a powerhouse” “Is the talent still there?” “Strong name, but rarely hear from them”

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Vault Guide to the Top 50 Banking Employers Gleacher Partners

THE SCOOP

A bank of their own Bigger isn’t always better. Just ask Eric Gleacher, the founder of his eponymous investment-banking firm, Gleacher Partners. Gleacher founded the mergers and acquisitions practice at Lehman Brothers in 1978; he moved to Morgan Stanley in 1985. Five years later, Gleacher and other Morgan Stanley M&A executives founded an investment bank of their own. In October 1995, London-based National Westminster Bank, looking to break into the U.S. investment banking market, acquired Gleacher Partners, but the marriage was short-lived, and Gleacher’s employees staged a buyout of the company in April 1999. The new Gleacher received some capital assistance from the Bank of Scotland, which now owns just under 10 percent of the firm. Gleacher provides M&A, restructuring and asset management services from offices in New York and London. The firm has advised on over $150 billion worth of transactions since its 1990 founding, according to the firm, which is privately held and doesn’t disclose its revenue or earnings. Clients have included part-owner Bank of Scotland (Gleacher advised on its $40 billion merger with Halifax Group in May 2001), investment bank Sanford C. Bernstein (on its $3.5 billion purchase by Alliance Capital Management) and WebMD (on two mergers in 1999 and 2000). Gleacher’s asset management arm has invested in over 30 companies, including California Pizza Kitchen, WebMD and Cosi Sandwich Bar. (Cosi has a family connection; its co-founders are Eric Gleacher’s nephews.) The firm’s small size and entrepreneurial spirit work well with the firm’s main service, providing advisory services to clients, without worry about the conflicts of interest that accompany underwriting, lending and trading operations.

London falling In the early 2000s, Gleacher’s asset management unit began to expand into debt investing and hedge funds. In February 2002, to help in these efforts, the firm hired Bruce Ruehl, former chief investment strategist from Tremont Advisers, to run Gleacher’s hedge fund ventures. Specifically, Ruehl runs the firm’s fund-of-funds, investing in promising hedge funds on behalf of Gleacher. The expansion plans did not prove universally popular with insiders. Partners in the firm’s London office were reportedly unhappy with the new direction, as well as 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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equity the new partners would receive. Four London partners left in early 2003, including three who formed their own advisory boutique, Tricorn Partners. Gleacher quickly responded to the loss, naming two new partners within weeks of the departures. Sir Peter Burt, who had recently retired as executive deputy chairman at financial services company HBOS, joined Gleacher in February 2003. Tim Shaclock joined Gleacher the following month from Dresdner Kleinwort Wasserstein, where he had been deputy chairman.

Size matters? However, Gleacher’s small size – the firm has just 40 employees – became a liability in May 2003. According to a story in Corporate Financing Week, Fleming Cos., a Lewisville, Texas-based food distributor that was in Chapter 11 bankruptcy protection, dropped Gleacher as its restructuring advisor in favor of The Blackstone Group because Fleming felt Gleacher wasn’t big enough to handle the task. Although Gleacher didn’t comment on the move, a Fleming spokesperson noted that the separation was “mutually agreeable.”

GETTING HIRED

Pulling from the top As a boutique firm, respondents to our survey rated Gleacher as being one of the more selective firms in which to get hired. An associate in the Atlanta office notes that individuals from Ivy League schools, top undergraduate programs and “selected top 20 MBA programs” often get the most consideration. He notes, “Fit is important, as most industry and product groups are thinly staffed.” Expect the interview process to be comprehensive, as the respondent notes “a candidate should expect to meet with the entire group before being seriously considered.” Gleacher offers positions in mergers and acquisitions, divestitures, takeover defense, special committee assignments, leveraged buyouts, corporate restructurings and bankruptcies, execution and oversight of the firm’s principal investments and joint ventures or partnerships. According to the firm, it “recruits on a limited basis and looks for a highly select group of individuals with outstanding analytical abilities, strong communication and interpersonal skills, high personal integrity and an ability to thrive in a fast-paced and entrepreneurial work environment.”

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OUR SURVEY SAYS

Bonus time Associates do quite well in the money department, with respondents reporting annual bonuses significantly exceeding their annual salaries. An associate notes Gleacher “realizes it needs to pay competitive bonuses to retain top performers,” and praises the firm’s Wealth Accumulation Plan, which allows associates to defer pre-tax bonus dollars into various investment vehicles. The company’s culture is “changing in the U.S.,” according to one associate in the Atlanta office who adds that Gleacher is “morphing substantially into a much more aggressive middle-market” type of organization.

Lifestyle issues Working at Gleacher yields employees “standard fare in terms of lifestyle perks depending on office location,” according to an associate in the corporate finance division. He praises the “summer program for new hires,” which takes place in Toronto over several weeks’ time. Offices are generally well liked by employees, and respondents report that the firm has a casual dress code, with the exception of client contact. Although insiders are split with respect to treatment by management, an associate relays that manager treatment at Gleacher tends to be “situation specific.” That contact, who’s very happy with the way his superiors treat him, praises the diversity of his U.S.-based group. “Our U.S. platform is a put-together of professionals from many different backgrounds,” he says.

Time Crunch An equity research analyst notes that he works between 60 and 70 hours per week, and he works weekends “often.” Another associate who reports working between 90 and 100 hours per week complains that it’s “difficult to make a blanket statement on hours, but conditions are difficult today.” He adds that generally the “market conditions dictate [the] hours worked,” and notes that the long hours also include “travel related to transaction processing and marketing.” Respondents also felt that Gleacher needs work in the areas of diversity with respect to women and minorities.


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Brown Brothers Harriman

PRESTIGE RANKING

140 Broadway New York, NY 10005 Phone: (212) 483-1818 www.bbh.com

DEPARTMENTS Administration • Banking • Corporate Finance • Institutional Equities • Investment Management • Investor Services • Operations • Systems • Treasury

KEY COMPETITORS The Bank of New York HSBC JPMorgan Chase Northern Trust State Street

UPPERS • Solid reputation (200 years old)

DOWNERS THE STATS Managing Partner: Michael W. McConnell Employer Type: Private company No. of Employees: 2,800 No. of Offices: 15

• Narrow product focus

EMPLOYMENT CONTACT www.bbh.com/career

THE BUZZ


• • • •

“As exclusive as it gets” “Lost its luster” “Old, sleepy boys club” “Very good private banking group

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Vault Guide to the Top 50 Banking Employers Brown Brothers Harriman

THE SCOOP

Product of a proud banking family Now the oldest and largest private bank in the United States, Brown Brothers Harriman & Co. (BBH) traces its roots back to 1800, when Irish immigrant Alexander Brown founded an eponymous import/export business. Brown included his sons in what would later become Alexander Brown & Sons. (Alexander Brown & Sons went through several incarnations and was a Baltimore fixture for nearly 200 years; it’s now a part of Deutsche Bank.) The sons – William, George, John and James – had their eyes on another line of business. The four founded a merchant bank in Liverpool, England, in 1810, opening a branch office in Philadelphia in 1818. Brown Brothers & Co. opened a New York office in 1825, expanding thanks to its expertise in financing shipping and textile businesses. Meanwhile, E.H Harriman was busy acquiring large stakes in railroad companies in the late 1800s. In 1931, two businesses owned by the Harriman family merged with Brown Brothers & Co. to form Brown Brothers Harriman. The firm has since shifted from investment-banking operations to commercial banking and investment advisory. BBH boasts about financing a diverse range of projects, from the Cherry Hill Mall in New Jersey to the Bokaro power plant in Calcutta, India.

41 “brothers” strong Currently run by approximately 41 partners, BBH offers commercial banking, global custody, investment management, private equity investing, M&A advisory, foreign exchange and equity brokerage services to corporations, institutions and wealthy individuals in over 100 markets. BBH’s largest business is its investor services practice, which provides safekeeping and settlement of assets in addition to accounting and administration services. Included in this group are the firm’s wellrespected custodial services, responsible for over $800 billion in assets and ranked among the top five in Global Investor’s Global Custodian Survey for the last 13 years. BBH’s investment management practice is another core revenue area for the firm, providing investment strategy and analysis while overseeing more than $37 billion in assets. The firm’s corporate banking offerings include credit facilities, corporate advisory and cash management services for middle-market companies located principally in the Northeast and Texas. BBH’s M&A group concentrates on


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providing advice to private and closely held companies with values of $20 million to $1 billion in the health care, medical technology, telecommunications, media and outsourcing industries. In 2003 the firm counseled medical-device manufacturer Spine Solutions on its $350 million acquisition by Synthes-Stratec. BBH also advised One Call Medical when TA Associates purchased the health care outsourcing company for $115 million. For individuals, BBH’s offerings include trust administration, estate planning, investment advice and management and tax advisory services. Most of the firm’s 2,800 employees work out of the New York, New Jersey and Boston offices.

This private bank likes private equity BBH has six funds (known as “The 1818 Family of Funds”) comprising approximately $1.9 billion in capital through which the firm makes equity and debt investments in small and mid-sized private companies. Through the bank’s three private equity funds, the firm invests over $1.3 billion predominantly in mid-sized companies experiencing major changes such as acquisitions or business expansion. BBH is currently raising capital for a fourth private equity fund which is expected to close sometime in 2004. BBH’s other funds concentrate on providing financing to smaller companies. The firm’s two 1818 Mezzanine Funds (with a combined $627 million in capital) normally invest between $5 million and $25 million in somewhat proven companies with $20 million to $200 million enterprise values. The mezzanine funds avoid early stage ventures, companies with undeveloped technologies, and hostile situations. For select early stage companies with enterprise values of $5 million to $100 million, BBH invests $3 million to $5 million through its $100 million 1818 SBIC Fund to finance such activities as recapitalizations, acquisitions, buyouts and expansions.

GETTING HIRED

Take it from the top Brown Brothers Harriman recruits bankers from top schools, say current employees. “From what I understand, the firm as a whole is known for selecting candidates from the top schools around the world and certainly in the U.S,” says a source. “This is also true of the institutional equities business, on the sales desk in particular. The recent history of hiring patterns in institutional equities has shown somewhat of an 344

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‘Ivy League bias’ in sales.” An insider notes that not all departments are so stringent. “In research I think they look for something a little less traditional. I think they are just looking for really good thinkers, maybe with a flair for the creative, no matter what school they went to.”

Know thyself An investment management employee went through “three interviews with head of department and some other senior people.” It was much more rigorous for an investment banking recruit, who remembers “one extremely vigorous eight-hour super-day. I met everyone from Brown Brothers Harriman’s equivalent of the CFO, to the senior partner managing the institutional equities business, to the managing director, the strategists, right on down to the associates.” And they can get tough on you. “The most difficult exchange I had was with one of the strategists, which was really more of a conversation about my thoughts on the market and what was going on out there – probing me for opinions and what I knew. It didn’t really get any more technical than that, although that was pretty technical. I had a lot of product questions which, I feel, took some of the interviews to a level of detail they otherwise would not have gone to.” But they’re not looking to trip you up. “On the whole, no one was out to give me a hard time. My impression was that people seemed more interested in how I was as a person, what I was like to work with, and how I would fit in with a team that works long hours together.” Another source, who says recruits should expect two to three rounds of questioning, gives this advice to would-be interviewees: “Study your resume well. Know yourself and know what you want in life.”

OUR SURVEY SAYS

The last American private bank Brown Brothers Harriman’s employees are described as “friendly” and “helpful.” One source, who raves about the firm’s training offerings (“Training is very useful, as it will be used for your daily work”), says the firm is the “best place to work if you’re a fresh graduate and interested in accounting and finance.” To be sure, the firm’s reputation cannot be taken lightly. “I think we are known for being one of the more traditional firms on the Street – very brass plate, staid and established,” says one employee in research. “After all, we are the oldest owner-managed private bank


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in the U.S. However, [my department] is a different animal. On one hand, we have the longest running piece of research on Wall Street – rumor has it that Alan Greenspan himself did an internship here back in the day. But on the other hand, our portfolio strategy product is getting to be known as some of the newest, freshest, most creative work out there. At the end of the day, the research team has a lot of fun.” Another insider complains Brown Brothers Harriman’s culture is “typical for financial services: too many chiefs and not enough Indians.” The chiefs aren’t that bad, though. “I have had great experiences with current and recent management,” says one source. Another insider issues this glowing report: “Brown Brothers Harriman is a great firm with a great name. It gets you places, whether you choose to grow inside or outside the firm.”

Meritocracy or nepotism? The firm’s compensation structure gets mixed reviews. “My firm has a very disproportionate compensation structure that encourages nepotism and relationships rather than hard work and accomplishments,” gripes one insider. One banker notes, “From what I hear, management remembers if you stick with them through the tough times, and the industry has definitely been going through one of those.” However, one insider notes the firm is a true meritocracy, saying, “Your bonus and raise depend on your performance.” The hours apparently are not grueling. “I work a lot of hours due to personal devotion to my work,” says one workaholic. “But no one asks me to stay late. However, while management doesn’t require face time here, your colleagues will definitely pay attention to your hours. If they feel you’re not working hard enough, they’ll give you a tough time – but it’s all in good fun.”

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“Brown Brothers Harriman is a great firm with a great name. It gets you places, whether you choose to grow inside or outside the firm.” — Brown Brothers Harriman insider


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The Bank of New York

PRESTIGE RANKING

One Wall Street New York, NY 10286 Phone: (212) 495-1784 www.bankofny.com

DEPARTMENTS Corporate Banking Global Market Services Private Client Services & Asset Management Retail Banking Securities Servicing & Global Payments Services

THE STATS Chairman and CEO: Thomas A. Renyi Employer Type: Public company Ticker Symbol: BK (NYSE) Revenue: $6.4 billion (FYE 12/03) Net Income: $1.2 billion No. of Employees: 23,000+ No. of Offices: 369

KEY COMPETITORS Bank One Citigroup JPMorgan Chase State Street

UPPERS • Job security • Diverse workforce

DOWNERS • Below average pay • Upward mobility can be limited

EMPLOYMENT CONTACT www.bankofny.com/careers

THE BUZZ


• • • •

“Good bank” “Well-respected” “Less than they think they are” “Good regional”

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Vault Guide to the Top 50 Banking Employers The Bank of New York

THE SCOOP

Pumping the heart of the global markets The Bank of New York (BNY) is America’s oldest financial institution and is currently the nation’s 11th-largest bank with $92.2 billion in assets. BNY offers a host of financial services, including securities servicing, global payment services, private client services, asset management, corporate and retail banking, and global market services, in more than 100 markets worldwide. The bank has a particularly significant retail presence in the northeast U.S., with 341 retail branches in 23 counties in New York, New Jersey and Connecticut. Through its BNY Securities Group subsidiary, the firm specializes in trade execution, securities clearing, commission management and independent research services, executes trades for more than 250 million shares and clears over 300,000 trades every day. BNY’s other core business is corporate trust and agency services, and the New York bank is consistently at or near the top of the annual trustee deal rankings.

Founding father BNY was founded in 1784 by none other than Alexander Hamilton, one of the most prominent founding fathers and the first Secretary of the Treasury. The Hamilton connection came in handy for BNY in the early days, and the company was tapped to make the first loan to the United States government for the then-large sum of $200,000 in 1789. When the New York Stock Exchange was founded three years later, BNY was the first stock traded. The company financed some of the most important companies in early America as well as infrastructure projects like the Erie Canal in New York. In the early 20th century, BNY grew through mergers, and in the 1960s began expanding geographically, including opening a London office in 1966. The company’s reputation took a hit in the late 1990s when two employees were caught laundering money for members of a Russian organized crime ring.

In an acquisitive state of mind BNY’s strategy over the years has evolved from improving its commercial banking position to concentrating on fast-growing, fee-based businesses such as securities servicing, corporate trust and global custody. Whereas traditional banking revenues made up more than 70 percent of BNY’s top line in 1995, now nearly the same ratio comes from BNY’s fee-based businesses. Much of the growth has been achieved through acquisitions, and the bank has made more than 80 purchases since 1994. 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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BNY dove into the acquisition pool again in 2003, and the bank’s biggest splash was its $2 billion purchase of Credit Suisse First Boston’s Pershing unit in May. Holding over $450 billion of client assets, Pershing is the largest provider of correspondent clearing services and outsourcing solutions in the world with a particularly strong presence in the U.S., Europe and Asia. Pershing’s size was the main driver for the deal, as pricing pressure has forced clearing houses to scale their businesses in order to maintain profitability. Analyst reactions were mixed, with some complaining about the high price BNY was forced to pay as it outbid two rivals (the $2 billion price tag was an expensive 3.3 times Pershing’s book value of $600 million). Still, most observers praised BNY for achieving the scale necessary to effectively compete in the securities clearing market; with the acquisition of Pershing, the BNY Securities Group is now the largest agency brokerage in the world. BNY has also recently improved its corporate trust market position. In 2003 BNY bought Fifth Third Bank’s corporate trust business, increasing BNY’s Midwestern presence, and BNY’s subsidiary BNY Trust Company of Missouri acquired the corporate trust business of Kansas-based INTRUST Bank. The purchases came on the heels of a slew of BNY corporate trust additions in the last few years designed to improve the bank’s presence in the central U.S. As part of its geographic expansion, BNY plans to open corporate trust offices in Cincinnati, Detroit and Indianapolis, adding to its current presence in Chicago and St. Louis. In December 2003, BNY moved further west with its acquisition of the trust business of Bank of Hawaii. Also in December, BNY announced a partnership with Perpetual Trustees Australia Limited to offer corporate trust services to Australian companies. And just as BNY is focusing on its main revenue producers, the bank is ridding itself of unwanted parts. In January 2004, BNY sold a 5 percent equity stake in Wing Hang Bank, one of the largest banks in Hong Kong, in an effort to free up capital for its core businesses. BNY still holds a 20 percent stake in the Hong Kong bank and has not disclosed whether it plans to sell its remaining equity in the near future.

Feeding off of fees Boosted by the Pershing acquisition, better market conditions and a decline in nonperforming assets, BNY’s fourth quarter of 2003 saw profits of $307 million, more than triple the $100 million reaped in the same period a year earlier. (BNY’s 2002 fourth quarter was depressed because of a $125 million write-off for bad loans to bankruptcy-protected United Airlines.) The bank’s security servicing business, BNY’s largest revenue producer, was the star performer, netting record fees of $684 million, up a healthy 41 percent over 2002 thanks in large part to the Pershing 350

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purchase. Private client services and asset management were also significant contributors to BNY’s results, scoring $103 million in fees, a 17 percent increase over 2002. And though BNY’s foreign exchange business did not exceed its third quarter performance, the unit’s $81 million net was a 59 percent increase over 2002’s numbers. Overall, BNY brought in almost $1.2 billion in profits in 2003, a nice improvement over the $902 million the firm saw in 2002. Looking ahead, BNY anticipates a challenging 2004 due to inconsistency in the capital markets and pricing pressure on its core services. To cut costs, CEO Renyi plans to move as many as 1,500 jobs from high-cost areas (including the bank’s New York base) to lower-cost regions, including upstate New York, China and India. India is a particular area of focus, as BNY hopes to expand its asset management, custody and pension fund businesses in the country. BNY had approximately 700 employees in India at the end of 2003 and plans to hire 250 more in 2004.

The envy of its competitors According to Thomson Financial, BNY was the top-ranked trustee for new debt issues in 2003 for the U.S. taxable and long-term municipal debt market, the third consecutive year BNY came in at No. 1. BNY was also named the Best Custody Bank in Global Finance’s Best Banks 2003 awards; the magazine was effusive in its praise, noting that BNY’s custodial services “set the standards in their markets and are the envy of their competitors.” The respondents on the Global Custodian 2003 Mutual Fund Administration Survey liked BNY, too, ranking the bank Best in Class in Fund Accounting and Client Service and runner-up in mutual fund administration. BNY also grabbed Best Provider of FX Services Overall on Global Investor’s 2003 Foreign Exchange Survey. BNY Securities Group, the bank’s brokerage, clearing, and financial services outsourcing subsidiary, took home some high honors of its own, coming in first in Waters magazine 2003 ranking of financial services providers. Waters was particularly impressed with BNY’s “rigorous cross-selling effort not only to encourage the businesses within BNY Securities Group to offer the services of other units but also to familiarize The Bank of New York’s other customers with the Group’s services.”

I want a refund BNY was able to settle a dispute with General Motors Acceptance Corp. (GMAC) in September 2003, but the bank had to pay a sizeable sum to do it. In 1999 GMAC had 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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purchased BNY Financial Corp., the bank’s factoring and consumer lending business, for $1.8 billion, but had subsequently complained that the price was unfair. In the face of threatened litigation, BNY decided to pay GMAC $110 million to avoid the hassles of a courtroom battle. Additionally, BNY is still dealing with a federal investigation into leasing fraud involving RW Professional Leasing, a former corporate customer. RW Professional is accused of misappropriating loan proceeds intended to secure medical equipment leases. BNY is a defendant in two related civil lawsuits seeking damages totaling $46 million.

GETTING HIRED

The power of human resources For individuals with undergraduate degrees, The Bank of New York seeks entry-level candidates for groups such as branch banking, corporate trust, investment accounting, stock transfer, unit investment trust and American Depositary Receipts. For MBAs, BNY regularly hires newly-minted business grads to serve as corporate banking associates, investment management associates, and media and telecommunications banking associates. The bank also has an MBA summer associate program where business students work for 12 weeks in one of the following divisions: asset management, private client services, capital markets, corporate banking, international banking, product management, marketing or operations management. BNY summer internships for undergraduate students are typically in the firm’s branch banking group. For both undergrads and MBAs, BNY actively recruits at select institutions and provides a recruitment schedule on its web site at www.bankofny.com (click on “Careers” and then “Recruitment Calendar”). The site also allows interested candidates to search for open positions and view required qualifications. Applicants should be forewarned that at BNY, the human resources group seems to wield a good bit of power. One source says that “HR pre-screens applicants and is the most difficult stage to get through.” A contact in New York goes even further, saying, “The amount of power [human resources has] is absolutely absurd. They place hires in the branches without even having the manager interview.”

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OUR SURVEY SAYS

Low risk… Insiders say that BNY is a “safe” bet “if you’re interested in having job security,” but the bank isn’t exactly the most exciting place to work. “[BNY] is the last of the big banks and although it offers stability, don’t expect to come here and be enlightened by your fellow employees,” says a contact. “Most of the work involves processing of some sort so it can be somewhat repetitive.” Another source complains that “most of the procedures at the bank are undocumented and you find out about them either through making a mistake and getting reprimanded or, if you’re lucky enough to find a mentor, being guided by someone for at least the first year. The paperwork and documentation is very frustrating, and it’s hard to handle customer needs against the constant flow of paper.” Notwithstanding the apparent need for improved efficiency, incoming BNYers shouldn’t be thinking about improving on the bank’s procedures. “If you have any ideas about coming in and shaking things up, forget about it,” warns a source. “There is a real complacency here and no one is willing to break lock step out of fear they’ll be labeled a ‘cowboy.’” Another employee concurs, “It’s hard for young, ambitious workers to come in and sort of shake things up a bit.” Hours are truly “banker’s hours” with a “straight 9-to-5 day” the norm.

But low reward While BNY staffers get the benefit of job security, they don’t seem to get much in the way of compensation. A billing analyst in New York says, “The bank is notorious for not paying well to the rank and file workers.” The source cites “merit” raises that are “really just [cost of living allowances] in disguise,” as well as a lack of bonuses for lower level staff. Another contact does say, “If you work in New York you get the standard profit sharing.” For those in higher-level positions, the view on the compensation situation isn’t much better. A department manager laments, “I am totally embarrassed at how the bank has compensated me over the years.” The insider also complains that there are “no year-end bonuses unless you’re a VP or above.” Even those who do get bonuses don’t seem content. A vice president in New York believes that “bonuses are getting slimmer and slimmer.” One contact sums up the experience of working at BNY: “This is a great place to work if all you want is a paycheck without stress. If you are looking for a place with a lot of upward mobility, then you will find BNY very frustrating.” Multiple insiders report that promotions are hard to come by because “there’s no room for real 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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advancement with the bank.” “What’s more,” says one source, “advancement is done according to seniority, not according to achievement, so it’s often possible to find yourself working for an incompetent whose only qualification is that they’ve been at the bank longer than you have.” Furthermore, although the bank does not give raises except during the annual review period, BNY has been known to promote during other times of the year, meaning that promoted employees sometimes have to wait “six to ten months” before receiving a raise. In addition, employees complain about the raises they do receive (e.g., “1.5 percent to 3 percent on an already below average salary”). The bank’s benefits, which one source calls “as basic as you can get,” include health insurance, various retirement plans, life insurance, partial tuition reimbursement and favorably priced BNY services, including discounted brokerage services and rates on loans. BNY also has an employee stock purchase plan allowing staffers to purchase the company’s stock at a 5 percent discount. Non-officers at BNY who have worked for the firm for less than three years get two weeks vacation (and three weeks after that); bank officers receive four weeks vacation. From one of the bank’s Florida offices, an insider calls BNY vacation policies “absurd. You have to take your two weeks of vacation in a row. The two-week vacations can only be taken between April and November and the last two weeks of the month.”

Equal opportunities Insiders agree that BNY does a very good job of promoting and maintaining workforce diversity. One contact believes that “the workforce – on all levels – reflects the diversity one expects to see in a place like New York.” BNY diversity initiatives include participating in MBA minority career fairs, recruiting at historically black colleges such as Howard, Spelman and Morehouse, and working with organizations such as INROADS, the Financial Women’s Association, and the International Center for the Disabled. Some still see room for improvement, though. “The diversity at BNY is much better than at any company I have worked for, which includes a number of Fortune 500 companies,” says a source, “but there are still not enough women and minorities in senior level roles. However, throughout the rank and file, the bank really tries to fulfill its policy of being a diverse, equal-opportunity company.”

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“The diversity at BNY is much better than at any company I have worked for, which includes a number of Fortune 500 companies. But there are still not enough women and minorities in seniorlevel roles.” — Bank of New York insider


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Allen & Company, Inc.

PRESTIGE RANKING

711 Fifth Avenue 9th Floor New York, NY 10022 Phone: (212) 832-8000

DEPARTMENTS Asset Management Investment Banking Private Equity Sales and Trading

KEY COMPETITORS Blackstone Broadview International Goldman Sachs Morgan Stanley

UPPERS • Working on high-profile deals

DOWNERS THE STATS Chairman: Donald R. Keough President and CEO: Herbert A. Allen Employer Type: Private company No. of Employees: 200 No. of Offices: 1

• Fluctuating comp

EMPLOYMENT CONTACT Human Resources Allen & Company, Inc. 711 Fifth Avenue 9th Floor New York, NY 10022

THE BUZZ


• • • •

“Media powerhouse” “Wicked smart” “Uppity” “Know they’re good”

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Vault Guide to the Top 50 Banking Employers Allen & Company, Inc.

THE SCOOP

One of the best keeps it close to the vest It may seem strange to think of an investment bank as a cultish, secret society, but closely held Allen & Company’s reputation may not be totally undeserved: the company has just one office, doesn’t have a web site, doesn’t issue press releases and prohibits journalists from attending the firm’s annual media industry conference. However, at least one thing is known about Allen & Co.: the investment bank is a major player in the entertainment industry, having advised on some of the biggest transactions in the sector’s history, including Seagram’s combination with Universal Studios, Westinghouse’s purchase of CBS and the acquisition of Capital Cities/ABC by the Walt Disney Company. In addition to M&A advisory, Allen & Co. provides underwriting, private equity, venture capital and money management services.

Like father, like son Brothers Charles and Herbert Allen founded Allen & Co. in 1922. In 1966, Herbert Allen Jr. took over at the tender age of 26. The younger Allen made a name for himself in the 1970s by purchasing a controlling interest in Columbia Pictures. Though the investment had its rocky points (a low point was when the company’s CEO, David Begelman, was busted for embezzling), Allen was rewarded when he sold Columbia to Coca-Cola in 1982 for 18 times what he paid, a feat that established Allen & Co. as a significant entertainment industry force. Warren Buffett has opined, “Herbert Allen is not a conventional person and doesn’t try to run a typical operation,” and other observers of Allen & Co. might agree. For one thing, the firm’s principals are required to invest personal funds in the deals they recommend, creating a strong incentive to thoroughly analyze potential deals before backing them. These bankers also bear the burden of performing their own research because the firm doesn’t have a separate research arm. In addition, Allen & Co. doesn’t hire people straight out of school, preferring that they gain some life and work experience first. And once hired, Allen & Co. bankers don’t have a big base salary on which to rely since most of their income comes from the payoffs from deals in which they’ve invested.


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M&A: that’s entertainment Allen & Co.’s M&A bankers had to work very hard in 2003. In December, the firm ran the bidding process for Primedia’s sale of New York magazine, selling the weekly for $55 million to well-known investment banker Bruce Wasserstein. In another December deal, Allen & Co. advised Artisan Entertainment (of The Blair Witch Project fame) on its $160 million merger with Lions Gate Entertainment. Earlier in the year, Allen & Co. advised online financial services company LendingTree.com on its $734 million purchase by USA Interactive. And notwithstanding the purchase price, EM.TV & Merchandising must have liked what it saw when Allen & Co. helped in its purchase of the Jim Henson Company for $680 million in February 2000. In May 2003, a financially strapped EM.TV decided to cut its ties to the Muppets company and had Allen & Co. deliver it to Jim Henson’s children for only $78 million. Also in 2003, media king Rupert Murdoch used Allen & Co. to sell his Los Angeles Dodgers for $430 million to real estate developer Frank McCourt. Allen & Co. is still heavily involved in the sports business, looking to sell the Milwaukee Bucks (at an asking price of $170 million) and the Atlanta Braves (expected to go for between $250 million to $400 million). The boutique bank was also tapped in January 2004 to run the bidding process for the Milwaukee Brewers, a franchise valued in the range of $180 million to $200 million. And in May 2004, Major League Baseball’s New York Mets retained Allen & Co. to represent them in television contract discussions. Heading up the deal team is Allen & Co.’s Steven Greenberg, a former deputy Major League Baseball commissioner. Thanks to its busy 2003, Allen & Co. made it on to Thomson Financial’s U.S. completed M&A league table, ranking No. 22 with four deals totaling $4.7 billion. Allen & Co. also found itself on Global Securities Information’s list of the top financial advisors ranked by transaction value. Allen & Co. came in at No. 20 with eight deals worth a combined $8.7 billion.

Name bankers for name clients Allen & Co. wouldn’t be able to get the deals it does without a core of experienced, well-connected bankers. The company’s chairman is Donald Keough, who took the post the day after retiring as Coca-Cola’s president in 1993. Keough is known for his golden Rolodex, which holds the contact information of plenty of heavy hitters, including Warren Buffett (Keough currently serves on the board of Buffett’s Berkshire Hathaway). Other star Allen & Co. team members include Bill Bradley,

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the former U.S. senator and New York Knick; Steve Greenberg, a former deputy commissioner for Major League Baseball; and Nancy Peretsman, a former star Citigroup banker who was No. 36 on Fortune’s 2003 list of the 50 Most Powerful Women in American Business.

Mingling with media ringmasters For an event with no journalists, Allen & Co.’s annual media industry conference in Sun Valley, Ida. sure gets a lot of press. Of course, where high profile moguls like Sumner Redstone, Barry Diller, Michael Eisner, Warren Buffett and Bill Gates go, news stories normally follow. Originally intended to be an executive retreat from the non-stop action of Wall Street, the conference has become a breeding ground for big deals (Disney/ABC and Time Warner/AOL to name just two). The bigwigs also gather to hear speeches on current topics, which in 2003 included terrorism (given by George Tenet, director of the CIA) and the growth of wireless computer networks (delivered by Intel CEO Craig Barrett).

GETTING HIRED

MBAs only Getting hired at Allen & Company is close to impossible. The firm doesn’t publicize job openings and the company’s human resources department doesn’t accept outside phone calls. The company will, though, accept resumes mailed to its headquarters. Experience is necessary – the company hires only MBAs with at least a few years of work experience under their belt. Allen & Company chairman Don Keough has said that those interested in landing a job at the firm should develop a broad range of interests, get some international experience and learn a foreign language. Naturally, media industry experience is a prerequisite. Intensive networking would seem to help as well.


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U.S. Bancorp

PRESTIGE RANKING

800 Nicolett Mall Minneapolis, MN 55402 Phone: (651) 466-3000; (800) 8722657 www.usbancorp.com

DEPARTMENTS Consumer Banking Payment Services Private Client, Trust and Asset Management Treasury and Corporate Support Wholesale Banking

THE STATS Chairman, President and CEO: Jerry A. Grundhofer Employer Type: Public company Ticker Symbol: USB (NYSE) Revenue: $14.57 billion (FYE 12/03) Net Income: $3.73 billion No. of Employees: 51,377

KEY COMPETITORS Bank of America Bank One Wells Fargo

UPPERS • Strong retail reputation

DOWNERS • Big organization burdened by some “red tape”

EMPLOYMENT CONTACT www.usbancorp.com/careers

THE BUZZ


• • • •

“Solid banking institution” “Great firm, great culture” “Stick to retail” “Great branch coverage and customer service”

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Vault Guide to the Top 50 Banking Employers U.S. Bancorp

THE SCOOP

In America’s Top 10 Minneapolis-based U.S. Bancorp is the eighth-largest financial services holding company in the U.S., with more than $192 billion in assets. Its main subsidiary, U.S. Bank, serves over 11 million customers, operating some 2,250 banking offices and more than 4,425 ATMs in 24 midwestern and western states. Along with traditional commercial banking services, the firm offers brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. U.S. Bancorp Asset Management, another major subsidiary, manages more than $110 billion for individuals and institutions. The unit also manages the First American family of mutual funds. U.S. Bancorp’s NOVA Information Systems subsidiary is a major merchant credit processor. Through its wholesale banking unit, the firm provides lending, depository and treasury management, among other services, to mid-sized and large corporations and government entities. The consumer banking unit offers commercial banking services to individuals through branch offices and an extensive ATM network. Private client, trust and asset management provides financial services through five sub-units: private client group, corporate trust, asset management, institutional trust, and custody and fund services. The payment services unit delivers credit and debit cards services, as well as commercial card services, business-to-business payment and ATM and merchant processing.

Hello and good-bye In 1998, U.S. Bancorp acquired investment bank Piper Jaffray in an attempt to create a one-stop financial services outfit that could take advantage of cross-sell opportunities. But five years later, U.S. Bancorp ditched the strategy and spun-off Piper to shareholders. The $730 million acquisition didn’t achieve desired synergies; culture clashes and regulatory crackdowns plagued the combined company. U.S. Bancorp also grew more risk-averse after the acquisition. The firm didn’t like the unpredictable economics of investment banking and wasn’t happy with Piper’s operating results. Piper Jaffray’s earnings added only 1 percent to the U.S. Bancorp’s bottom line in 2003. As part of the spin-off, U.S. Bancorp distributed one share of Piper Jaffray‘s common stock for every 100 shares of U.S. Bancorp common stock held by shareholders.


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Piper Jaffray, which now trades on the NYSE, has indicated it will continue to refer business to U.S. Bancorp.

One for the record book US Bancorp started 2004 in style. The firm reported record net income of $1.008 billion for the quarter ended March 30, 2004, outdistancing the $884.8 million the firm reported for the first quarter of 2003. In an earnings release announcing the results, chairman, president and CEO Jerry A. Grundhofer said the firm “continued to benefit from growth in both consumer deposit accounts and loans, and began to see signs of growth in commercial loans.” According to the firm, the strong first quarter results were largely due to growth in fee-based products and services, as well as lower operating expenses and credit costs. The wholesale banking unit saw net earnings rise 17 percent to $264.7 million for the quarter, as compared to 2003 first quarter results. Private client, trust and asset management boosted earnings 26 percent to $123.8 million. Payment services also saw a rise, increasing earnings 21 percent to $160.5 million. Treasury and corporate support earnings went up a whopping 55 percent to $138.2 million. Consumer banking, though, experienced an earnings decrease, booking $321.2 million in earnings, an 8 percent slide as compared to the previous year’s quarter. Despite the overall decline in consumer banking (the firm’s largest unit), its retail segment did well, increasing earnings by 19 percent. According to the firm, the unit’s mortgage banking segment was largely responsible for the decline.

GETTING HIRED

Service with a smile Prospective U.S. Bancorp employees can search through the firm’s job database on its web site (Go to www.usbancorp.com/careers and click on “Job Opportunities”). Jobs are organized according to location and title. The firm’s career site outlines the ethical standards of the bank and points out that it’s big on customer service. In fact, the bank has an exclusive Five Star Service Guarantee that promises the highest possible level of service, including 24/7 availability of bank representatives and short waiting times. If customers aren’t satisfied, the bank credits $5 to their accounts. To increase the chance of outstanding customer service, U.S. Bancorp provides employees with various performance incentives, including the chance to receive a 362

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Circle of Service Excellence award. In addition, the firm says that “every department within U.S. Bank has developed and adapted its own set of Five Star Service Guarantees” relevant to the particular business the department conducts. Along with providing top-tier customer service, U.S. Bancorp wants it to be known that the bank has a “strong commitment to diversity.” To this end, the bank seeks “to recruit, select and retain the most qualified employees who represent all segments of the communities we serve and support.” In addition, U.S. Bancorp partners with various organizations such as INROADS to assist in the training and development of the firm’s minority employee base.

OUR SURVEY SAYS

Cutting through the tape An insider in sales says the work environment at U.S. Bancorp can be “fast-paced,” but “because we’re so large, there are times that the ‘red tape’ makes implementing a new idea more difficult.” Still, the source reports that he gets “a chance to really contribute” notwithstanding the firm’s size. The bank actually has a formal system in place, the Bright Ideas program, to encourage employees to contribute. According to the firm, the program allows employees to “develop new initiatives … that enable us to continually improve our service delivery and operational efficiency.” Training opportunities at U.S. Bancorp exist throughout one’s career and include financial training courses as well as the opportunity to work with the firm’s Development Network, regionally organized groups that assist with personal and professional development for the bank’s diverse employee base. U.S. Bancorp is also committed to supporting the communities in which it does business. Through its Development Network, groups of employees “work together to support such causes as Special Olympics, March of Dimes’ WalkAmerica, and homebuilding and painting through Habitat for Humanity.” Depending on one’s position in the bank, compensation may be a combination of base pay and bonus, with senior level personnel receiving “stock options and deferred cash.” And according to the firm, “Total compensation includes programs that reward employees for achieving or exceeding our business objectives, with special attention given to exceptional performers.” In addition, U.S. Bancorp has a 401(k) program whereby the bank will match a portion of employee contributions


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after one year of service at the firm. The firm also offers standard benefits such as health and dental insurance, a pension plan and a retiree health care program.



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“Because we’re so large, there are times that the ‘red tape’ makes implementing a new idea more difficult.” — U.S. Bancorp insider


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William Blair & Company

PRESTIGE RANKING

222 W. Adams Street Chicago, IL 60606 Phone: (312) 236-1600 www.williamblair.com

DEPARTMENTS Asset Management Equity Research Institutional & Private Brokerage Investment Banking Private Capital

THE STATS Chairman: Edgar (Ned) D. Jannotta CEO: John R. Ettelson Employer Type: Private company No. of Employees: 800+ No. of Offices: 7

KEY COMPETITORS Friedman, Billings, Ramsey Group Keefe, Bruyette & Woods Roth Capital Partners

UPPERS • Chicago headquarters, New York paychecks

DOWNERS • Conservative culture

EMPLOYMENT CONTACT www.williamblaircareers.com/careers

THE BUZZ


• • • •

“Good boutique investment bank” “Prestigious” “Not a lead manager” “Premier middle-market Chicago firm”

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Vault Guide to the Top 50 Banking Employers William Blair & Company

THE SCOOP

Midwest middle-marketeer One of the nation’s premier middle-market investment banks, William Blair & Company offers its clients in the U.S. and abroad a full slate of services, including underwriting, M&A, sales and trading, asset management, brokerage, research and private equity. Founded at the tail end of the Depression in a downtown Chicago building, William Blair figured the only way to regain the public’s trust after the stock market crash was to produce careful, conservative research on the companies the firm was recommending. The firm has stuck to that credo since its founding, and today it’s one of the last private, independent securities firms still standing. While other independent banks such as Robertson Stephens, Alex. Brown, and Wheat First have either gone under or been swallowed by large public institutions, William Blair has kept its head above water – well above, in fact – and remained a private entity. The privately held firm is owned by 175 of the bank’s approximately 800 employees, and over 95 percent of the firm’s staff work out of the Chicago headquarters. William Blair has additional offices in Hartford, San Francisco, London, Zurich, Vaduz, Liechtenstein and Tokyo. Overall, William Blair manages more than $17 billion in assets, including nearly $5 billion in mutual funds. The bank has a consistently strong advisory practice, focusing its efforts on small and middle market companies. William Blair caters to middle market companies’ capital needs, too, and in 2003, the bank closed 25 equity deals totaling over $1.7 billion. Also in 2003, three William Blair mutual fund executives were on Barron’s list of Top 100 mutual fund managers, and one, George Greig, was also nominated for Morningstar’s 2003 International Fund Manager of the Year.

Getting younger William Blair began 2004 with some changes at the top as president and COO John Ettelson was promoted to CEO, replacing E. David Coolidge, who remained the firm’s vice chairman. “One of the hallmarks of our firm and our collegial culture at William Blair & Company is that we are always looking to the future and to transitioning the business to the next generation over many years’ time,” explained Coolidge, who has been with William Blair for 34 years. Ettelson has worked at


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William Blair for 20 years and served as head of the firm’s M&A practice and CFO before becoming COO in 2002.

We don’t care how great we are William Blair maintains that it doesn’t care about rankings, but the firm had to be happy about its showing in 2003. The bank rocketed up 31 spots to No. 20 on Thomson Financial’s U.S. announced M&A league table, with 27 deals valued at $9.2 billion. Helping William Blair’s stellar performance was a big advisory win on a deal outside the middle market, Concord EFS Inc.’s giant $6.9 billion merger with First Data Corp. More traditional William Blair deals included Precision Strip’s $246 million sale to Reliance Steel & Aluminum Co., the $110 million sale of Lehigh Press to Von Hoffman Corporation and PracticeWorks’ $493 million acquisition by Eastman Kodak Company. William Blair was also active in debt and equity securities issuances in 2003, and the firm managed the City of Chicago’s $200 million general obligation bond offering, State Street Bank and Trust’s $400 million subordinated notes offering and the $460 million bond issuance by the State of Illinois.

GETTING HIRED

Get with the program In addition to posting jobs on its website, the firm recruits for its formal programs at universities. The corporate finance analyst program is comprised of four weeks of training in Chicago, a year as a generalist (learning the basics of finance) and a year in a specific industry or product group. There’s ongoing training throughout, along with mentors at the associate level. Top analysts may be offered a third year with the company, though most leave for business school or to work at client companies. In 2003, Blair recruited for the analyst program at Notre Dame, University of Illinois, University of Pennsylvania, Northwestern and the University of Chicago. Applicants outside of these schools are asked to submit a cover letter and resume to [email protected]. For its corporate finance associate program, the firm went to Northwestern, Haravard and the University of Chicago to find new employees. This program puts MBAs on deals such as mergers and acquisitions and private equity. Like analysts, associates spend the first year as generalists then choose a specialty. The company says that 368

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associates can become VPs within two or three years, and can become principals two to three years after that. Most associates have MBAs and some sort of investment banking background, though neither is mandatory. For summer internships, the firm says it begins recruiting first-year MBA candidates in early January through mid February.

The select few Blair is selective, according to insiders. “Of approximately 2,000 resumes received, there are 150 first-round interviews granted, 35 second rounds and five to eight openings,” says one source. The interview process is “two rounds.” The “first round, if on campus, consists of one 30-minute interview. If the first round is in the office, then there are three first-round interviews with the analyst program manager, a firstor second-year analyst and an associate. Second round interviews consist of eight to ten 30-minute interviews plus a 90-minute lunch with two to four current analysts. Every interviewer asks questions of their own. Some are tough, some easy; some quantitative, some fit.” Another source reports having interviews “with six different people, and I came back another day to talk to another person.”

OUR SURVEY SAYS

Congenial and conservative “It’s a great firm all in all, especially for banking,” opines an insider. “There’s a genuine interest in making sure the analysts get into business school or private equity jobs after the program.” The contact adds, “But there’s not enough strategy and direction that is communicated to bankers or employees in general, so that is frustrating.” On the bright side, William Blair has an “entrepreneurial” feel with “very little bureaucracy.” Even so, others say the firm is “very conservative, almost too conservative” and “old-school, ultra-conservative.” One insider says, “It tends to be behind what the industry is doing and if it does that for too long, it is going to get left behind.” Employees say they could use some clarification regarding promotional policies. “Going forward, it is going to become increasingly important to communicate with bankers what the firm’s strategy is in terms of new business development, growth opportunities, and expectations for partners and those on the partner track,” notes one source. “Firm-wide formal mentoring and/or employee development should 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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implemented.” Another insider says the firm should “promote from within – there is no career path in any department. They like to think there is, but people usually have to leave to get anywhere.”

Pennies and bennies Salaries for analysts and associates at Blair are said to be “at least equal to the Street, generally higher.” And associates are said to be paid “around the median level for the Street.” Says a source, “It’s a Chicago-based firm that pays New York levels so, given that the cost of living is lower, it feels like more.” There’s “great matching” on the 401(k) for some employees, and “sizable year end profit sharing for all employees.” Also, the “company provides reimbursement for meals and cabs after 7 p.m. weeknights and all weekend, discounted gym memberships and cell phone reimbursement.” Blair’s benefits include life, dental, health, and short- and long-term disability insurance; a 401(k) with a cap contribution of 25 percent or $10,500 (employees eligible for firm matching have a cap of 21.5 percent of earnings over $25,000). There’s usually profit sharing, there’s three weeks of vacation (four weeks after 10 years), flex spending accounts, and discounts on trades and at some entertainment venues.

Space and time The firm gets applause all around for its offices. “Our offices are great, with windows to the hallway and, for associates and higher, outside offices with views of the city. Analysts share inside offices (two analysts per office) with windows to the hallway – analyst offices are not luxurious but better than cubes.” When strolling around the deluxe space, “casual is fine unless you’re meeting a client,” though most people tend to dress up.” Hours at Blair seem to be normal for the investment banking world. “It’s typically 70 to 90 [hours a week] for analysts and new associates, but the type of work analysts and young associates do, in general, is higher-end than most banks. Approximately 60 percent of a first-year’s time is spent on non-live deal work, including pitches, research, and grunt work, and the rest of the time is spent on live deals. Second- and third-year analysts spend approximately 60 to 70 percent of their time on live projects and the rest pitching,” reveals an insider.

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Training gets mixed reviews. Some insiders rave about it; some insiders say it doesn’t exist. One source calls the firm’s formal training “very thorough” even though it’s “shorter than at New York firms.” Another contact, though, says training is “absolutely non-existent,” explaining that he learned his job “by being thrown into it and asking a lot of questions.”


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Raymond James Financial

PRESTIGE RANKING

880 Carillon Parkway St. Petersburg, FL 33716 Phone: (727) 567-1000 www.rjf.com

DEPARTMENTS Asset Management Capital Markets Private Client Group RJ Bank

KEY COMPETITORS A.G. Edwards Jones Financial Merrill Lynch Morgan Keegan

UPPERS • Laid back culture

DOWNERS THE STATS Chairman and CEO: Thomas A. James Employer Type: Public company Ticker Symbol: RJF (NYSE) Revenue: $1.5 billion (FYE 9/03) Net Income: $86.3 million No. of Employees: 6,000 No. of Offices: 2,100+

• Lacks prestige outside southeastern U.S.

EMPLOYMENT CONTACT Phone: (727) 567-1490 [email protected] www.rjf.com/careers

THE BUZZ


• • • •

“Cool if you live in Florida” “Regional” “Struggle to get deals done” “Stellar”

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Vault Guide to the Top 50 Banking Employers Raymond James Financial

THE SCOOP

Sunshine state star In 1962 Robert A. James founded an eponymous investment firm in St. Petersburg, Fla. Two years later, his firm merged with Raymond and Associates to form Raymond James & Associates. Thomas A. James, son of the company’s founder, joined the firm in 1966; he is currently the company’s chairman and CEO. The firm continued to grow in the late sixties and in 1969 changed its name to Raymond James Financial. In the 1970s, Raymond James obtained seats on the New York Stock Exchange and American Stock Exchange (in 1973 and 1977, respectively) and went public in 1983. International expansion came in the late 1980s with the opening of offices in Paris (1987) and Geneva (1988). Now a full-service financial holding company, Raymond James Financial’s subsidiaries offer a wide range of services, including securities brokerage, investment banking, asset management and retail banking. Overall, Raymond James has more than 5,000 financial advisors in 2,100 locations globally, and its asset management operations oversee $20 billion in assets under management. The Florida firm’s research offerings are also highly respected, and Raymond James made Institutional Investor’s 2003 All-America and Latin American Research Teams. A Washington Post journalist also noted Raymond James’ research success, writing: “A recent academic study found that the analysts at Raymond James & Associates have the best stock-picking record of all major investment firms. Last year’s “best picks” list returned 35 percent – the eighth year in a row in which the selections have whipped the S&P 500.”

Raymond on the rise Raymond James finished its 2003 fiscal year (which ended in September) on a strong note, as an improved stock market and robust investment banking business paved the way for a 51 percent jump in fourth quarter profits from $22.0 million to $33.1 million. Overall, the company’s fiscal 2003 saw a 9 percent rise in net income, from $79.3 million to $86.3 million. The firm rode its fourth quarter momentum into 2004’s first quarter (ending December 2003), as net income shot up 68 percent to $24.2 million. “Dramatic increases in investment banking revenues and trading profits, which increased 76 percent and 83 percent, respectively, were generated by continued low interest rates and an active IPO market, in which we managed or comanaged 23 transactions,” said Raymond James CEO Thomas James. The firm also 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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benefited from increased assets under management (and associated investment advisory fees) and a relatively small rise in expenses. The last half of 2003 was so good for Raymond James’s investment banking business that 44 of the firm’s 60 public financing transactions in 2003 were completed during those six months. Highlights included co-managing Highland Hospitality Corporation’s $345 million IPO, Ameritrade Holding Corporation’s $543 million follow-on offering, and JetBlue Airways’s $127 million follow-on offering. Raymond James’ M&A bankers were also hard at work in 2003, advising on 33 transactions worth over $2.2 billion, including First Midwest Bank’s $103 million acquisition of CoVest Bancshares, WebMD’s $280 million purchase of MedifaxEDI and D&K Healthcare Resources’s $99 million acquisition of Walsh HealthCare Solutions.

Breakpoint breakdown In February 2004, Raymond James was one of 15 firms to settle with the SEC and/or the NASD concerning charges that the banks overcharged mutual fund clients by failing to provide breakpoint discounts (offered for large mutual fund purchases). Along with the other brokerage firms involved in the settlement, Raymond James agreed to pay a fine ($2.6 million) and provide refunds to its mutual fund clients. The bank disclosed that investors were overcharged by $6.9 million, but Raymond James expects more than half of that amount to be paid back by in-house financial advisors (leaving Raymond James with less than $3.5 million of commissions to refund). CEO Thomas James was upset with the overcharges and took responsibility for the transgressions. “Although we believe that our financial advisors acted in good faith, we should have done a better job,” said James, who added, “We are embarrassed by this incident. Our participation in the SEC/NASD settlement reflects that. Together with the rest of the industry, Raymond James is committed to improving business practices.”

Award-winning artistry Raymond James seems to be known as much for its arts patronage as for its financial services offerings. The firm has over 1,400 works of art in its offices (95 percent of which are owned by Thomas James and his wife), and Raymond James regularly sponsors various museums and art festivals in the southern U.S. In October 2003, the bank’s generosity was honored with a 2003 Business in the Arts Commitment Award presented by the Business Committee for the Arts and Forbes magazine. Raymond

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James also encourages artistry among its employees, holding a yearly Associate Art Show that showcases in-house produced artwork.

GETTING HIRED

You’ve got options Raymond James actively recruits at select undergraduate institutions and business schools. Although the firm hires talent from “across the U.S.,” it recruits “heavier in the East and Midwest.” A recruiting schedule is provided on the firm’s web site (www.raymondjames.com), which also allows candidates to search through open job listings and apply for those that interest them. Raymond James also has summer and internship programs in various departments. The equity capital markets division at Raymond James regularly hires candidates with undergraduate degrees and strong analytical skills for financial analyst, research associate and syndicate analyst positions. Other departments, including fixed income, asset management and research, also regularly have entry-level openings (check the site for current firm needs). In addition, Raymond James offers a unique rotational program (called the “OPTIONS Program”) at its headquarters in St. Petersburg, where select first-year employees work through four-month rotations in three different departments. Participants who find a good fit with a particular division may be hired for full-time work at the completion of the program. Those going through the OPTIONS program hiring process will be subject to a good bit of scrutiny before getting hired; in addition to sitting through multiple interviews, successful applicants need to provide a letter of reference as well as answer selected essay questions and pass some pre-employment tests. For MBAs, available positions typically include MBA-level spots in the investment banking, equity research, equity or fixed income sales and trading, asset management and international groups. Raymond James also hires MBA graduates to serve twoyear stints as assistants to Raymond James President and CEO Thomas A. James. The assistants get the opportunity to work with James on special projects, which may include analyzing potential acquisitions and divestitures or enhancing executive recruiting procedures. MBA candidates are vetted by “a fairly high-level individual, the No. 2 guy with the firm,” according to one insider. Prospective Raymond James-ers will meet with a peer, and several candidates will go on a dinner interview together. All potential 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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employees undergo a series of multiple-choice personality and intelligence tests. One broker says he went on “two meetings with a recruiter and had to fill out a long questionnaire and other paperwork.” He adds, “You must have a clean record.” A research associate who went through two rounds of interviewing reports that the first round was a three-on-one on-campus interview with “numerous macro-economic questions.” The source faced six senior interviewers in the second round and warns prospective researchers to “know the current market environment very well.” An investment banking analyst also faced two rounds of scrutiny and had to answer fit and technical questions. The contact says, “You also take a test that has math, logic and psychological questions.”

OUR SURVEY SAYS

Happy family Raymond James is “a little more laid back than your average bulge-bracket New York firm,” says a source in investment banking who is pleased with the exposure to management and deals. “The investment banking group is small and analysts have access to managing directors and senior management within equity capital markets,” explains the contact. And “because industry teams are smaller, you develop better relationships with superiors and are often given significant responsibility.” Another insider who says that Raymond James has a “strong history of family values” supports the claim by pointing to “associate phone directories listed by first name instead of last” and “company-wide events, including fiscal year-end parties, graduation ceremonies for [the firm’s] in-house education system and annual company festivals.” A financial advisor raves about the firm’s brokerage division: “Raymond James provides a unique opportunity for experienced financial advisors, delivering on the promise of competitive payouts, top-rated independent research and the freedom to build your business without management pressure to sell proprietary products.” An extremely pleased source says, “One of the testaments to how great it is to work at Raymond James is the number of associates who have had long-term careers with the company.” That source adds, “I’ve worked here for more than 11 years, and I’m only 34.”

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Propensity for intensity Though insiders generally feel that Raymond James is a relatively relaxed place to work, a research associate who regularly puts in 60 to 70 hours per week says the atmosphere can be “intense.” Investment banking hours are “long, but not as long as New York,” says an analyst. “Expect 70 on average, [but] face time is not important.” Compensation at Raymond James seems to be reasonable for the region. A research associate reports a salary of $48,000 with the expectation for a year-end bonus of $11,000 to $13,000 (the source also reports having received a $5,000 sign-on bonus). An experienced investment banking analyst in New York has a $60,000 base salary and says that third-year analysts can receive a bonus of up to $45,000. Benefits at Raymond James include health care insurance, a 401(k) plan, profit sharing, an employee stock ownership plan, a stock purchase plan and discounts on securities trades. Raymond James also offers significant educational benefits, including tuition reimbursement and firm-run training (“Raymond James University”), which includes industry- and product-related courses as well as leadership development classes. Raymond James implements various diversity initiatives including a “Cultural Awareness Week.” However, one employee in New York observes that the firm “continues to be very white and male.” The source believes, though, that “management does make an effort to hire the best and the brightest regardless of race, etc.”


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Nomura Holdings

PRESTIGE RANKING

1-9-1, Nihonbashi, Chuo-ku Tokyo 103-8011, Japan Phone: +81-3-5255-1000 www.nomura.com 2 World Financial Center Building B New York, NY 10281 Phone: (212) 667-9300

DEPARTMENTS

KEY COMPETITORS Credit Suisse Group Daiwa Deutsche Bank Nikko Citigroup

UPPERS • Strong and improving M&A practice

Asset Management Domestic Retail Global Wholesale

DOWNERS

THE STATS

EMPLOYMENT CONTACT

Chairman: Junichi Ujiie President and CEO: Nobuyuki Koga Employer Type: Public company Ticker Symbol: NMR (NYSE) Revenue: $7.1 billion (FYE 3/03) Net Income: $1.0 billion No. of Employees: 14,385 No. of Offices: 155+

• Japanese economy still struggling

Jennifer Antonacci Phone: (212) 667-9722 Fax: (732) 465 1986 [email protected] www.nomura.com/ibd-us/careers

THE BUZZ


• “Will roar if Japan does soon” • “Solid in Japan, not much in the U.S.” • “Trying to make mark in U.S.”

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Vault Guide to the Top 50 Banking Employers Nomura Holdings

THE SCOOP

Hold everything Nomura Holdings was established as Nomura Securities on Christmas Day, 1925. A spin-off from Osaka Nomura Bank, the firm opened a New York office in 1927; its head office moved from Osaka to Tokyo in 1946. Nomura began managing investments in 1951 and continued growing throughout the late 20th century, opening up consulting practices and branching out internationally. The bank was rocked by scandal twice in the 1990s. In 1991 it was revealed that Nomura was reimbursing customers for investment losses; in 1997 senior executives were caught approving payoffs to corporate extortionists. Now the largest brokerage in Japan, Nomura offers a full range of securities and investment banking services in more than 20 countries and regions, including Japan, the U.S., the U.K., Singapore and Hong Kong. The firm’s businesses are organized into three main divisions: the domestic retail arm, which provides investment consultation services to retail customers; the global wholesale division, which offers investment banking services; and asset management, which manages investment trusts and provides investment advisory services. Nomura’s Japanese investment banking practice is very strong, and the bank held the No. 1 spot on The Nikkei Financial Daily survey for the 17th consecutive year in 2003, achieving the highest honors in eight out of the 10 criteria including “product development ability based on cutting-edge technologies” and “appropriate guidance of client firms in management.” Nomura also topped the 2003 Japanese securities issuance league tables, ranking first on lead-managed deals for equities, convertible bonds and other securities on its way to nabbing a 32.7 percent share of the country’s transactions. Along with its underwriting prowess, Nomura boasts a global M&A business, ranking No. 21 on Thomson Financial’s worldwide announced M&A league table with 125 deals worth $18.4 billion. Nomura isn’t satisfied with its top 25 status, however, and the bank augmented its advisory offerings in 2003, purchasing China International Trust & Investment Corp.’s advisory business. Boosted by this acquisition, Nomura plans to grow its Asian M&A practice by as much as 50 percent in 2004.


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A star spangled restructuring With the goal of improving governance and management accountability, traditionminded Nomura surprised the financial services industry when it announced in 2003 that it would become the first Japanese securities firm to take on a U.S.-style management structure. As part of the February 2003 restructuring, the bank reassigned president Junichi Ujiie to the chairman post and promoted vice president Nobuyuki Koga to president and CEO. The organizational shift also separated officers from directors and created three independent committees (a nomination committee, a compensation committee and an audit committee), each with a majority of outside directors. Many Nomura observers saw the moves as part of Nomura’s plan to become more globally competitive as it moves beyond its scandal-ridden past. Perhaps influenced by the Americanization of his company, new CEO Koga, soon after his promotion, announced that Nomura would possibly pursue U.S.-based acquisition opportunities. Noting the sagging equity prices of his company’s U.S. competitors, Koga told the Financial Times that “based on the prices alone, an acquisition is one of the options for me right now.” Koga did not name specific companies Nomura was targeting, however. Since Koga’s declaration, the U.S. stock market has rebounded significantly, and it is unclear if a U.S. acquisition might still be part of Nomura’s plans. One thing that is clear is Nomura’s dedication to expanding its corporate customer base. In late 2003, Nomura announced it was expanding its research coverage and hiring more marketing representatives to try to gain more corporate traders in 2004. The move is part of Nomura’s plan to increase its share of the securities exchange market from 4 to 5 percent, and to double its proportion of corporate customers from 10 to 20 percent.

Man oh man Responding to a report by the International Labor Organization, GES Investment Services, a leading corporate responsibility company, accused Nomura of gender discrimination in 2003 and put the Japanese bank on its list of 25 firms with which GES clients should avoid investing. The suggested boycott not only has the potential to hurt Nomura’s reputation but may also negatively impact Nomura’s financial prospects since GES’s clients manage more than €60 billion in assets. The GES announcement came on the heels of an adverse Japanese legal judgment in which Nomura was convicted of discriminating against 12 female employees and ordered to pay them €500,000. Nomura is planning to appeal the ruling.

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GETTING HIRED At www.nomuraholdings.com/company/careers/index.html, Nomura maintains a sparse career section. There, candidates can access three separate sites, covering opportunities in Japan, Europe and the Americas. The sites include contact information, as well as details on Nomura’s culture and training programs, among other aspects of the firm.

OUR SURVEY SAYS Insiders at Nomura report on a culture where “different business groups have enormously different experiences here. In particular there is no movement and no communication between equities and fixed income.” The hours can be tough. “The ability to work from home is universal in the IT groups,” says one source. “Thus you are expected to provide 24/7 coverage.”




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WR Hambrecht + Co.

PRESTIGE RANKING

539 Bryant Street Suite 100 San Francisco, CA 94107 Phone: (415) 551-8600 www.wrhambrecht.com

KEY COMPETITORS Goldman Sachs Piper Jaffray

UPPERS DEPARTMENTS Advisory Brokerage Capital Markets Equity Research Investment Banking Private Equity Sales & Trading

THE STATS Chairman and CEO: William R. Hambrecht Employer Type: Private company No. of Employees: 150+ No. of Offices: 5

• “Far more relaxed [culture] than at major banks” • “A lot of responsibility” and “direct interaction” with senior management

DOWNERS • Compensation could be better • Top-heavy with management

EMPLOYMENT CONTACT www.wrhambrecht.com/ind/about/employ

THE BUZZ


• • • •

“Innovative auction system” “Small underwriter” “Where’s the deal flow” “Niche player”

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Vault Guide to the Top 50 Banking Employers WR Hambrecht + Co.

THE SCOOP

Transparently fair Headquartered in San Francisco with additional offices in New York, Boston, Chicago and Philadelphia, WR Hambrecht + Co. provides underwriting, advisory, equity research, sales and trading, brokerage, investment banking and private equity services principally for emerging growth companies. WR Hambrecht + Co.’s goal is to improve transparency and fairness in the securities markets; to this end, the bank approaches stock and bond offerings in a unique way, conducting them through proprietary online auction systems, which include OpenIPO (for initial public offerings), OpenFollowOn (for follow-on stock issuances), OpenPreferred (for preferred stock issuances) and OpenBook (for debt offerings). Designed by Nobel Prize-winning economist William Vickrey, the Internet-based offerings resemble Dutch auctions and use mathematical models to treat qualifying bids in an impartial way. WR Hambrecht + Co. is not totally Internet dependent, however, as the firm also participates in traditional equity and debt issuances.

Remembering that the tortoise won WR Hambrecht + Co. Chairman and CEO William Hambrecht founded his eponymous firm in 1998 not long after leaving his former company, Hambrecht & Quist (which is now a part of JPMorgan Chase). Hambrecht’s goal was to revolutionize the way in which stocks and bonds were offered to the market, and he saw the Internet as a way to level the playing field for all types of investors. The bank’s approach has intrigued many investors, and WR Hambrecht has received financial backing from many high-profile companies, including American Century, American Express, Fidelity Ventures and Scudder Kemper. Heading into 2004, however, WR Hambrecht + Co.’s systems hadn’t gotten a lot of use, as many issuers continued to use traditional bankers and methods to get their securities into the hands of buyers. Explanations for WR Hambrecht + Co.’s struggles vary, but the general consensus is that while William Hambrecht himself is a top-notch banker, he has not had enough well-connected bankers surrounding him to bring in more business. The CEO seems to be listening to his critics. In January 2004, the bank announced that it had poached from rival SoundView Technology Group 15 senior investment bankers, including the former head of investment banking and the former head of


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West Coast investment banking. The move greatly strengthens WR Hambrecht + Co.’s technology investment banking capabilities in its San Francisco and New York offices.

New fee schemes Hiring isn’t the only way in which Hambrecht wants to grow. In a radical move designed to steal business away from its more expensive competitors, the San Francisco firm made another announcement in January 2004 that it would be reducing its fees on bringing initial public offerings to market. WR Hambrecht + Co. will charge 4 percent on IPOs in which the bank is lead manager and 5 percent on comanaged deals, while the rest of the industry continues to demand 6 to 7 percent commissions on first-time offerings. The firm hopes the move will improve its rank on the U.S. IPO league tables after finishing No. 46 in 2002 and No. 20 in 2003. As expected, WR Hambrecht + Co.’s new fee structure wasn’t well-received by the bank’s competitors, and some went so far as to doubt whether the tactic would even work in generating more business. One unnamed banker told Investment Dealer’s Digest, “I don’t believe that lowering the fees is a driver. What issuers of IPOs want to know is that their offering and their company are going to be viewed with very high regard. Whether they pay 7 percent, 5 percent or 4 percent, that is not their worry. It’s the impression that the offering and the company have on Wall Street. So they’re going to be looking for the best underwriting talent, not for a lower fee.” Still, after experiencing a very slow IPO market in 2003, WR Hambrecht + Co. appears well-positioned for what is expected to be a very active 2004. The firm has already secured a spot as a co-manager on what many believe will be the year’s hottest deal, Google’s IPO, which is expected to raise approximately $3.3 billion. In addition, the bank has participated in a slew of other offerings, including the IPOs for Semiconductor Manufacturing International Corporation and Sunset Financial Resources, a start-up REIT. And given William Hambrecht + Co.’s technology contacts and the new hires from SoundView, many believe the mandates will keep coming the its way.

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GETTING HIRED

Not just the typical schools A senior VP notes that the firm “has grown more selective in the last two years,” but adds that WR Hambrecht + Co. “does not rule out applicants based on college like some firms do.” Moreover, one first-year analyst says, “We do not recruit on many campuses,” explaining that any campus recruiting is centered on the alma maters of the firm’s current employees. Even so, one source cites “most Ivies as well as Stanford and UC Berkeley” as typical schools at which the firm recruits. The contact does admit that WR Hambrecht + Co. “does not exclude any applicant based on school, so we also receive many incoming resumes from other schools.” Other insiders say the firm goes to Penn, Harvard, Dartmouth, MIT, Georgetown and NYU, among others, to find employees. With respect to what the firm is looking for in a candidate, another junior banker explains that “culture is the biggest obstacle for a candidate. You need to fit in and work well with the people.”

Asking and answering Candidates can expect two to three rounds of interviews. One source indicates that junior bankers handle the first round of on-campus interviews (“it’s usually a phone screen for laterals for the first round”), which are followed by meetings with five to 10 senior bankers for the “intense” second and final round. Still, one analyst in the corporate finance department characterizes the hiring process as “very decentralized,” with “each office typically [handling] it’s own hiring.” The contact adds, “If a managing director in New York needs more junior support, he will often handle the search himself with the help of his junior bankers.” Another veteran employee in the firm notes that, not surprisingly, having “contacts in the company helps to a great extent” to land a job.

OUR SURVEY SAYS

Think West Coast tech According to an insider who’s been with the firm for seven years, the firm’s culture is “very entrepreneurial and easy-going, as we’re focused on technology and based in San Francisco.” He adds that while “a lot is expected,” face time isn’t 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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requirement for success. Additionally, he says that “people are given lots of responsibility quickly and more if they do well with it.” The view from the rank-andfile is a little less optimistic. “The culture is far more relaxed than at major banks,” notes a second-year analyst, “but that is changing as the firm grows.” The source adds, “The firm is currently understaffed, especially at the junior level, which can make hours miserable at times.” Another insider notes that the firm’s West Coast technology foundation allows for “a less formal setting than bulge brackets given that everyone is more laid back and easy going.” He adds that analysts get “great exposure,” and they “participate in a lot of client meetings, get a lot of responsibility and have direct interaction with senior management.” The consensus was that the “hours and lifestyle” are “pretty desirable for an investment banking position,” although one analyst notes that while she normally works until 7:00 p.m., “on bad weeks, I consistently stay until 2:00 a.m.”

Cool on comp and training, but pretty perky Compensation is a sensitive topic among workers. One investment banker states, “Currently, the compensation at the firm is very low compared to our competitors, but that should change shortly – possibly in the coming months. While 2004 bonuses will likely be well below the Street [average], I think the firm is on track to pay competitively in 2005.” Training doesn’t receive much better marks than pay these days. “We really need some work in this space,” says a first-year analyst out of New York. “Right now there’s no time and no resources to train new employees. It’s a listen-in and figureit-out-as-you- go situation here.” An associate in San Francisco explains that the firm has “a two-week training program for analysts, and a one-week training program for summer interns. After that, most of the training is on the job, since you’ll have to learn the style and resources of particular industry verticals or product groups.” One contact says the training is improving. The training program has been greatly enhanced,” explains a senior VP, “but was relatively low key until lately.” The firm offers the same perks as the largest investment banks on the Street, such as meal allowances and free transportation for working late, a 401(k) plan, and discounts on movie tickets and other entertainment events. In addition, the firm “has season tickets to the 49ers and the [San Francisco] Giants, which are shared regularly with members of the investment banking team.” One employee says that he “got tickets to one post-season Giants game, and three games in the regular season.” He adds, “And these are third row seats right next to the third-base line.” 386

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Mixed on managers Employees have varying opinions about management. “I have no problem talking to my superiors,” says one first-year analyst. “They are very open to our suggestions.” Another analyst has even stronger things to say: “I’m treated really well. If I have a lot of work, managers help me out so I won’t end up staying too late.” Even when he stays late he gets help. “I’ve pulled all-nighters with MDs in the firm.” He adds that his direct superior is “great, really honest, personable, direct and understanding.” But not everyone feels this way. “The management style is ‘shoot from the hip,’” explains one VP. Another contact thinks “managers get their work done by intimidation and not motivation.” Despite the varying opinions, insiders seem to agree that “there’s a strong culture of mutual respect here,” and several stress that the small size of the firm is an incredible advantage. One young banker says, “I’m the only first-year analyst working in my sector and that makes me a serious asset to my team. I love the fact that I have ownership of my sector and that my ideas are integral to the projects we work on.” Although many insiders give the firm’s offices low marks, saying they’re “far from luxurious” and consist of “not even decent” cubicles. Rumor has it that the San Francisco office may be moving into the financial district by the end of 2004, but the firm will still keep its cubicle style office layout. One associate gives a possible reason behind the lack of privacy. He explains, “In San Francisco, everyone from Bill Hambrecht to the summer intern sits in a cubicle, which I believe allows for better communications and eliminates those dubious closed-door conversations.”


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PRESTIGE RANKING

Friedman, Billings, Ramsey Group

1001 Nineteenth Street North Arlington, VA 22209 Phone: (703) 312-9500 www.fbr.com

DEPARTMENTS Asset Management Institutional Brokerage Investment Banking Merchant Banking Mortgage-Backed Securities Research

THE STATS Co-Chairman and Co-CEO: Eric F. Billings Co-Chairman and Co-CEO: Emanuel J. Friedman Employer Type: Public company Ticker Symbol: FBR (NYSE) Revenue: $628.5 million (FYE 12/03) Net Income: $201.4 million No. of Employees: 600 No. of Offices: 15

KEY COMPETITORS Credit Suisse First Boston Goldman Sachs SG Cowen Thomas Weisel Partners

UPPERS • Joining an I-bank on the rise

DOWNERS • Joining an I-bank in D.C., not NYC

EMPLOYMENT CONTACT www.fbrcorp.com/company/careers

THE BUZZ


• • • •

388

“Coming on strong as of late” “Great regional bank” “Not great” “Pure co-manager”

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Vault Guide to the Top 50 Banking Employers Friedman, Billings, Ramsey Group

THE SCOOP

Aiming for top billing Friedman, Billings, Ramsey Group (FBR) was founded in 1989 to deliver research on a select group of industries. The firm has since expanded its capabilities, and today, the bank provides investment banking, institutional brokerage, asset management, private client services, merchant banking and mortgage-backed securities investing. It operates through offices in Arlington, Atlanta, Bethesda, Boston, Chicago, Cleveland, Denver, Houston, Irvine, New York, Portland, San Francisco, Seattle, London and Vienna. FBR concentrates on delivering services to and investing in middle market companies in six industries, including financial services, technology, real estate, energy, health care and diversified industrials. The firm’s investment banking practice offers securities underwriting as well as M&A and restructuring advisory. FBR complements its offerings with an equity research team that covers more than 370 companies.

Brokers and assets FBR’s institutional brokerage executes securities transactions for institutional investors (mutual funds, pension funds, etc.) around the world. For individual investors, FBR offers an online brokerage (FBR Investment Services or FBRIS). In addition to investing in traditional brokerage products, FBRIS clients can take advantage of FBR’s Offering Marketplace, an online distribution system that allows individual investors to invest in offerings, including IPOs and secondary issuances. Together, FBR’s asset management businesses oversee more than $2.5 billion in assets, including the FBR family of equity and fixed income mutual funds. The firm’s private client group caters to high-net-worth clients who seek assistance with investing, retirement services and estate planning. Also included in the asset management arm are FBR’s alternative investments, including hedge funds, venture capital investments and private equity. FBR offers corporate trust and custody services through the FBR National Trust Company. FBR is a major investor in mortgage-backed securities. As of December 2003, FBR’s portfolio of mortgage-backed securities was worth approximately $10.6 billion. FBR also has a merchant banking practice that makes equity, mezzanine and senior debt


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investments in companies with stable business models. As of December 2003, FBR had $269.5 million in merchant banking investments.

Getting itself together In March 2003, FBR completed a $756 million merger with FBR Asset Investment Corporation, a real estate investment trust that invests in mortgage-backed securities and securities of real estate-related companies. FBR had established FBR Asset Investment in 1997 and owned more than 10 percent of the company before the transaction was consummated. The deal allowed FBR to classify itself as a REIT (thereby qualifying FBR for favorable tax treatment) and made FBR one of the biggest public investment banks in the country.

Hitting a growth spurt FBR saw record earnings of more than $200 million in 2003 thanks to the firm’s merger with FBR Asset Investment and strong showings from its investment banking, merchant banking and mortgage-backed securities businesses. Investment banking was the star performer, raking in $278.6 million in revenues, up from $143.9 million in 2002. FBR was especially strong in the equity markets. According to Dealogic/CommScan EquiDesk, FBR came in 10th overall on equity deals in 2003. The boutique bank had an even better showing on Thomson Financial’s IPO league tables. Despite its small size, FBR came in ahead of bigger competitors such as Morgan Stanley and Merrill Lynch, ranking No. 3 overall with eight deals worth $1.6 billion (after bringing only one deal to the market and ranking No. 30 in 2002). FBR was particularly dominant in the market for real estate initial offerings, bookrunning five of the industry’s eight deals. Among FBR’s 2003 IPO highlights were American Financial Realty’s $804 million issuance, Highland Hospitality’s $345 million deal and the $203 million initial offering of Integrated Alarm Services. FBR was also active in the private placement market, raising $2.5 billion in privately placed equity deals. FBR’s prospects for continued success look bright. Heading into 2004, FBR revealed that it had more than $5 billion in underwriting and advisory business in its pipeline. To help with the anticipated deal inflow, FBR is looking to hire more bankers. FBR plans to add 60 bankers in 2004, bringing its total number to 150.

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GETTING HIRED

In part or full? Full-time job openings are posted on the “careers” section of the FBR web site, as are the firm’s benefit offerings and details of its internship program (in asset management, equity research, investment banking, institutional sales, accounting/finance, corporate communications, human resources, IT and legal/compliance). Candidates interested in permanent positions or a specific internship program can e-mail a cover letter and resume to [email protected]. FBR says it may conduct background checks on education, employment, NASD qualifications and employment references. An NASD Series 7 or other financial certification may be necessary for certain jobs. FBR’s benefits include a health/dental plan; life, disability and travel accident (business only) insurance; a 401(k); a stock purchase plan with a 15 percent discount; flex spending and transportation accounts; an employee assistance program; an employee referral bonus; tuition reimbursement; a gym at headquarters; and free lunch daily.


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Peter J. Solomon Company

PRESTIGE RANKING

520 Madison Avenue New York, NY 10022 Phone: (212) 508-1600 www.pjsc.com

DEPARTMENTS Financial/Strategic Advisory Mergers and Acquisitions Private Financing Restructurings Special Committee

THE STATS Chairman: Peter J. Solomon President: Kenneth Berliner Employer Type: Private company No. of Employees: 45 No. of Offices: 1

KEY COMPETITORS Greenhill & Co. Lazard

UPPERS • Great deal and client exposure for junior bankers

DOWNERS • Face time required

EMPLOYMENT CONTACT Diane M. Coffey Managing Director PJSC 520 Madison Avenue New York, NY 10022 E-mail: [email protected] www.pjsc.com/career/index.html

THE BUZZ


• “Great boutique” • “Still around?” • “Good at what they do”

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Vault Guide to the Top 50 Banking Employers Peter J. Solomon Company

THE SCOOP

The anti-Wall Street, Wall Street firm Peter J. Solomon (the man) started his career in the corporate finance department at Lehman Brothers in 1963. He became a partner in 1971 and was appointed to Lehman’s board of directors in 1975. Solomon left banking in 1978 when he was named New York’s Deputy Mayor of Economic Policy and Development under Ed Koch. Two years after that, he was appointed Counselor to the U.S. Treasury by President Jimmy Carter. In 1981, Solomon returned to investment banking and Lehman Brothers as a senior managing director. After the firm’s purchase by American Express, he became co-chairman of its investment banking department and vice chairman of the firm. In addition to leading his self-named firm since 1989, Solomon also serves on the boards of several companies, including Phillips-Van Heusen and Zagat Survey. Labeled the “anti-Wall Street, Wall Street firm” by The Wall Street Journal, Peter J. Solomon Company (PJSC) does not engage in lending capital to its clients, focusing simply on delivering advice. The boutique bank offers M&A, restructuring and financing advisory, and separates itself from its competition by promising independence (the firm does not underwrite securities, publish research or invest capital) and ample senior level attention. Overall, PJSC has 45 employees, 30 of whom are investment bankers.

Big deals In the 15 years since its inception, PJSC has been engaged as an M&A advisor on more than 200 transactions worth more than $50 billion, and the firm has given more than 40 fairness opinions. Recent announced PJSC deals include Dick’s Sporting Goods’ $362 million acquisition of Galyan’s Trading Co. and Del Laboratories’ $465 million sale to DLI Holding Group. PJSC’s recent completed transactions include the $1.9 billion sale of Lands’ End to Sears Roebuck and Chico’s FAS Inc.’s $90 million purchase of The White House, Inc. Heading into 2004, the PJSC restructuring group is advising clients such as The Penn Traffic Company, the creditors of Spiegel, Inc. and the stockholders of Mirant Corporation. PJSC is also representing the pilots of Continental Airlines and Northwest Airlines in their respective contract disputes.


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Since 2001, PJSC has had an ongoing partnership with Calyon, the investment banking arm of the newly joined Credit Agricole/Credit Lyonnais, whereby Calyon has represented PJSC in France and Belgium, and PJSC has served as Calyon’s representative in the U.S. As part of the five-year agreement, Credit Lyonnais made a minority investment in PJSC. In 2003, PJSC benefited from its relationship with Credit Lyonnais, advising Office Depot on its €815 million acquisition of Guilbert S.A. from Pinault-Printemps-Redoute.

Kenneth T. Berliner Company? In February 2002, Kenneth T. Berliner, the head of the firm’s M&A group and a firm employee since 1992, became the first ever president of PJSC. “I think every firm should have [a president],” chairman Peter Solomon told The Wall Street Journal. “Even mine.” As part of the promotion, Berliner assumed more management and strategic responsibilities while continuing to run PJSC’s M&A practice. According to the Journal, the 40-something Berliner is Solomon’s likely successor, although at the time of the appointment, the then 63-year-old Solomon had “zero plans to leave.” Berliner, a reputedly aggressive negotiator, came to PJSC after working in the M&A group at Salomon Brothers.

GETTING HIRED

Tight fit Because the firm is “very small,” it’s “very selective” when it comes to hiring. According to one insider, PJSC recruits at Ivy League and other top-20 schools. “Michigan, Harvard and Penn are the top three” the firm recruits from, says one analyst. If you’re lucky enough to land an interview, insiders say to expect two rounds. One will take place on campus and the second will be a Super Saturday round in which candidates will go through about five interviews. “Specifically,” explains one contact, “the firm tends to like people with pedigree – prep schools, college, internships. And some kind of prior finance internship is almost required.” According to another employee, if you have a finance or accounting background, expect “very technical” questions. And everyone, irrespective of background or major, will receive “a lot of personality questions.” Explains one contact, “Looking to see if you can work with the team” is especially

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important in a firm as small as PJ Solomon. For a description of the analyst and associate positions at PJSC, log on to PJ Solomon’s “careers” section of its web site.

OUR SURVEY SAYS

Steppin’ up The firm’s culture is described as “relaxed” but “hard working,” and “team-oriented” with “small deal teams,” which means junior people “need to step up.” One insider likens the firm’s culture to a “family,” in which “everyone knows everything about each other.” Another source, though, calls PJSC more “fraternity house” than family. This contact says, “Analysts will work long hours and are unhappy, but there’s a strong camaraderie between the analysts based upon their unhappiness.” Speaking of analysts, most agree that the deal exposure they receive at PJSC is one of, if not the best part of working at PJSC. “The client exposure is excellent,” says one analyst. Another says, “You get to see all facets of a particular deal.” And yet another explains, “I’ve been put on interesting deals I feel I wouldn’t have if I went to a larger bank.” The source adds, “Unlike other banks, we are staying busy. And there’s never a threat that the firm will fire people due to the economic situation.”

Dressin’ up The firm is “suit and tie, Monday through Friday.” One banker says PJSC “tried casual Fridays during the summer three years ago, but since then it’s been formal always.” Possibly making up for the business attire policy is the firm’s “beautiful offices.” But insiders say the firm’s training isn’t so hot. Explains one PJSC analyst, “We had accounting classes in the morning for two weeks with a professor, but the rest of the training program was taught by analysts and associates. Excel training, for example, was a 20-minute session with a second-year analyst.” The contact goes on to say that “you’re thrown into the fire rather quickly, and people without prior experience will have a particularly difficult time at first.”

Showing your face around the office “The hours can be tough,” warns an insider. Another banker says, “There’s a lot of face time, especially on weekends, as many of the MDs live in the city.” The contact continues, “People who are held in high regard are the ones who spend the most 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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hours in the office.” An analyst echoes that sentiment, saying there’s a lot of “pressure to put in face time.” He says the most dissatisfying thing about the long hours is the “inability to plan a weekend because bankers will give you assignments at the last minute on Friday. You can’t book a flight to go away on the weekends without permission.” However, there is a light at the end of the cubicle. Explains one employee, “First years here are known among their peers as working the most hours. Though, as you gain respect within the firm, and because it’s a small firm where you can get chummy with your MD, the hours do get better.” That said, “Most senior bankers will treat you fairly,” says one junior banker, “but sometimes there is a feeling of under appreciation among the analysts.” Another agrees: “Once you gain respect, it can be a very cordial relationship – depending on the MD.”



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“You’re thrown into the fire rather quickly, and people without prior experience will have a particularly difficult time at first.” — Peter J. Solomon insider


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Calyon Securities (USA) Inc.

PRESTIGE RANKING

1301 Avenue of the Americas New York, NY 10019 Phone: (212) 261-7000 Fax: (212) 459-3170 www.calyonamericas.com

DEPARTMENTS Corporate Banking Services Commodities Services Derivative Products Debt Markets Equity Products Foreign Exchange Services Investment Banking

THE STATS CEO: Jean-Marc Moriani President and CEO: Francois Pages Employer Type: Subsidiary of Crédit Agricole No. of Employees: 1,300 No. of Offices: 5

KEY COMPETITORS Bear Stearns CIBC World Markets UBS Investment Bank

UPPERS • Global franchise • Interdepartmental transfer opportunities

DOWNERS • Culture going through merger evolution • Reputation not as strong outside of Europe

EMPLOYMENT CONTACT Visit the “careers” section of the firm’s web site, www.calyonamericas.com.

THE BUZZ


• • • •

“Strong in France” “Messy merger” “Archaic and much too rigid” “Will get stronger once merger issues are worked out”

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Vault Guide to the Top 50 Banking Employers Caylon Securities (USA) Inc.

THE SCOOP

Changing names Formerly known as Crédit Lyonnais Securities, Calyon Securities (USA) is the U.S.based outpost of Calyon, the corporate and investment banking subsidiary of French megabank Crédit Agricole. In May 2004, the name Calyon was born when Crédit Agricole Indosuez was consolidated with the corporate and investment banking division of Crédit Lyonnais (which was acquired by Crédit Agricole the previous year). Calyon Securities offers brokerage and investment banking services through regional offices in New York, Los Angeles, Chicago, Dallas and Houston, which are operating as part of Crédit Agricole’s strategy to make further inroads into the lucrative U.S. markets. Like many investment firms, Calyon Securities equity research department targets a variety of industries, including health care, hotels, energy, media, telecommunications and real estate. The firm currently has 12 analysts in its U.S. equity research team in New York, and has more than 100 companies under coverage. The firm is also quite formidable in the middle market M&A arena, targeting crossborder transactions (Europe to U.S.) with enterprise values of between $50 and $500 million. The parent, Crédit Agricole, is France’s largest bank. It offers lending and deposit services at more than 7,200 locations in France, and is also active in wholesale banking and capital markets in more than 60 countries, primarily through subsidiary Crédit Agricole Indosuez. In addition, Crédit Agricole also offers property/casualty and life insurance, and asset management service.

French kiss In December 2002, Crédit Agricole launched a $21.1 billion takeover bid for Crédit Lyonnais, fighting off a rival bid from BNP Paribas. The deal was approved in 2003, but all has not gone smoothly – especially on the U.S. front – for either Crédit Lyonnais or Crédit Agricole. Under pressure from the U.S. government, Crédit Lyonnais, now owned by Crédit Agricole, admitted in 2003 to illegally acquiring Executive Life, the Californian insurance company, in the early 1990s. Crédit Lyonnais agreed to pay a $771.75 million fine to avoid criminal prosecution, according to a February 2004 article published in White Collar Crime Reporter. 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 bad news didn’t end there. According to a March 2004 Wall Street Journal report, the U.S. Federal Reserve ordered Crédit Agricole to pay $13 million in fines to settle a case involving its U.S. operations, noting that the Paris-based bank and its affiliates allegedly didn’t comply with the full requirements of a 2000 enforcement agreement, and that the banks allegedly didn’t keep accurate books and records and submit them to U.S. state and federal regulators as required. This fine fell on the heels of poor fourth-quarter performance; net income dropped 94 percent, according to the Journal story, largely due to integration-related costs. Additionally, Les Echos reported in April 2004 that Crédit Agricole expects 1,550 employees to leave by 2006 through voluntary redundancies, retirement, early retirement and wastage, which is due to the Crédit Lyonnais merger.

A long history Crédit Lyonnais dates back to the early 1839, when Henri Germain founded a bank in Lyons, France, with several prominent local businessmen. The firm grew over the next 25 years and, in 1865, added branches in Paris and Marseilles. The company survived the Franco-Prussian War of 1870-1871, but after the siege of Paris by the Prussians in the winter of 1870, Germain felt Crédit Lyonnais could benefit from more geographical diversity; a London office was promptly set up. At the same time, Crédit Lyonnais began expanding into different industries, operating as a merchant bank that invested in promising businesses. The firm also entered the underwriting field, placing post-war “liberation bonds” in 1871, and took over two insurance companies in 1879. By the end of the 1880s, Crédit Lyonnais was the leading bank in France and had branches in London, Constantinople (now Istanbul, Turkey), Alexandria, Geneva, Madrid and St. Petersburg, Russia. A new Paris headquarters opened in 1883, shortly after the firm led the French banking industry through a liquidity crisis. By the time World War I started, Credit Lyonnais was the largest bank in the world and had nearly 400 branches, including those in an additional 13 cities outside of France. Like most of Europe, Credit Lyonnais was devastated by the war; branches were closed and nearly 1,600 of the company’s employees died in the war. The firm was touched by the tide of history again in the late 1910s; revolutions in Russia and Turkey closed branches and put foreign debt in doubt. Crédit Lyonnais actually fared better in World War II than in the previous continent-wide conflict; fewer branches were destroyed in the fighting, and the company focused on safer investments during the uncertain time. Post-war Credit Lyonnais provided financial help to the rebuilding

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efforts. The company benefited from a deregulation mania in the 1980s and expanded its capital markets presence.

GETTING HIRED

Foreign exchange Prospective employees can visit the “career opportunities” section of the firm’s web site (www.calyonamericas.com), but they shouldn’t feel too much pressure about picking the perfect job right off the bat. Calyon has an internal transfer policy whereby employees become eligible to move between departments after working at the firm for at least 18 months. For those seeking an American base but some global exposure, Calyon employees may be able to take advantage of international assignments (when available), which are normally located in Calyon’s Paris headquarters. As for summer stints, Calyon isn’t afraid of a little nepotism. According to the firm, summer employment opportunities are available for college students who happen to be children of Calyon employees. Calyon bankers receive a relatively standard compensation and benefits package (e.g., 401(k), pension plan, health insurance, as well as tuition reimbursement and an employee loan program for qualifying personnel). In the past, employees have also had the opportunity to purchase company stock at a discounted price. In New York, staffers can join the Lyons Club, an employee club that entitles members to receive corporate discounts (e.g., gyms and cultural events) and participate in various activities such as ski trips and volunteering for non-profit organizations.


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Keefe, Bruyette & Woods

PRESTIGE RANKING

The Equitable Building 787 Seventh Avenue, 4th Floor New York, NY 10019 Phone: (212) 887-7777 www.kbw.com

DEPARTMENTS Asset Management Equity Sales & Trading Fixed Income Investment Banking Loan Portfolio Sales Research

THE STATS Chairman and CEO: John G. Duffy Employer Type: Private company No. of Employees: 300 No. of Offices: 9

KEY COMPETITORS Friedman, Billings, Ramsey Group KeyCorp Merrill Lynch Raymond James Financial

UPPERS • Culture: a family affair

DOWNERS • Narrow industry focus

EMPLOYMENT CONTACT The Equitable Building 787 Seventh Avenue, 4th Floor New York, NY 10019 Phone: (212) 887-7777

THE BUZZ


• “Very good in FIG [financial institutions group]” • “Law firm?” • “Financial industry experts” • “Client focused”

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Vault Guide to the Top 50 Banking Employers Keefe, Bruyette & Woods

THE SCOOP

Financially focused Founded in 1962 and headquartered in New York City, Keefe, Bruyette & Woods (KBW) is the largest full-service investment bank that caters exclusively to the financial services sector. KBW’s offerings include corporate finance, mergers and acquisitions, sales and trading, and research services for banking companies, insurance companies, broker/dealers, mortgage banks, asset management companies and specialty finance firms. Employing approximately 75 professionals, KBW’s growing investment banking practice worked on a large number of securities issuances and M&A transactions in 2003. Some of the major KBW-led equity deals included a $1.2 billion follow-on offering from Hartford Financial Services Group, CapitalSource’s $340 million IPO and a $391 million common stock offering from Friedman, Billings, Ramsey Group. KBW was also active in the fixed income markets, and helped raise $6.9 billion through five debt deals for JPMorgan Chase alone. Recent M&A advisory highlights for KBW include BB&T Corporation’s $3.4 billion purchase of First Virginia Banks, the $1.5 billion purchase of Independence Community Bank Corp. by Staten Island Bancorp and North Fork Bancorporation’s $725.8 million acquisition of The Trust Company of New Jersey. Overall, KBW came in at No. 18 on Thomson Financial’s 2003 U.S. announced M&A league table with 51 deals worth $11.8 billion (up from No. 26 with $4.0 billion in deal value in 2002). The firm finished the year at No. 16 on the U.S. completed M&A list with 40 deals valued at $8.8 billion (up from No. 31 with $2.4 billion in deal value in 2002). The bank’s research department is also well-respected, covering more financial services companies (268) than any other brokerage. In December 2002, Institutional Investor named KBW “Best of the Boutiques” in many of its coverage groups, including Large-Cap Bank, Mid-Cap Bank, Mortgage Finance and Specialty Finance. KBW research analysts have also been praised in The Wall Street Journal, which has noted their skill in stock-picking and earnings projection accuracy. Time magazine has also found KBW’s research offerings impressive, calling KBW a top provider of independent research on bank stocks.


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Rebuilding after September sadness KBW was one of the firms decimated by the terror of September 11, 2001. The firm’s New York offices were on the 88th and 89th floors of 2 World Trade Center, and 67 employees, including Joseph Berry, the firm’s co-CEO, and Jeffrey Fox, the firm’s CFO, were killed in the attacks. “The leadership of the firm that was left had a decision to make,” said Robert Giambrone, the company’s current CFO. “That was to go away and be much smaller or ... go down a path toward growth.” KBW decided to grow. The firm relocated its offices and hired additional staff (including former employees) while the company’s executives worked to stabilize and improve the firm’s dealflow. KBW also expanded its fixed-income and equity research departments and eventually opened offices in Atlanta and London. In November 2003, just over two years after September 11th, KBW signed a 13-year lease that nearly doubled its office space in the Equitable Building in New York, a move which signaled that the bank’s incredible turnaround was complete. The firm’s rebuilding process was so remarkable that KBW CEO John Duffy felt compelled to write Triumph Over Tragedy, a book detailing KBW’s resurgence after the September 11th tragedy.

Employee owned for now KBW is currently 100 percent employee owned, but it is unclear whether the firm will revive its plans to go public. KBW had planned a 2000 IPO, but the bank canceled the deal after then-chairman and CEO James McDermott was charged by federal prosecutors for illegally passing on insider information. Apparently, the married McDermott had told his mistress, cyber porn star Kathryn Gannon, about potential bank mergers, information she used to her economic advantage. McDermott was forced to resign, and the firm’s expected $85 million IPO was scrapped notwithstanding that KBW itself was not accused of illegal activity.

GETTING HIRED

Industry focus limits numbers “While the firm makes significant efforts to locate and hire good undergrads and MBAs, our size and scope obviates many traditional recruiting programs,” says one insider who explains that “KBW is very small, and focused on the banking industry only.” The contact adds, “As a result, it’s not the kind of place where a regular stream 404

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of new analysts and business-school interns come through.” Experienced bankers interested in KBW should make friends at the firm and demonstrate interest and experienced in financial services investment banking. “Hiring tends to be from within the industry, based on prior relationships or on having amassed a major track record at another firm focusing on the financial industry.”

OUR SURVEY SAYS

Family matters KBW is “small and quite unified, a firm with a family feel,” notes one banker, adding, “Housed on one floor of a large building in New York, it’s easy to know and interact with just about everyone. There is very little formality and there are a lot of close friendships.” Just like at home, dress is still apparently casual except for client contact. “The guys at Keefe long ago came around to the epiphany that no one really wants to wear suits,” says another employee. “People keep the place neat, and no one really thinks about it.” The firm has little hierarchy thanks to “flat structures and management availability.” Compensation is at market, as are hours. “One of the hallmarks of this is that not only is there no real pressure to put in long hours, there’s no real consciousness of the issue,” says a source. “They give us a clear premise: we’ll talk at the end of the year and see if you made money.”

If size matters… Keefe isn’t for everyone, says one insider. “You have to be geared to a small firm and its reach and resources to work here. I guess the brand name isn’t as big as Goldman’s, so maybe there are times when you have to work harder to make an imprint on new clients.” The contact adds, “If you want to feel like a master of the universe, this isn’t the place for you; they just don’t care about the trite side of Wall Street.”


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PRESTIGE RANKING

Robert W. Baird & Co. (Baird)

777 East Wisconsin Avenue Milwaukee, WI 53202 Phone: (414) 765-3500; (800) RW BAIRD www.rwbaird.com

KEY COMPETITORS Piper Jaffray SG Cowen

UPPERS DEPARTMENTS

• The hours; work won’t be your life

Asset Management Capital Markets Private Client

DOWNERS

THE STATS Chairman: G. Frederick Kasten Jr. President and CEO: Paul E. Purcell Employer Type: Private company Revenue: $544 million (FYE 12/03) No. of Employees: 2,168 No. of Offices: 69

• Weaker presence outside of regional footprint

EMPLOYMENT CONTACT www.bairdcareers.com

THE BUZZ


• • • •

“Solid niche player” “Small, growing” “Second rate” “Good Midwestern firm”

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Vault Guide to the Top 50 Banking Employers Robert W. Baird & Co.

THE SCOOP

Big cheese Milwaukee-based Robert W. Baird & Co. (Baird) was originally founded as the securities arm of the First Wisconsin National Bank in 1919. Several years later, a recent graduate of Northwestern University joined the firm. The young dynamo, Robert Baird, eventually engineered a breakaway from the bank, and in 1948, Robert W. Baird’s eponymous firm became the first Wisconsin company admitted to the New York Stock Exchange. (Another Robert Baird claim to fame: After the stock market crash of 1929, he was a leading organizer of the National Association of Securities Dealers.) In 1982, thirteen years after Baird’s death, a majority stake in the firm was sold to Northwestern Mutual Life. Baird – the firm – made a move into Europe in October 1999 with the $55 million acquisition of Granville plc, a European investment bank headquartered in London, which now operates under the name Robert W. Baird Group Limited. In April 2004, Baird announced that it would be getting its independence back. The firm reached an agreement to purchase all of Northwestern Mutual’s interest in Baird. (Northwestern Mutual owned 57 percent of Baird at the time, with Baird holding the rest.) Under the agreement, Northwestern Mutual will retain the option to acquire up to a 7 percent equity interest in Baird in the future. In a press release announcing the deal, Baird CEO Paul E. Purcell said, “This agreement sets the stage for the next chapter in Baird’s more than 80-year history of success.” He added, “Associate ownership of the firm creates new opportunities for Baird to invest in the business as part of our ongoing quest to provide the best financial advice and service to our clients. It also provides additional equity ownership opportunities for current and future Baird associates, which will be an enormous boost to our efforts to provide a great workplace and to recruit and retain the best people.” The purchase was completed in May 2004. Today, the employee-owned, fully independent Baird is one of the nation’s largest securities firms outside of New York and has offices in 17 states in the U.S. along with presences in the U.K. and Germany. The firm’s Robert W. Baird & Co. unit offers investment banking, equity research, asset management, wealth management and private equity services to U.S. clients, while Robert W. Baird Group Limited offers equity research, investment banking and private equity services to European corporations.


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Dealing in the middle market Baird’s investment banking business concentrates on providing equity underwriting and M&A advisory services to middle market companies. Included in Baird’s 2003 capital markets deals were the $298 million IPO of Journal Communications, and a $232 million follow-on offering and $230 million convertible issuance for Roper Industries. Baird was also able to win a co-manager role on Accenture’s $2.0 billion follow-on offering. Baird’s M&A bankers were active in 2003 as well, working on such deals as the $228 million sale of Landis Plastics to Berry Plastics and Newell Rubbermaid’s $13 million sale of its Cosmolab business to CSI East. In addition to its U.S. and British operations, Baird has a German investment banking partnership (HBB Capital Advisers) with Landesbank Hessen and Bayerische Landesbank, two of Germany’s largest banks. Baird has spent the last few years expanding its research capabilities, and the firm currently employs 75 professionals who cover more than 500 U.S. and European companies. Among other accolades received by the bank, The Wall Street Journal placed four Baird analysts on its 2003 Best on the Street Analyst Survey, and a Greenwich Associates survey of small- and mid-cap fund managers recognized Baird for providing the “most independent and objective research,” and for offering the highest “quality of analyst service” and “capability of sales professionals and team.” Baird also came in second in the “most trusted” category in a broader Greenwich Associates poll. Baird’s public finance group acts as underwriter and advisor to many municipalities, educational institutions and government agencies. Since 1998, Baird public finance professionals have managed, co-managed or served as advisors on debt issues totaling more than $50 billion. Baird’s private equity units (Baird Capital Partners, Baird Venture Partners, and Granville Baird Capital Partners) have raised close to $1 billion, and invest in various industries including technology, life sciences and health care.

Passing with honors Baird prides itself on creating a premier workplace environment, and critics are taking notice. Baird was recognized on Fortune’s 2004 list of the 100 Best Companies to Work For and was also on Selling Power magazine’s list of the 50 Best Companies to Sell For, based on Baird’s compensation, training and career mobility policies. Closer to home, Corporate Report Wisconsin praised Baird in 2003 for the

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firm’s perks, work environment, communication, morale, training and community involvement.

GETTING HIRED

Trying to find a balance Like many investment banks, Baird typically begins its hiring process with an oncampus screening interview. Desirable candidates are then invited to the firm’s offices for a second round of interviewing. During this second round, applicants are likely to meet with a handful of Baird professionals over the course of multiple twoon-one interviews. The firm actively recruits at the “top” undergraduate institutions and MBA programs in the country, but Baird invites all interested applicants to create a profile and search for current openings on the firm’s web site. One contact calls the firm “fairly selective,” saying it hires “mostly the best people who already have industry experience.” An equity sales associate in Europe says he went through “five interviews” before getting hired and notes that Baird Europe “uses headhunters on a needs-only basis because we’re a small operation.” A senior investment consultant, who reports going through seven interviews, explains that Baird also recruits laterally, from banks and other firms, for sales people who have great personal skills and drive.”

Showin’ you the way Besides brushing up on financial concepts, candidates may want to become familiar with “The Baird Way,” the “cultural foundation of [Baird’s] success” and its selfdescribed corporate philosophy. Among others things, doing things The Baird Way calls for: “putting clients’ interests first,” understanding that “how we succeed is as important as if we succeed,” and a “personal balance in home, work and community involvement” for Baird’s employees (all of whom are classified as “associates”).


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OUR SURVEY SAYS

Situation specific Baird’s culture in the U.S. is lauded as “classy” and “terrific,” and one research professional even calls his co-workers “the greatest.” In Europe, staffers echo the state-side sentiments, praising Baird’s “strong team based culture” and “small firm feel.” Hours can vary but will tend to be somewhat long for junior personnel. The good news is that managers “generally appreciate the hard efforts of everyone,” says a source. “They’re good about sharing success.” Baird operates a “dress for the situation” policy that gives associates flexibility to tailor their attire to particular circumstances. For the most part, this means that associates conform to a business casual dress code with more formal attire expected when meeting clients.

Graduating from Baird University Baird takes professional development and education seriously. In fact, Baird has its own educational program, Baird University, which offers a firm-provided curriculum to aid associates seeking to learn more about various financial products and hone work skills. On the job, associates can expect to get feedback through Baird’s yearly review process as well as “informal coaching and feedback sessions throughout the year.” For those associates who excel, Baird doles out periodic awards such as “Associate of the Month” and the “Sales Achievement Awards” (for financial advisors).

The benefits of being at Baird If the lure of positive feedback isn’t enough to get them working hard, associates have an extra financial incentive to contribute to Baird’s success: the firm’s profit sharing plan. The firm’s contributions, which are dependent on how well Baird does, vest over five years of employment at the firm. Baird also offers a 401(k) program and matches 100 percent for the first $1,200 contributed and 25 percent thereafter until an employee’s contribution has reached 2.5 percent Other benefits include tuition reimbursement, a counseling service (the Associate Assistance Program), and corporate discounts at various businesses including gyms and stores. Finally, Baird rewards employees who bring other talented associates to the firm with a referral bonus of as much as $2,000.

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“[Managers] generally appreciate the hard efforts of everyone. They’re good about sharing success.” — Baird insider


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ABN AMRO Holdings

PRESTIGE RANKING

Gustav Mahlerlaan 10 1082 PP Amsterdam, The Netherlands Phone: +31-20-628-9393 www.abnamro.com

DEPARTMENTS* Consumer & Commercial Clients Private Clients & Asset Management Wholesale Clients

KEY COMPETITORS Bank One Credit Suisse Group Deutsche Bank UBS

UPPERS • Junior employees given a lot of respect

DOWNERS *Strategic business units

THE STATS Chairman, Supervisory Board: A. A. Loudon Chairman, Managing Board: Rijkman Groenink Employer Type: Public company Ticker Symbol: ABN (NYSE) Revenue: €18.8 billion (FYE 12/03) Net Income: €3.2 billion No. of Employees: 110,000+ No. of Offices: 3,446

• Non-performers not dealt with quickly enough

EMPLOYMENT CONTACT www.abnamro.com/com/career/home.asp

THE BUZZ


• • • •

“Big lender” “Strong firm globally” “Not a major U.S. player” “Not bad, just below second tier”

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Vault Guide to the Top 50 Banking Employers ABN AMRO Holdings

THE SCOOP

A bank fit for a king Some banks have pedigree; few are descendants of royalty. In 1824 King Willem I of the Netherlands issued a royal decree creating the Nederlandsche HandelMaatschappij (fortunately shortened to NHM), a bank charged with maintaining trade between the Netherlands and its colonies, specifically the Dutch East Indies. In 1861 De Twentsche Bank was formed; NHM and De Twentsche Bank merged in 1964 to form Algemene Bank Nederland (ABN). ABN became a Dutch powerhouse in 1991 when it merged with the Amsterdam-Rotterdam (Amro) Bank. Amro was formed by the 1964 merger of Amsterdamsche Bank and Rotterdamsche Bank, two Dutch financial institutions with 19th-century pedigrees. Like the Dutch empire of King Willem’s time (or, more accurately, before Willem), ABN AMRO and its predecessors have expanded around the globe. ABN AMRO has two U.S. subsidiaries, LaSalle Bank (acquired in 1979) and Standard Federal Bank (acquired in 1997). The two U.S. banks are major players in the Midwest and regularly account for a quarter of ABN AMRO’s revenues.

Let’s go Dutch ABN AMRO now has a presence in 63 countries and territories, providing banking products and financial services on a global basis through three business units. The consumer and commercial clients division concentrates on catering to the needs of 16 million consumer and small- to medium-sized business clients. The wholesale clients arm contains ABN AMRO’s corporate and investment banking operations and is principally organized along industry groups including telecoms, media and technology, health care and chemicals, integrated energy, global manufacturing, consumer, general industrials, and financial institutions and public sector. ABN AMRO’s third main business unit, private clients and asset management, offers investment management services to institutions and private banking services to highnet-worth individuals.

Gains from losses Apparently, ABN AMRO doesn’t think enough of itself. The bank’s 2003 profits were up 31 percent to €3.16 billion, exceeding not only analysts’ forecasts but its own as well. The Dutch bank’s bottom line saw the benefits of a massive restructuring 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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that cut headcount by 10,000 and divested and closed many non-core businesses. ABN AMRO was also helped by diminished charges for bad loans and a resurgence in its wholesale business, which jumped to a profit of €387 million after losing €294 million in 2002. Although ABN AMRO’s loan performance was improved, the bank still had to take a hit for Parmalat, the failed Italian dairy company being investigated for accounting fraud and executive embezzlement that led to its collapse. ABN AMRO has maintained that while it had loans outstanding to Parmalat, the bank did not commit any financial wrongdoing and has not been named in the widening probe related to the dairy company’s accounting misconduct.

Take or be taken? In an effort to continue its profitable ways in the near-term, ABN AMRO plans to enhance its presence in core markets including the Netherlands, the U.S. and Brazil, and to selectively expand in growth areas within Europe and developing markets. In Europe, the Dutch bank has its eyes particularly on the Italian and German markets, believing that for the time being, Italy provides better growth prospects. ABN AMRO owns stakes in two Italian banks, Capitalia and Antonveneta, and observers have wondered whether ABN AMRO would seek to acquire an Italian firm outright, a speculation that chairman Rijkman Groenink has specifically denied. Still, ABN AMRO is continuing to invest in Italy, and in October 2003, ABN AMRO increased its stake in Capitalia from 6.6 percent to 9 percent. And while ABN AMRO may prefer Italy’s market to Germany’s, the bank seems to be hedging its bets. In January 2004, ABN AMRO completed its acquisition of German bank BethmannMaffei from HVB Group for €110 million (about $136.5 million). The Dutch bank plans to merge its new purchase with another German subsidiary, Delbrück & Co., creating one of the top five private banks in Germany with more than €10 billion in assets under management. ABN AMRO also improved its presence in Brazil and China. In October 2003, its Brazilian subsidiary Banco ABN AMRO Real completed its purchase of Banca Intesa’s almost 95 percent stake in Banco Sudameris for over €600 million. The acquisition bolsters ABN AMRO’s retail and commercial banking presence in southeastern Brazil, a region that produces nearly 60 percent of Brazil’s GDP, and establishes Banco ABN AMRO Real as the fifth largest privately owned Brazilian bank. And in February 2003, ABN AMRO subsidiary ABN AMRO Asset Management bought a 33 percent stake (the maximum allowed by law) of China414

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based Xiangcai Hefeng Fund Management, expanding its asset management capabilities in one of the world’s fastest-growing markets. Given that the bank (like all enterprises) has limited resources, ABN AMRO has also spent the last few years divesting some businesses in an effort to reallocate capital to its core services and markets. To better focus on its key wholesale clients offerings (including investment banking), ABN AMRO recently sold its U.S. professional brokerage and U.S. prime brokerage units, both of which offered securities clearing and trade execution services. The bank sold its prime brokerage to UBS for $250 million in December 2003 and its professional brokerage to Merrill Lynch in January 2004 for an undisclosed sum. To free up even more capital, ABN AMRO plans to sell its nearly 5 percent share of Bank Austria, and the Dutch bank also announced plans to sell its over 80 percent equity stake in Thailand’s ninth-largest bank, Bank of Asia. ABN AMRO will continue to operate its branch in Thailand. As for the consolidation wave that’s sweeping the financial services industry, ABN AMRO chairman Groenink doesn’t believe the bank will make any large, transformative acquisitions in the near future. However, in order to comply with best practice requirements established by its home country, ABN AMRO announced in early 2004 that it had canceled its Dutch preference shares, a move which had the added implication of removing a possible defense in the event of a takeover attempt. Eyeing the share cancellation, analysts questioned whether a big merger could be in store for the Dutch bank. For his part, Groenink did not rule out the possibility, saying, “If it is necessary to improve value for our shareholders, then a merger is of course not out of the question.”

Applauding ABN AMRO Seemingly every periodical agreed in 2003 that ABN AMRO was tops in its home country: Euromoney, Global Finance and The Banker all named the Dutch financial house the best bank in the Netherlands. ABN AMRO also got some respect for its dealings in Thailand, receiving the 2003 award for Best Foreign Investment Bank in Thailand at The Asset Asian Awards and the same honor from FinanceAsia. ABN AMRO’s name also consistently shows up in Thomson Financial’s mergers and acquisitions league tables. In 2003 the ABN AMRO M&A team moved up a spot to No. 16 on the worldwide announced M&A league table with 132 deals worth $35.0 billion. ABN AMRO held onto its No. 17 ranking in worldwide completed M&A with 117 deals worth $27.4 billion. And Institutional Investor thought so highly of ABN AMRO’s work that the periodical gave two transactions ABN AMRO advised 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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on Deal of the Year awards: William Morrison Supermarkets’s $5.2 billion purchase of Safeway, and Air France’s acquisition of KLM Royal Dutch Airlines.

GETTING HIRED

Meet the bankers While one insider feels the firm “pretty much scrapes the bottom of the barrel” for recruits, others say the firm does “campus recruitment from leading business schools.” The process doesn’t vary too much by location or business unit. One investment banking contact reports going through “four interviews,” and recalls that he was required to take an “aptitude test.” To land his second position, a senior vice president slot, the contact says he went through “15 interviews,” but notes that the process was “friendly but professional.” A commercial banker remembers “one interview at the time of selection. Two people from HR and one from the business line.” The contact says he was asked “mostly personal questions.” A U.S. employee says, “I met with HR first, then the group head and then the department members.” One ABN AMRO insider reminisces that he “met with HR staff personnel, then a more senior HR representative, and then finally my current division manager.” ABN AMRO’s web site, www.abnamro.com, has a section chock full of career information, including job listings in the company’s numerous international locations. The firm maintains separate web sites for MBA and undergraduate applicants. According to the firm, ABN AMRO has a “contribution culture, where goals are set for the entire organization and where everyone within it is expected to help achieve them.”

OUR SURVEY SAYS

Conflicting views on culture Insiders say ABN AMRO makes a serious attempt to live up to the company’s four principles of “integrity, respect, professionalism and teamwork.” One source says the company is “laid back” but “cost concerned.” “I would say that we are structured with an eye on the future,” notes a forward-looking banker. But not everyone is 416

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impressed. One source calls ABN AMRO “chaotic, with confused signals sent to middle management.” That person elaborates. “Many do not respect the company’s principles and do not talk to the team frequently.” Another insider complains that the firm has “no sense of urgency to [get] something done today.”

Mellow hours One insider notes that there’s “no pressure to work long hours.” A corporate finance employee seems to disagree, spinning a tale of extra effort. “Although my peers tend to work usual business hours, I am usually working after hours from home or am available via cell phone for sales people and clients, as needed.” The contact adds, “It is important to me to add value to a deal and to be respected by my sales people and my customers.” Traders have to put in long hours, too. “I am at my desk before 6.30 a.m. and I leave just after 5 p.m. most evenings,” says one trader. “We take turns going out to get lunch for the rest of the members on the desk.”

Old-fashioned fashion The company’s dress policy has seemed to return to tradition. A senior VP notes that dress is now “formal, always.” “The days of casual dress seem to be gone, “ explains another contact. “That sits just fine with some people. “There are various dress codes, but I prefer to wear a suit daily,” says one contact. ABN AMRO’s training programs get mixed reviews. “The networking among the group is the only training available,” notes one source, though another finds that “more training is offered than can actually be taken.”


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PRESTIGE RANKING

Harris Nesbitt/BMO Nesbitt Burns

Harris Nesbitt 3 Times Square New York, NY 10036 Phone: (212) 702-1200 www.harrisnesbitt.com

KEY COMPETITORS

BMO Nesbitt Burns 1 First Canadian Place Toronto, Ontario M5X 1H3 Phone: (416) 359-4000 www.bmonesbittburns.com

UPPERS

DEPARTMENTS Advisory Services • Capital Raising • Institutional Investing • Risk Management • Treasury Management • Wealth Management

THE STATS CEO, BMO Nesbitt Burns and Head of Investment Banking: William A. Downe President and COO, BMO Nesbitt Burns: Yvan J.P. Bourdeau Vice-Chair and Head, Harris Nesbitt, Investment Banking Group: Ellen M. Costello Employer Type: Subsidiaries of BMO Financial Group No. of Employees: 1,000+

Adams, Harkness & Hill Friedman, Billings, Ramsey Group SG Cowen

• Strong name in Canada

DOWNERS • Growing business in the U.S., but still not a player

EMPLOYMENT CONTACT For jobs with Harris Nesbitt, refer to the career section of the firm’s web site, www.harrisnesbitt.com For jobs with BMO Nesbitt Burns, visit www.bmo.com/careers

THE BUZZ


• • • •

“Good in Canada” “Wannabe investment bank “Chop shop “Alright”

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Vault Guide to the Top 50 Banking Employers Harris Nesbitt/BMO Nesbitt Burns

THE SCOOP

Cross-border banking Harris Nesbitt and BMO Nesbitt Burns are the U.S. and Canadian investment banking arms of Canadian bank BMO Financial Group. The companies offer a full range of wholesale banking services including advisory, capital markets, research, risk management, sales and trading, treasury management and institutional investing. Harris Nesbitt has offices in 10 major cities across the U.S. and focuses its efforts on middle market clients ($50 million to $1 billion in sales). The bank offers wealth management services through another BMO Financial subsidiary, Harris Bank (BMO Financial bought Chicago-based Harris Bank in 1984). Harris Nesbitt offices tend to house bankers with knowledge in particular industries, including media and communications (New York), health care and technology (New York), energy (Houston), food (Chicago), and manufacturing (Chicago). The firm’s research analysts are particularly strong in the media, consumer, health care and technology industries.

Burning up the Canadian charts BMO Nesbitt Burns caters to larger clients and is a major underwriter and advisor on Canadian transactions. According to Thomson Financial, BMO Nesbitt Burns ranked No. 1 in completed Canadian M&A deals in 2003, with 20 transactions valued at $9.4 billion. BMO Nesbitt Burns was also high on the announced Canadian M&A league table, coming in at No. 2, with 17 deals valued at $8.9 billion. Helping its cause in 2003 was the investment bank’s advisory role on Great-West Lifeco’s $4.7 billion acquisition of Canada Life Financial Corporation. BMO Nesbitt Burns was active in the capital markets as well, working on 617 debt and equity deals that raised a total of $67 billion. In addition, BMO Nesbitt Burns has a very strong Canadian equity research team. In 2003, the firm was ranked first overall on the Brendan Wood International Survey for an incredible 23rd consecutive year. Greenwich Associates also named the bank the Top Overall Research Team in 2002 and 2003. BMO Nesbitt Burns research analysts work out of offices in New York and Houston in addition to Calgary, Toronto and Montreal.


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Vault Guide to the Top 50 Banking Employers Harris Nesbitt/BMO Nesbitt Burns

Searching for research In July 2003, BMO Financial completed its $40 million purchase of Gerard Klauer Mattison, a New York middle market investment bank with 195 employees and additional offices in Boston, Chicago and San Francisco. The acquisition, which gave BMO Financial sales and trading and equity research capabilities in the U.S., tripled Harris Nesbitt’s research coverage of U.S.-based companies from 100 to 300. Concurrent with the completion of the acquisition, BMO Financial put the Harris Nesbitt brand on all of its U.S.-based investment banking businesses.

Help wanted Harris Nesbitt has been hiring senior bankers at a good clip in 2004. In January the bank’s Dallas office added a team of six asset-backed securities professionals. Later in the month, the firm hired two senior bankers for the high yield research, sales, and trading groups in New York. Harris Nesbitt added a third senior banker to the highyield research group in February. In March Harris Nesbitt hired Carlos Conde, the former head of European Equity Capital Markets at Société Générale. At Harris Nesbitt, Conde will be an executive managing director and head of the U.S. Equity Capital Markets Group in New York. Also in March, Harris Nesbitt Gerard added a top media and entertainment research analyst, Lee Westerfield. Westerfield was on The Wall Street Journal’s Best of the Street lists in 2002 and 2003.

GETTING HIRED

Two sites for two countries To search for available positions in the U.S. check out the “careers” section the firm’s web site, www.harrisnesbitt.com. There, you can also create a personal profile to “tell the firm about your skills and employment preferences,” so it can “notify you about upcoming opportunities.” The firm’s career site also gives a brief overview of benefit offerings, which include a 401(k) plan, a stock purchase plan and tuition reimbursement. In addition, Harris Nesbitt offers “choices of medical, dental, life insurance, spending accounts and disability plans.” Both full- and part-time employees are eligible for benefits. For positions in Canada, check out www.bmo.com/careers, where you can search for jobs by type, location or keyword. You can also create a career profile on this site, too.

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Vault Guide to the Top 50 Banking Employers MBNA Corp.

“[MBNA offers] one of the best health plans around.” — MBNA insider


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MBNA Corp.

PRESTIGE RANKING

1100 N. King Street Wilmington, DE 19884-0115 Phone: (302) 453-9930 Fax: (302) 432-3614 www.mbna.com

DEPARTMENTS Credit Cards Financial Services Life Insurance Personal Lending

THE STATS Chairman: Randolph Lerner CEO and President: Bruce L. Hammonds Employer Type: Public company Ticker Symbol: KRB (NYSE) Revenue: $11.68 billion (FYE 12/03) Net Income: $2.34 billion No. of Employees: 28,000 No. of Offices: 29

KEY COMPETITORS Bank of America Citigroup Comerica

UPPERS • Good training • Great benefits

DOWNERS • Prestige limited to credit card business • Somewhat poor opportunities for advancement

EMPLOYMENT CONTACT www.mbna.com/careers/index.html

THE BUZZ


• • • •

“Credit card kings” “Well known” “Rising star” “Credit cards are too big a part of their business”

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Vault Guide to the Top 50 Banking Employers MNBA Corp.

THE SCOOP

Credit affinity marketing MBNA is the world’s largest independent credit card issuer, and it’s easy to see why. The company operates three banks (MBNA America Bank, MBNA Europe Bank Limited and MBNA Canada Bank) and markets its credit products through more than 5,400 professional organizations, universities and professional sports leagues, resulting in a total membership of more than $160 million. This strategy of offering specialized, branded credit card products has allowed the company to grow from a regional credit card issuer to a large multinational, with nearly $11.7 billion in 2003 revenues. The company’s claim to fame is the use of affinity marketing, which dates to 1982 and Charles Cawley, a Georgetown University alumni and banker, who persuaded the school to endorse a line of GU credit cards in exchange for a cut of the profits. Today, the firm has more than 5,400 agreements to co-market credit cards, which provide a way for customers to show school spirit, affiliation and fan support.

Center of attention It’s no secret that Charles Cawley was a great businessman. Cawley assumed the CEO post in November 2002, shortly after the sudden death of Alfred Lerner, who had been MBNA’s chairman and CEO. (Lerner’s son Randolph was appointed chairman). In addition to creating the powerhouse MBNA has become, Crawley brought thousands of jobs to Delaware, and gave millions to charity. However, in December 2003, Cawley was forced to retire. According to a March 2004 New York Times report, Cawley and the company’s board of directors clashed over executive compensation. Nonetheless, an April 4, 2004 follow-up story in the Times noted that Cawley made out well, netting $46.3 million in 2003, according to Pearl Meyer & Partners, a consulting firm in New York.

A free ride? Despite being a generous benefactor to various charities, Cawley was skewered in a March 2004 profile in the Baltimore Sun, which highlighted the Times’ findings that Cawley used a corporate plane last year to take friends and relatives to Europe and reimbursed MBNA for only a fraction of the cost. The paper also noted that Cawley


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used MBNA funds to build a multimillion-dollar collection of paintings, which were sometimes displayed in his home. MBNA didn’t dispute the Times’ account. However, it appears that change has arrived. In March 2004, MBNA announced that compensation for its top-dozen executives would be 44 percent lower in 2004 than in 2002. In addition, MBNA indicated that it plans to sell Cawley-inspired planes, yachts and paintings.

GETTING HIRED

The one and only On MBNA’s web site, www.mbna.com, interested candidates can search for open positions, submit resumes, and view the bank’s recruitment schedule. MBNA also provides a statistical chart on the company’s workforce diversity, organized by job type such as sales workers and officials and managers. Insiders say that “flexible, self-motivated professional people only need apply.” Candidates can expect around four interviews, including one with a human resources/recruiting representative, one with a peer and two with more senior personnel. Be aware that MBNA is very customer-focused; one contact at the bank says, “We believe that we should treat the customer as if he is the only one we have.”

OUR SURVEY SAYS

Conform to code MBNA insiders hail the company as an “industry leader” and a “good company to work for.” The firm has a “strong corporate culture” that “encourages group conformity” and is known for its “high stress, high benefits and reasonable rewards.” Employees are given “freedom to develop,” according to a source. Another insider observes that “managers are generally interested in their teams progressing.” Training is also lauded. Newcomers receive “intensive education.” There are also “ongoing development courses to improve skill sets, including some funded official qualification courses.” On the downside, the company insists on “very formal dress,” even if there’s no client contact. The dress code is strictly enforced, and one contact warns female co424

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workers to wear stockings “or you will be sent home and be expected to return promptly.” Offices are said to range from “lavish” to “makeshift.” And one source finds that “there is no such thing as opportunities for advancement” unless “you have a relative in a top position,” in which case “your chances increase by 100 percent.” A second contact agrees that getting promoted is a difficult task, saying, “Room for advancement is very limited.” Overall, though, MBNA employees feel the firm is interested in their development. “I have assumed far greater responsibility than my level or salary reflects,” says one insider. “Recognition has been minimal. However, this is a departmental issue – overall, recognition at the company is excellent.”

OK pay, great benefits Insiders disagree over whether MBNA pays adequate compensation with one source finding that the bank does not pay salaries that are “competitive with other companies,” while another receives a “competitive base salary plus bonus.” One thing on which insiders can agree is that the firm offers a host of “great benefits,” including “one of the best health plans around” as well as “on-site day care centers.” Another contact praises the firm’s 401(k) plan. Other benefits include in-house cafeterias, access to gyms and a financial advisory service. One source says that “tuition reimbursement is OK but not competitive compared with other similar companies.” The contact adds that stock options are given only to “top senior executives.”


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TOP50 BANK EMPLO THE BEST OF THE REST

A.G. Edwards & Sons One North Jefferson Avenue St. Louis, MO 63103 Phone: (314) 955-3000 Fax: (314) 955-5402 www.agedwards.com

DEPARTMENTS Asset Management Financial Services Mutual Funds Retail Brokerage

THE STATS CEO: Robert L. Bagby Employer Type: Public company Ticker Symbol: AGE (NYSE) Revenue: $2.50 billion (FYE 02/2004) Net Income: $159.5 million No. of Employees: 15,900 No. of Offices: 700

KEY COMPETITORS Jones Financial Companies Merrill Lynch UBS

UPPERS • Flexible work schedules • Very good benefits

DOWNERS • Cost-cutting environment • Currently experiencing high turnover

EMPLOYMENT CONTACT See the “careers” section of www.agedwards.com

THE BUZZ


• • • •

“Mom-and-pop brokers” “Good, small-time player” “Great name and tradition” “Minor league”

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Vault Guide to the Top 50 Banking Employers A.G. Edwards & Sons

THE SCOOP Retail to be reckoned with A.G. Edwards & Sons is undoubtedly more Main Street than Wall Street. Based in St. Louis, A.G. Edwards operates one of the largest retail distribution systems in the brokerage industry, with more than $265 billion in assets under management, as of February 2003. Still, the firm also offers a diverse range of financial products and services, including securities and commodities brokerage, investment banking, investment management (through A.G. Edwards Asset Management), mutual funds and insurance. With nearly 7,000 consultants working in over 700 offices across the U.S. and London, A.G. Edwards clearly has positioned itself as a major player within the industry. A.G. Edwards was founded in 1887 to serve St. Louis banks trading on the New York Stock Exchange. In 1971, the firm became one of the first brokerages to go public. It continued to diversify and expand over the following decades. During the 1990s the firm more than tripled its revenue, from $900 million in 1992 to more than $2.1 billion in 1999. During that period, the firm nearly doubled its number of consultants and branches. A.G. Edwards employed 3,861 financial consultants in 398 branches in 1990, and at the end of fiscal 1999, the firm had 6,528 financial consultants and 639 branches. One of A.G. Edwards’ brokerage operations’ strongest selling points is its awardwinning research unit. A.G. Edwards’ staff of more than 50 senior research analysts covering 650 companies in 35 industries is regularly singled out for its acumen. Eight analysts from the firm made The Wall Street Journal’s May 2003 “Best on the Street” list, including three who were recognized as tops in their respective fields: Robert Buchanan (retailers), Timothy Conder (leisure) and Doug Fischer (utilities). In addition, Buchanan and banking analyst, David Stumpf, captured two of the eight Fortune “All-Star” analyst slots in its June 9, 2003 issue.

Onward and upward The firm has enjoyed success in fiscal year 2004. Although 2004 results hadn’t been released by press time, A.G. Edwards posted net revenues of $1.8 billion for the nine months ended Nov. 30, 2003, and net earnings of $105.1 million. In addition, the firm was again named as Fortune magazine’s 100 Best Companies to Work For In America (2004).


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The firm also posted solid results in investment banking, notching nine-month revenues of $41 million, an increase of 21 percent over the prior year’s nine-month period. According to the company’s earnings press release, the improvement was due to increases in the underwriting of a variety of closed-end funds and, to a lesser extent, other equity products. A.G. Edwards’ asset-management and service-fee revenues also increased during 2004, to $28 million for the third quarter of FY 2004, a jump of 19 percent versus the third quarter last year. For the nine-month period ended Nov. 30, 2003, asset-management and service-fee revenue increased just one percent over the same period a year ago, to $6 million.

Awards and accolades Although the firm slipped from the top spot in the J.D. Power and Associates’ Customer-Service rankings, A.G. Edwards managed to garner a four-star ranking in Kiplinger’s Stocks 2003 survey of full-service brokerage firms, based on an evaluation of several categories of products and services. The firm also was named one of Fortune magazine’s Most Admired Companies for 2003, based on quality of management, products and services, and social responsibility.

GETTING HIRED Strictly ethical A.G. Edwards typically hires individuals to serve as financial consultants, communications professionals, finance professionals (including financial planners and research analysts) and investment bankers (analysts and associates). For a full list of employment opportunities, visit the firm’s web site (www.agedwards.com). When recruiting, A.G. Edwards looks for “producers,” team players and leaders, especially those who have experience or can display a strong interest in the securities industry. A.G. Edwards has a somewhat more traditional slant than most other financial firms, requiring its hires to adhere to a strict code of ethics. New brokers can start at any of the firm’s U.S. offices, but new hires in asset management and most other departments all report for duty in St. Louis. “The interview process varies from branch to branch and typically takes on the personality of the branch manager,” reports one insider. Another contact who “had to take a proficiency test and had two interviews” agrees that “the hiring process is different for each branch.” In addition, says the source, the firm “asks many prospects to write a business plan [but] I didn’t have to.” Another contact reports going through “two interviews with a branch manager” in which he received 430

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“questions on how I prospect clients and target groups, as well as types of investments and my career goals.” An employee who also went through two interviews says at least one interview was with a “high-level manager.” As for questions, the contact says they “could be broadly grouped into aptitude and attitude.” A.G. Edwards accepts resumes via regular mail, fax, e-mail and its web site. But, says one insider, the firm recruits “mainly from other firms.”

OUR SURVEY SAYS Clients and employees win Insiders generally praise the “wonderful, honest and supportive” culture at A.G. Edwards. “Working at A.G. Edwards involves exciting and challenging daily activities,” says an employee who also points out that the environment can be “uptight at times” because of deadlines and the need to act quickly because of changing markets. Other sources say A.G. Edwards operates according to “a servicedriven business model” with “extremely high ethical standards” that reward “dogged individualism and entrepreneurial spirit.” “In our firm,” explains one employee, “the needs of the client come before anything or anyone else.” Still, employees are not overlooked at A.G. Edwards. In fact, one contact says that the firm has “a big ‘employees first’ mentality.” Another insider praises the chance to grow a career at the firm. “The opportunities for advancement are endless here for all employees,” boasts the contact. “At A.G. Edwards you make your career however big you want it to be, whether [you are] just an assistant helping a couple of brokers with their accounts or growing your own business.” One source notes that “since we are responsible for our own sales goals and production, we have our own hours and opportunities for advancement.” Another source says the general hours are “8 to 5, but are flexible.” Not everyone is pleased with the work environment at A.G. Edwards, however. One sour St. Louis source reveals that the firm’s financial performance has recently been subpar and “at this time advancement is in title only as cost containment is in effect and raises are scarce.” The contact says that current cost reduction initiatives include a technology upgrade that will “result in greater efficiency and large consolidation of functions,” but will thus “lead to a large number of displaced workers by 2005.” Furthermore, “turnover is becoming an issue as key, long-time employees are leaving to competitors and other industries that are paying better.” The contact also worries


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about A.G. Edwards becoming a takeover target because the firm is no longer controlled by the Edwards family.

Down on comp, up on benefits A.G. Edwards staffers have mixed views on compensation. Those with commissionbased salaries generally make livings dependent on the markets and their own efforts. One St. Louis source says that the firm “is hurting in that there have not been any significant raises in the last two years, and bonuses are minimal as well. With declining revenue due to market conditions and low commission revenue of financial consultants, the current feeling is that for a third-year there will not be any raises or bonuses.” Given this environment, the contact says that “morale is very bad because, regardless of the quality of work done, everyone knows that the money will not follow.” Employees in St. Louis do praise the benefits and perks the firm offers such as free parking, a subsidized cafeteria on premises and discounts to local attractions like the St. Louis Arch. Other sources in branch offices agree that the benefits are “excellent” and “great.” In addition to a stock purchase plan with at least a 15 percent discount, A.G. Edwards employees can also take advantage of benefits, including a “401(k) and health, dental, vision and life insurance.” The 401(k) plan includes a 5 percent employer contribution as well as a profit-sharing component that depends on the firm’s financial performance. An insider adds that the firm also offers “some tuition refunds and money towards adopting a child.” Dress is generally formal through the week except on Fridays, but attire expectations vary “greatly department by department,” says a St. Louis insider. The contact adds that inconsistent enforcement of the dress code “is a source of resentment as some come to work looking like they should be in the garden – jeans, capri pants for women, etc. – while others are adhering to the code” of full dress attire.

Maintaining training Employees at A.G. Edwards report that the firm takes its training very seriously; the company’s training center offers staffers more than 30 education programs. Although one insider reveals some programs have experienced “major cuts due to budget constraints,” another observes that the training available is still “well respected” throughout the industry.

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AmSouth Bancorporation AmSouth Center 1900 5th Avenue North Birmingham, AL 35203 Phone: (205) 320-7151 www.amsouth.com

DEPARTMENTS Commercial Banking Group Consumer Banking Group Wealth Management

THE STATS Chairman, CEO, and President: C. Dowd Ritter Employer Type: Public company Ticker Symbol: ASO (NYSE) Revenue: $2.9 billion (FYE 12/03) Net Income: $626.1 million No. of Employees: 13,222 No. of Offices: 660+

KEY COMPETITORS Bank of America Regions Financial SouthTrust

UPPERS • Great benefits, great culture

DOWNERS • Great takeover candidate

EMPLOYMENT CONTACT www.amsouth.com/career

THE BUZZ


• “Growing company” • “Wannabe bankers” • “Regional”


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Vault Guide to the Top 50 Banking Employers AmSouth Bancorporation

THE SCOOP Bama banking AmSouth Bancorporation’s roots trace back to the 1870s with the opening of First National Bank of Birmingham. Today, the bank holding company has $47 billion in assets and conducts business in a six-state region in the southern U.S. AmSouth’s principal subsidiary is AmSouth Bank, which offers consumer and commercial banking, mortgage financing, equipment leasing, mutual funds, trust and investment management services through more than 660 branches in Alabama, Florida, Georgia, Louisiana, Mississippi and Tennessee. AmSouth’s organization is divided into regional business groups (e.g., South Alabama/South Louisiana, Tennessee/North Louisiana, etc.) as well as across business lines (consumer banking, commercial banking and wealth management). The consumer banking group provides retail and small business clients with traditional banking products and services, including deposits, loans and mortgage financing. Larger companies are catered to by the commercial banking group, which provides services such as commercial lending, treasury management and international banking. AmSouth’s wealth management group delivers investment management, estate planning and trust services to individual and corporate clients. The group also offers employee benefit administration as well as land and natural resources management (AmSouth manages 2.3 million acres of timberland, farmland and mineral properties). In addition to its core banking offerings, AmSouth provides equipment leasing through AmSouth Leasing Corporation, brokerage services through AmSouth Investment Services, and asset-based and secured lending through AmSouth Capital Corporation. The bank also has stakes in two investment management companies, OakBrook Investments LLC and Sawgrass Asset Management LLC.

Over thirty years of payback AmSouth netted record earnings of $626.1 million in 2003, thanks to strong performances from almost every business line and a particularly good year for the Consumer Banking Group. Historically low interest rates drove demand for mortgages and refinancings, and AmSouth’s residential mortgage originations rose an eye-popping 60 percent to $4.3 billion. The bank’s good fortunes continued in the first quarter of 2004, as AmSouth saw record earnings of $160.1 million. The results were driven by a healthy rise in loans and deposits as well as improved credit exposure. 434

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As AmSouth continues to make money, its board of directors continues to offer higher payouts to the company’s shareholders. In October 2003, AmSouth upped its dividend for a remarkable 33rd consecutive year, this time increasing it by 4.3 percent to $0.96 per share. The bank’s consistently rising dividend has caught the eye of Standard & Poor’s, which has named AmSouth a “dividend elite” company (signifying relatively strong prospects for high stock appreciation and income). Mergent, a financial information provider, has also taken note, classifying AmSouth as a “dividend achiever” for increasing dividends for at least 10 consecutive years.

Just build, baby In the last five years, AmSouth has been going through a period of rapid expansion, opening up almost 100 new branches. In 2003, of AmSouth’s 41 new branches, 31 were in the Sunshine State. In 2004, AmSouth plans to open at least 30 branches, many of which will be in Florida (the bank built 10 Floridian branches in the first quarter of 2004). Currently, AmSouth ranks as Florida’s fifth-largest bank in terms of deposits.

Executing a new financial plan In February 2004, AmSouth announced that CFO Sloan D. Gibson would be retiring from the firm to pursue volunteering opportunities. Gibson pointed to improved market conditions as providing the right environment for an executive transition. “We have just completed a challenging few years,” Gibson explained in an AmSouth press release that announced the management change, “and this new year will likely be the best business environment we have had in three years. I have great confidence in our strategic plan and our management team has never been stronger.” Succeeding Gibson is Beth Mooney, a senior executive vice president and head of AmSouth’s Tennessee/North Louisiana regional banking group. Before joining AmSouth in 2000, Mooney had served as Bank One Ohio’s CFO. Gibson, who had held the AmSouth CFO position since 1997, will remain a vice chairman of the bank for an undetermined transition period.

GETTING HIRED To get with the program, get on the site In the “careers” section of the AmSouth web site (www.amsouth.com), candidates can search for open positions by location, department and key word. The site also


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gives details on the firm’s Management Associate program, which “allows associates to learn about the entire banking operation before entering a specific division.” The program, which begins in the summer of each year, includes three months of classroom training aas well as hands-on experience in various departments. The firm requires candidates for the program to have a BS/BA or MS/MBA, and at least a 2.8 grade point average. For its summer 2005 program, AmSouth will begin accepting resumes, which can be submitted online through the careers site, in September 2004. The firm also recruits for the program at several colleges throughout the Southeast, including Vanderbilt, Tennessee, Auburn, Louisiana State, Florida, Florida State and the University of Alabama at Birmingham. A full list of the firm’s recruiting schedule and the colleges at which it recruits is available on the AmSouth web site.

In the door At the branch level, one source says the firm will “give you a test to assess your math and verbal skills,” and will also give you “an ethics quiz.” The insider adds, “People who pass are brought in for an initial interview with the area HR rep. After that, they’ll interview with the branch or department [they’re applying to]. And if a candidate is accepted, [AmSouth] will run a background check on them, which is a very long process.” A product manager reports going through “two interviews – one with my [current] boss and his boss, and one with just my boss.” The contact adds, “Since this was a sales job, they were mainly interested in my banking and sales experience. Luckily, I had many years of banking experience and a very good sales record with my previous employers, so the interview process was fairly easy.” An MIS specialist in the firm’s Birmingham headquarters says, “The interview process was very different from any I’d been on before in that I was there for more than three hours and felt very comfortable with the two people who interviewed me.” The contact adds, “We talked and traded questions back and forth, and they were very knowledgeable and patient with my questions. They even treated me to lunch afterwards.”

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OUR SURVEY SAYS Good ol’ boys and gals The firm’s culture and management receive rave reviews from employees. “Amsouth has a very good work culture,” says an insider in Birmingham. “They’re frugal, but not cheap.” Another source, in management information systems, notes, “Working for AmSouth has been a wonderful opportunity all around. I enjoy what I do as well as the people I work with.” The contact adds that managers “listen to employees and equip them with the necessary tools to do their jobs more effectively and efficiently.” The source also says management is “flexible where it can be,” but does admit “due to the nature of our business, we have very strict timelines.”

Time sheet “There are times such as the end of the month or quarter when more hours are required to get the job done,” explains an insider out of Birmingham, “but otherwise, we can count on regular business hours, or close to it.” Indeed, hours spent in the office, like the firm’s corporate culture, receives praise from insiders. One contact at the branch level says the hours are typically “8 to 5 with the periodic ‘call night,’ where we call customers who our system determines might be in the market for a particular product.” At headquarters, a vice president explains that he usually gets to work at 7:30 a.m. and works until 5:30 p.m. He adds, “Others come in later and stay later. And if we want or need to, sometime we can work from home.” Another contact says people do take a break from the serious from time to time. “Even though we work hard and sometimes work long hours, we have plenty of moments of pure nonsense, many of which management instigates and participates in.” In keeping with the laid-back nature of the office, the firm’s dress code is “business casual, unless you have direct contact with customers.”

Pretty paychecks, good-looking perks No one seems to complaining about salaries and benefits. A product manager in Birmingham reports receiving a base salary of about $75,000 “with a 15 percent of base incentive package.” The source adds, “The company offers pretty good benefits, including a 401(k) and health care” plans. An employee in IT, also out of Birmingham, describes his full pay package as follows: “$45,600 base salary, up to 10 percent per year incentive pay, two weeks vacation, six sick days per year, life insurance, paid short- and long-term disability insurance, preferred medical and dental insurance, 401(k), a medical spending account and several other things.” Regarding the 401(k), which one insider calls “incredible,” AmSouth “matches up to 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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6 percent of your salary dollar for dollar” and employees get “100 percent vesting day one of their employment.” AmSouth insiders also get “discounts on purchases of AmSouth stock.”

Moving on, moving up “The company posts job opportunities and seems to encourage changing jobs within, as long as you don’t change every year,” says one banker. Another explains, “In my duration with AmSouth, I’ve seen several employees within my department get promoted to the next level.” The contact adds that AmSouth “does not try to hold people back and tends to encourage employees to go further and develop their full potential. The company hires from within whenever possible.” “Overall,” begins another source, “compared to all the banks in Birmingham, I’d say [AmSouth] is a great place to work.” But will it be around for long? Although another insider says the firm’s “business outlook is good,” he admits that “there’s always the possibility we’ll be acquired by a bigger bank.”

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BB&T Corporation 200 West Second Street Winston-Salem, NC 27101 Phone: (336) 733-2000 www.bbandt.com

DEPARTMENTS Asset Management • Brokerage • Capital Markets • Commercial Lending • Corporate Lending • Factoring (Accounts Receivable/Payable) • International Services • Investment Services • Leasing • Merchant Services • Mortgages • Online Banking • Payroll Services • Private Financial Services • Sales Finance • Treasury Services • Trust

THE STATS Chairman and CEO: John A. Allison IV Employer Type: Public company Ticker Symbol: BBT (NYSE) Revenue: $6.2 billion (FYE 12/03) Earnings: $1.1 billion No. of Employees: 26,300+ No. of Offices: 1,400+

KEY COMPETITORS AmSouth Bank of America Fifth Third Bancorp Regions Financial Corp. SunTrust Wachovia

UPPERS • Good training program • Great hours

DOWNERS • Very conservative culture and dress code • Falling morale

EMPLOYMENT CONTACT www.bbandt.com/hs Office-specific HR contacts www.bbandt.com/hs/specialists.asp

THE BUZZ


• • • •

“Solid institution” “Conservative, slow to move” “Insignificant” “Up and coming”


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Vault Guide to the Top 50 Banking Employers BB&T Corporation

THE SCOOP After the war BB&T’s history begins like a late 19th-century novel. Alpheus Branch, the son of a wealthy planter, moved to eastern North Carolina to attend military school and married into a prominent Wilson County family. He set up a small trade business, through which he met Thomas Jefferson Hadley, who was trying to set up an educational infrastructure in Wilson. The duo thought the county could use a reliable bank – swindlers were taking citizens’ money right and left – so they set up Branch and Hadley in 1872. The county residents slowly started leasing money from Branch and Hadley, using its loans to build up their farms and plant a new crop, tobacco. Branch bought Hadley out in 1887, and as the years went on, the bank added savings accounts, trust departments and, come World War I, liberty bonds. Insurance and mortgage products were offered by the early 1920s. When the stock market crashed in 1929, dozens of North Carolina banks had to close their doors. BB&T survived and grew, doubling the number of branches and trebling its assets between 1929 and 1933.

Sweet Carolina Today, with over $97 billion in assets, Winston-Salem-based BB&T is the ninthlargest financial holding company in the country. Through its subsidiaries, the firm offers retail and commercial banking, brokerage, corporate finance, insurance, leasing, trust and investment services through more than 1,400 branches principally in the southeastern and mid-atlantic U.S. (BB&T also has a presence in Indiana.) The bank has the top deposit market share in West Virginia and is in the top three in the Carolinas, Virginia and Kentucky. BB&T is a member of the S&P 500 and, in 2003, came in at No. 287 on the Fortune 500 list. The bank was also on the 2004 Forbes Platinum 400 (a list of America’s best and biggest companies) for the fifth consecutive year. BB&T’s main subsidiary is Branch Banking and Trust Company, but the bank owns many other businesses including Agency Technologies (an insurance software and computer hardware provider), BB&T Insurance Services and Prime Rate Premium Finance Corporation (insurance offerings), Scott & Stringfellow (brokerage and private client services), BB&T Investment Services (discount brokerage), BB&T Leasing, BB&T Factors (a firm managing accounts receivable for various clients in the furniture, textile, and home-furnishing industries), FARR Associates (consulting), Laureate Capital, Lendmark Financial, and Liberty Mortgage (mortgage products), 440

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Regional Acceptance Corporation (auto financing), Sheffield Financial Corporation (small equipment financing), and Stanley, Hunt, DuPree & Rhine (employee benefits consulting). To help such a sprawling organization run efficiently, BB&T management has streamlined the decision making process, organizing its banking network into regional groups, each run by a separate president. Each community banking region is able to apply strategies and policies applicable to its particular area without the red tape of securing approval from BB&T’s headquarters.

Branching out BB&T has been burning up the acquisition trail since 1989, acquiring more than 55 community banks and thrifts, over 70 insurance companies, and 25 non-bank financial services companies. The year 2003 proved to be an especially active one as BB&T made two historic acquisitions. In July BB&T completed its $3.1 billion purchase of First Virginia Banks, the largest bank merger in BB&T’s history. The acquisition of First Virginia added $11.2 billion in assets along with 363 branches, almost 300 of which are located in Virginia (55 branches are in Maryland and 12 are in Tennessee). With the purchase, BB&T improved from fifth to second in Virginia deposit market share, and cracked the top 10 in Tennessee. In November 2003, BB&T Insurance Services announced its largest insurance acquisition ever, a $354 million deal to acquire Alabama-based McGriff, Seibels & Williams (MSW). At the time of the announcement, MSW was the 13th-largest insurance company in the country, specializing in large accounts including those of many Fortune 500 corporations. The move makes BB&T the sixth biggest insurance broker in the U.S. and is part of the bank’s overall strategy to become a nationwide provider of insurance and risk management services. As part of the purchase, BB&T also acquired two MSW subsidiaries: Wood & Company, a wholesale insurance broker specializing in property, casualty and professional liability; and Attenta, one of the biggest workers’ compensation firms in the U.S. In general, it seems that where BB&T’s bank business goes, BB&T’s insurance business tries to follow. For example, in April 2004, BB&T spent $392 million to acquire Republic Bancshares of St. Petersburg, giving BB&T another 72 branches in Florida (bringing the total number to 89). Three months later, BB&T Insurance Services entered the St. Petersburg market, announcing an acquisition of its second agency in Florida, Iler, Wall & Shonter Insurance. In another follow-the-leader move, BB&T Insurance Services purchased Tennessee-based STHARCO, the parent of Kingsport Development Company Insurance in June 2003. The acquisition came on the heels of the announced purchase of First Virginia and complemented 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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banking capabilities BB&T was acquiring in northeast Tennessee and southwest Virginia. In April 2003, BB&T Insurance Services expanded into Kentucky, purchasing Old Colony Insurance Service and Cromwell Insurance Agency. The move followed BB&T’s entry into Kentucky in 1999 when it bought Matewan BancShares (a purchase which gave BB&T the third best market share in the state). BB&T bolstered its insurance capabilities in a different way with a January 2004 acquisition of Charlotte-based Capitol Premium Plan, an insurance premium finance company. Capitol Premium will be combined with South Carolina-based Prime Rate Premium Finance Corporation, a similar company acquired by BB&T in 1994. In April 2003, BB&T completed its purchase of Southeast Fidelity Corporation, an insurance premium finance company located in Florida. The move followed the September 2002 purchase of Floridian bank Regional Financial Corporation for $271.5 million.

GETTING HIRED Develop your skills BB&T runs a formal Management Development Program that lasts six months. As its title indicates, the program is designed to train and produce future managers in banking fields such as commercial lending, retail lending, small business banking, operations, retail brokerage, human systems, trust services and insurance services. Applicants must have a BA or MA in a business field with a minimum of six credit hours of accounting, including three credit hours of financial accounting. A solid academic background is also required, and candidates must be willing to relocate to any of BB&T’s locations. The interview process is said to include “interviews conducted by managers through regional employment consultants,” says one source. “The employment consultant prescreens candidates for all positions. Qualified candidates are sent to the hiring manager, who interviews selected candidates. Behavioral-based interviews are utilized at BB&T.” Another source says, “The interview process is very relaxed.” The contact adds, “Usually, the prospective employee only has to interview once, and only with the hiring manager.” The company recruits at colleges in all states within its geographic footprint. In addition, one contact adds that the firm also sources employees through “competitors, newspapers and employee referrals.”

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OUR SURVEY SAYS The morale of the story While some insiders describe BB&T as a “quality-based,” “well organized and well managed bank,” others say layoffs, as a result of the generally poor state of the economy in recent years as well as the firm’s acquisitions, has taken a toll on morale. One source says, “Employee morale is not good.” The contact adds, “Budget cuts are looming – no raises, no more catered lunch meetings.” According to BB&T, jobs “may be eliminated, at times, as part of the firm’s ongoing process reviews, but the employees in those positions are either offered jobs elsewhere in BB&T or receive outplacement assistance.” The firm also notes that “most of the [recent] job eliminations have been associated with acquisitions where there’s been a redundancy of positions in back-office functions.” Other sources call the culture at BB&T “extremely conservative,” and one insider says that “employees like to talk about their church activities, and they like to know about yours.”

The many faces of comp Compensation varies according to department and experience. A risk manager in the commercial banking department with several years of industry experience reports receiving a salary between $40,000 and $50,000 with no bonus. An HR rep with over a decade of experience makes $57,000 a year. And a real estate lender with several years of experience pulls down $75,000 a year, with a $15,000 bonus. However, raises are hard to come by, according to insiders. “They start you out at a good rate, but forget ever getting a raise,” a trust officer hired in 2003 notes.

Tip-top training Training receives outstanding marks from insiders. “Some training is required annually, and BB&T University offers a vast amount of courses,” says a source. According to the firm, training is provided to all employees. The benefit package, available to all employees who work more than 19 and a half hours per week, is also hailed as tops. “It provides probably the best benefit basis of any bank in the U.S.,” says one employee. However, “we do not offer domestic partner benefits, which would be a benefit to gays and lesbians.” That said, “I haven’t seen nor witnessed any discriminatory issues,” says one source, who adds, “Women are a large part of our region’s officer base.” Benefits also get good grades. BB&T’s offerings include medical, dental, vision, life, dependent life, disability and accidental death and dismemberment insurance, 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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reimbursement accounts, an employee health program, a pension plan, a 401(k) plan with full match on the first 6 percent of salary and a cap of 25 percent of the salary, three weeks of vacation after five years and discounted banking services. The offices are said to be quite nice (“space, decor, equipment are exceptional: modern and well maintained”), but the “old school dress code” isn’t. Business attire is required in most departments, with business casual Fridays. A worker in the call center concedes, “I truly understand where management is coming from with the dress code,” but adds, “people work better with better attitudes when they are dressed comfortably.”

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Chanin Capital Partners 11150 Santa Monica Boulevard 6th Floor Los Angeles, CA 90025 Phone: (310) 445-4010 330 Madison Avenue 11th Floor New York, NY 10017 Phone: (212) 758 2629 www.chanin.com

KEY COMPETITORS Greenhill & Co. Houlihan Lokey Howard & Zukin Jeffries & Co. Lazard

UPPERS • Entrepreneurial culture

DEPARTMENTS

DOWNERS

Mergers & Acquisitions Recapitalizations & Restructurings

• No formal analyst training program

EMPLOYMENT CONTACT THE STATS Senior Managing Director: Russell Belinsky Senior Managing Director: Skip Victor Employer Type: Private company No. of Employees: 45 No. of Offices: 3

Attn: Human Resources Chanin Capital Partners 11150 Santa Monica Boulevard 6th Floor Los Angeles, CA 90025 [email protected] www.chanin.com/careers.php3

THE BUZZ


• “Decent restructuring shop” • “Respectable in their area of expertise” • “Up and coming; sloppy work” • “Who?”


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Vault Guide to the Top 50 Banking Employers Chanin Capital Partners

THE SCOOP Big advice for the middle market Founded in 1984 by corporate reorganization experts Jeffrey Chanin, Russell Belinsky and Skip Victor, Chanin Capital Partners is a boutique investment bank offering financial advisory services, including M&A, restructuring, capital raising, fairness and solvency opinions and valuation reports. Headquartered in Los Angeles with additional offices in New York and London, Chanin offers institutional investors and companies broad advisory experience in numerous industries with capital structures ranging from $30 million to $20 billion Chanin is best known for its strong restructuring practice, which advises companies, creditors and other stakeholders involved in financially distressed situations. The firm consistently ranks as one of the top restructuring teams in the country. The bankruptcy work often leads to M&A opportunities as well, since reorganizations commonly involve asset sales and divestitures, Chanin’s M&A bankers are sometimes brought in to advise in these as well as post-emergence situations. The M&A group also advises financially healthy companies on both the buy-side and the sell-side. Chanin’s valuation group complements the firm’s restructuring and M&A advisory practices by delivering fairness, valuation and solvency opinions for a broad range of transactions. Chanin rounds out its offerings with capital raising and corporate finance capabilities. Since its inception, Chanin has advised on more than $27 billion in M&A transactions; consummated more than $134 billion restructuring deals; provided more than 100 fairness, solvency and valuation opinions; and privately placed more than $5 billion of debt and equity.

Growth spurt In 2003 Chanin worked on 22 restructuring deals involving more than $42 billion in liabilities. Major restructuring deals included advising Global Crossing’s unsecured creditors and assisting noteholders in the Chapter 11 reorganization of Redback Networks. The high level of activity continued into 2004. The Deal placed the firm No. 2 on its May 2004 rankings of active bankruptcies. Chanin worked on 22 restructuring deals, just a few deals shy of the leader, the much larger Houlihan Lokey Howard & Zukin. Chanin was also active in the M&A arena in 2003, advising on 26 deals worth $4.3 billion. In fact, the Chanin M&A group was so busy that the firm was listed on Thomson Financial’s domestic M&A league tables through September 2003. While Chanin ended the year out of the top 25, the bank still had a strong showing, ranking 446

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Vault Guide to the Top 50 Banking Employers Chanin Capital Partners

No. 27 overall in U.S. M&A advisory, according to the firm’s year-end summary. M&A deals of note in 2003 included Commtel’s sale of Community Service Telephone Company to FairPoint Communications, and the sale by Magnatrax of two of its subsidiaries.

London calling In July 2002, Chanin opened an office in London, the bank’s first location outside of the U.S. “While we have a significant presence in the United States, we are seeing an increased level of financial transactions coming from Europe,” said Randall Lambert, the managing director who now runs the London branch. (Lambert also heads the New York office.) In November 2002, Chanin improved its overseas restructuring presence, announcing an alliance with Close Brothers Corporate Finance, a financial advisory firm with more than 150 bankers in Frankfurt, London, Paris and Madrid. Providing the rationale for the partnership, Randall Lambert said, “Close Brothers has completed more European restructuring transactions in the last few years than any other restructuring adviser; this new relationship creates an even stronger partnership. Our experience in the United States and our extensive relationships with U.S. investors combines perfectly with Close Brothers’ existing franchise in Europe.”

GETTING HIRED Getting an in with Chanin Chanin typically hires applicants with strong academic records and business-related degrees. In addition, the firm often looks for junior-level hires with significant experience with modeling, research and presentations. Typically, junior hires will be just out of undergrad or have one to three years of consulting or accounting experience. According to Chanin, “Junior-level hires can expect to hit the ground running and have the benefit of getting fairly regular exposure to clients.” Prospective employees can find current openings on Chanin’s web site at www.chanin.com (click on the “Careers” link). Candidates interested in available positions should send a cover letter and resume to the firm’s human resources department either by mail (see the company’s address above) or e-mail ([email protected]). An applicant seeking positions in multiple offices should not apply separately to the relevant locations; instead, the candidate should indicate in one cover letter the desired positions and locations. Chanin does not have a formal internship program but may hire interns depending on business conditions. 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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Comerica Comerica Tower at Detroit Center 500 Woodward Avenue, MC3391 Detroit, MI 48226 Phone: (313) 222-4000 www.comerica.com

DEPARTMENTS Business Bank Small Business Banking & Personal Financial Services Wealth & Institutional Management

THE STATS Chairman, CEO, and President: Ralph W. Babb, Jr. Employer Type: Public company Ticker Symbol: CMA (NYSE) Revenue: $3.3 billion (FYE 12/03) Net Income: $661 million No. of Employees: 11,854 No. of Offices: 500+

KEY COMPETITORS Bank of America Citigroup Standard Federal Bank

UPPERS • Open-door management policy • Flexible work arrangements

DOWNERS • Inconsistent training program • Emphasis on cost cutting

EMPLOYMENT CONTACT www.comericajobs.com

THE BUZZ


• • • •

“Good regional” “Average” “Small, customer-focused” “OK corporate bank”

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Vault Guide to the Top 50 Banking Employers Comercia

THE SCOOP Money in Motown On its first day of business in August 1849, Detroit Savings Fund Institute, the predecessor to Comerica, drew in a grand total of $41 from its six customers. The bank’s plan to get the working class denizens of Detroit to hold their money in the bank eventually worked so well that by 1870 the company had $1 million in assets. As the auto industry emerged in Detroit, the bank grew rapidly. But when the Depression hit the auto industry, it hit the bank equally hard. Yet the company held on, going after institutional clients as well as individuals. During World War II, the bank president courted government contracts and, after the war, helped Germany and Japan regain financial stability. In 1956 the company merged with three other banks forming Detroit Bank & Trust; come 1973, the bank changed its structure to a holding company in compliance with new federal banking rules. In the 1980s, the name of the holding company was changed to Comerica Incorporated. The company expanded outside of Detroit in the 1980s and merged with major competitor Manufacturers National Corp. in 1992. Today, with $53 billion in assets, Detroit-based Comerica is one the nation’s largest financial institutions. It’s also one of several financial firms whose name is emblazoned on a state-of-the-art professional sports stadium. Comerica Park, the home of Major League Baseball’s Detroit Tigers, opened in 2000.

A crowd of financial services Comerica conducts its business through three operating segments: the business bank; small business banking and personal financial services; and wealth and institutional management. The business bank lends money to middle market and large companies and provides asset-based lending and a host of other financial services relevant to commercial concerns. Specific products and services include lines of credit, cash management, capital market products, international trade finance and loan syndication services. The business bank division also contains Comerica Leasing Services and W.Y. Campbell & Company, which provides investment banking and corporate finance services to mid-sized and large companies. Comerica’s small business banking and personal financial services arm offers traditional retail banking including deposits, consumer lending, and mortgages in addition to small business banking for clients with less than $10 million in sales. The wealth and institutional management businesses at Comerica include private banking, retirement services, institutional trust, personal trust, Comerica Securities 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 brokerage unit), Comerica Insurance Group, Munder Capital Management and Wilson, Kemp & Associates. Munder Capital manages the Munder funds in addition to providing investment advisory to individuals, corporations and governments. Wilson, Kemp & Associates is an account manager for private investors, corporate clients and government entities. Comerica has a large presence in Michigan, California and Texas, and a smaller but still significant footprint in Florida, Canada and Mexico. In addition to its core markets, Comerica offers selected services in various major U.S. cities and in Sao Paolo and Hong Kong. The bank is one of the top 10 commercial lending organizations and top 20 small business lenders in the U.S. Comerica was No. 433 on the Fortune 500 in 2003.

GETTING HIRED Experience (at the firm) counts Prospective Comerica employees can search and apply for open jobs on the firm’s web site at www.comericajobs.com. While one insider finds that “candidates with several years of experience are hired very easily and entry level is very difficult,” another banker maintains “qualified candidates are subject to internal promotions, which make it somewhat more difficult to be hired as an external candidate.” The interview process can vary. One source went through “two interviews, one with the manager and then one with the staff that you would be a member of.” Another’s experience was “a half-day interview process where you meet with at least six different people. There is a technical interview as well as a lunch interview.” A commercial banking source had “five interviews,” and “met with the department manager, the HR rep, the department manager again, two senior VPs and the department manager again. I was asked about my experience, my accomplishments in treasury management sales and my professional goals.”

OUR SURVEY SAYS Conservatively customer-focused Comerica has a “conservative” culture and is considered by insiders to be “a very customer service oriented company.” In addition, there is a “heavy focus on credit analysis and cost containment” and a “strong credit culture with a process-oriented, 450

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team approach to marketing and credit approval.” Still, workers say Comerica is “employee-friendly and focused on personal and professional development, providing alternative work arrangements for those who desire such alternatives.” The firma also “rewards employees handsomely.” Benefits include health, dental, prescription drug coverage, long term disability and life insurance. Comerica also provides employees with a pension plan, a 401(k) plan and an employee stock purchase plan.

The door is open Insiders generally find that Comerica has an “open-door policy.” “Managers are very open and supportive,” says one source. “They want you to succeed.” “Executive management works hard to know as many people in the organization as possible and understand their roles and contributions to our success,” agrees another insider. But one naysayer believes “management is not supportive of getting the best out of their employees. The primary focus is on productivity and cost containment. Technology lags behind the industry by at least 10 years.” A side-effect of cost containment can be heavier workloads for each employee. “With the focus on cost containment, we have an environment which requires long hours, skipped lunches and occasional weekend days to keep up,” says one source, who reports working 50 to 60 hours a week. A different contact doesn’t find the workload so demanding, saying, “I have flexible work hours and am measured on production more than on number of hours in the office.” The source adds, “Time can be taken during normal business hours to participate in volunteer work.” Other sources report schedules hovering between 40 and 50 hours a week.

Dependent dress and training Dress at Comerica depends on one’s particular department. Some are casual always except for client meetings. Some are “business casual overall; some offices prefer to be more formal than not.” Some are “a little more formal.” One contact says, “We do business professional, which is a step up from business casual.” Training also depends on the position. One source says, “Sometimes it feels like too much. But it is a great benefit to the personal and professional development of those who take advantage of the events.” Another notes that there is a “three-week training course in Detroit.” But one insider finds that “one general training course for one or two days per year hardly makes for a well-trained staff.”


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The state of diversity Sources are mixed as to whether Comerica effectively recruits and retains a diverse workforce. According to insiders, the firm possesses “a largely female workforce, with largely male senior management. There’s been some improvement by hiring more senior female managers from outside the company, but there’s an overall lack of mentoring of current female employees to bring them up the ranks,” notes one source. Another contact says, “In California, our employee pool does not match the diversity of the state, particularly with regard to Hispanics.” But a third source reports that the “company takes very seriously the need to be diversified at all levels of the company.”

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Commerce Bancorp Commerce Atrium 1701 Route 70 East Cherry Hill, NJ 08034 Phone: (856) 751-9000 www.commerceonline.com

DEPARTMENTS Commerce Bank Commerce Capital Markets Commerce Insurance Services

THE STATS Chairman and President: Vernon W. Hill II Employer Type: Public company Ticker Symbol: CBH (NYSE) Revenue: $1.1 billion (FYE 12/03) Net Income: $194.3 million No. of Employees: 10,000+ No. of Offices: 290

KEY COMPETITORS Bank of America Hudson United PNC Financial

UPPERS • Integrity of employees

DOWNERS • Lack of privacy of office environment

EMPLOYMENT CONTACT www.commerceonline.com/apply_for_a_job

THE BUZZ


• • • •

“Nice regional bank” “Consumer oriented” “Trying hard” “Up and coming”


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Vault Guide to the Top 50 Banking Employers Commerce Bancorp

THE SCOOP Commerce with convenience Founded in 1973 by current president and chairman Vernon Hill, Commerce Bancorp (CBH) is a bank holding company offering banking, insurance and capital markets services to consumers and corporations. The firm delivers retail and corporate banking products, including deposits and lending, through nearly 300 Commerce Bank branches in Southeastern Pennsylvania, New Jersey, Delaware and New York. With a big focus on customer service, the bank has billed itself as “America’s Most Convenient Bank,” opening branches in desirable locations and keeping them open seven days a week. Commerce Bank has also standardized its business practices across the bank’s entire branch network, a strategy resembling that of a retail or fastfood chain. This shouldn’t be surprising; before founding CBH, Hill developed fastfood restaurants in New York (he has a stake in more than 40 Burger King franchises). In addition to traditional banking offerings, CBH provides insurance services through Commerce Insurance Services, as well as specialized capital markets expertise through Commerce Capital Markets. Commerce Insurance Services was started in 1996 and offers insurance products to individuals and businesses in more than 25 states. Through organic growth and acquisitions, the company currently ranks as one of the 30 largest insurance brokerages in the U.S. Overall, the firm serves over 130,000 clients and brings in more than $800 million in annual premiums. The Commerce Capital Markets subsidiary houses a strong public finance practice, and the company is currently the largest underwriter of New Jersey municipal bonds and notes. Commerce Capital Markets also advises clients in the education and health care industries.

Topping bottom line expectations In 2003, CBH booked record earnings of $194.3 million, a 34 percent jump over 2002. Revenues were $1.1 billion, up 31 percent for the year. Deposit growth, a figure CBH president and chairman Vernon Hill focuses on, was also strong, as deposits jumped 43 percent. In addition, CBH experienced large increases in assets and loans. All in all, it was just another in a series of successful years for CBH. Since 1999, the firm has seen annual increases of 39 percent in deposits, 36 percent in assets and 26 percent in loans. In the same time period, revenues have grown 30 percent while net income has climbed 31 percent.

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CBH continued to reach record heights in the first quarter of 2004, as earnings hit $62 million, up 44 percent from the same period in 2003. Analysts, however, were concerned about a $10 million increase in the bank’s nonperforming loans to $33.1 million. While CBH attributed the rise in bad loans to problems with just a few accounts, some observers remained skeptical given that bad loan exposure had been decreasing for the bank’s competitors.

Growing up quickly CBH’s strategy is one of rapid growth, fortifying its presence in current markets while aggressively expanding into others deemed desirable. In the last three fiscal years, the bank has opened 120 new branches, including 46 in 2003. CBH plans to open another 50 branches in 2004, 40 of them located in the New York metropolitan area (the other 10 will be opened in Philadelphia). Future initiatives include tapping into the metropolitan Washington D.C.-Baltimore market in 2005 and expanding into the Boston area in 2007. The bank’s goal is to grow assets from their current level of $25 billion to $109 billion and the number of locations from 290 branches to more than 700 by 2009. Of course, with more locations comes a greater need for personnel, and CBH plans to make 10,000 new hires over the next five years to staff the new branches.

GETTING HIRED Do you fit? The hiring process at Commerce Bancorp is fairly standard, and somewhat less rigorous than at bulge bracket or boutique firms. One contact notes he had “two interviews, one with the team leader, and the second with various individuals,” including the team leader, department head and a human resources employee. “I was asked about work history, family and relevant work experience.” A vice president notes that he “interviewed with four individuals” and “questions were specific to the position and the culture of the company.” Fitting into the culture of Commerce Bancorp is extremely important, says one commercial lender. “Customer service is paramount,” he says. “We are continually instructed on wow-ing the customer.”


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OUR SURVEY SAYS Just rewards In return for offering great customer service, a VP notes that the company offers a “very comprehensive benefits package, including stock purchase, 401(k), medical, dental, vision and other related mental/health programs.” Another VP notes that the bank provides a “401(k) with matching funds and stock purchase plan.” Commerce Bancorp’s commercial bankers tend to work average hours, with respondents working between 40 to 60 hours per week. However, says one VP, expect to adhere to the “very specific dress code,” which is formal always.

On the train The company’s “ in-house training programs are excellent,” notes one insider. Still, he admits that the “new hire office requirements are demanding at times and too frequent.” Still, the overall integrity at Commerce Bancorp has pleased two VPs. Commerce Bancorp’s “conservative approach to approving new loan requests is very unique,” one VP says. “Most banks need to lend out money in order to make money and will approve 99 percent of the loans that come through. This is quite the opposite within this firm, which approves 1 percent of the loans that come through.” As a result, another VP adds, “I enjoy coming to work every day.”

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Fifth Third Bancorp Fifth Third Center 38 Fountain Square Plaza Cincinnati, OH 45263 Phone: (513) 579-5300 www.53.com

DEPARTMENTS Commercial Banking Fifth Third Processing Solutions Investment Advisors Retail Banking

THE STATS President and CEO: George A. Schaefer Jr. Employer Type: Public company Ticker Symbol: FITB (NASDAQ) Revenue: $6.4 billion (FYE 12/03) Net Income: $1.8 billion No. of Employees: 21,000 No. of Offices: 959

KEY COMPETITORS Bank One Comerica Key Bank National City Standard Federal U.S. Bank Wachovia

UPPERS • Good pay for commercial banking

DOWNERS • Not nationally renown

EMPLOYMENT CONTACT www.53.com

THE BUZZ


• • • •

“Very strong in service” “Should stick to Ohio” “Emerging” “Needs new management”


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Vault Guide to the Top 50 Banking Employers Fifth Third Bancorp

THE SCOOP A fifth plus a third equals one The strangely named Fifth Third Bancorp began its existence in 1858 as the simply named Bank of the Ohio Valley. In 1871 The Bank of the Ohio Valley was acquired by The Third National Bank, and in 1908, the combined company decided to merge with The Fifth National Bank, creating The Fifth Third National Bank of Cincinnati. The name was subsequently changed to its current form, and today, Fifth Third Bancorp provides retail banking, commercial banking, investment advice and bank processing services to 5.7 million customers through 17 affiliates in Ohio, Kentucky, Indiana, Michigan, Illinois, West Virginia, Tennessee and Florida. In addition to offering consumer and corporate banking, the Cincinnati-based bank is one of the Midwest’s largest money managers and provides trust and investment management services through its investment advisors group. The division oversees more than $188 billion in trusts assets and more than $31 billion in assets under management. The bank’s other major business unit, Fifth Third Bank Processing Solutions, is one of the largest third-party providers of electronic funds transfer in the nation, processing more than 7 billion transactions annually.

Super-bank Fifth Third can’t seem to go a year without critical acclaim. In 2004 Fifth Third was named the No. 1 Superregional Bank on Fortune’s list of the Most Admired Companies in America, the third year in a row the firm has topped the Superregional category. In 2003 Global Finance recognized Fifth Third as one of The World’s Safest Banks. American Banker had Fifth Third on its survey of the Most Efficient Bank Holding Companies, and the periodical also gave the bank its top grade for reputation based on factors such as financial stability, customer focus, ethical behavior and workforce policy. In addition, Fifth Third was among Forbes magazine’s Platinum 400 for the fourth consecutive year. Colleen Kvetko, president and CEO of Fifth Third Bank’s Florida subsidiary, was named one of the 25 Most Powerful Women in Banking by U.S. Banker in October 2003. Fifth Third has also received praise for its charitable efforts as BusinessWeek recognized the Midwest firm as one of America’s most philanthropic companies as a percentage of revenues.

Accounting for a big error Since the fall of 2002, Fifth Third has been plagued with federal and state probes into faulty bookkeeping in the company’s trust unit. During the summer of 2002, Fifth

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Third upgraded its computer systems and discovered an $82 million accounting discrepancy in its bond portfolio. The size of the error prompted state and federal regulators to launch an investigation into Fifth Third’s bookkeeping. As part of the probe, Fifth Third was required to hire an independent consultant to review internal procedures, and the bank was prevented from making any acquisitions. Fifth Third had a deal in the works to buy Franklin Financial Corp. since July 2002, but given the acquisition ban, the closing of the transaction was postponed to June 2004.

Ditching the inessentials Although Fifth Third has not acquired any businesses recently, the bank has been busy divesting unwanted assets. In March 2004, Fifth Third decided to exit some of its transaction processing businesses outside of its core markets in Ohio, Indiana, Kentucky, Michigan and Illinois. The bank sold its third-party and agent-bank merchant division to TransFirst, a Dallas transaction processor, for an undisclosed sum. Most of the accounts sold were single stores (Fifth Third will continue to concentrate on chain store accounts). In another move designed to rid itself of a noncore business, Fifth Third announced it was selling its corporate trust business to The Bank of New York for an undisclosed price in November 2003 (analysts estimated the deal was worth less than $50 million). The move closely followed Fifth Third’s sale of its stock transfer business in August 2003 to Australian firm Computershare Ltd. And in January 2003, Fifth Third completed its $37 million sale of Fifth Third Insurance Services (the firm’s property and casualty insurance unit) to Hub International Limited. Fifth Third will still offer life and other insurance products.

GETTING HIRED Pick your program The company runs several training programs for new hires, including associate programs in finance, commercial banking, investment advising, retail banking (focusing on branch operations, customer service and office managers), operations, processing solutions and IT. For GPA and background requirements, as well as open job postings, see the firm’s career section of its web site (www.53.com). Candidates can also submit resumes through that site. “We are very selective about the talent we hire,” notes a source inside the company.


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OUR SURVEY SAYS Rewarding for the time Fifth Third has a “sales, hustle, teamwork,” culture with a “customer service orientation.” “Hard work is well rewarded,” says a source, adding that there is “the availability of earning additional income in a variety of ways.” Indeed, employees report they’re quite happy with their salaries. Perks are praised as well. The firm’s offerings include profit sharing; a 401(k) with different levels of matching depending on years with the company; medical, dental, life, and voluntary disability insurance; commission; two to five weeks of vacation; flex spending accounts; education loans; discounts on vision care; and discounts on banking. Insiders say hours are fairly good, too. “Delegation among my employees reduces my hours,” notes a source, who works between 40 and 50 hours a week. “The bank expects people to work for the hours paid,” says another source, who reportedly works between 50 and 60 hours a week. Managers get particularly high marks. You’re “treated as a partner,” assesses one source, who says there’s a “positive attitude coming from the top.” Another banker likes that management gives him “control over [his] area of responsibility.”

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First Albany Companies 30 South Pearl Street P.O. Box 52 Albany, NY 12201-0052 Phone: (518) 447-8500 One Penn Plaza 42nd Floor New York, NY 10119 Phone: (212) 273-7100 www.fac.com

DEPARTMENTS Descap Securities First Albany Capital Equity Capital Markets Investment Banking Municipal Capital Markets Taxable Fixed Income FA Technology Ventures

KEY COMPETITORS Ryan Beck SG Cowen & Co. William Blair & Co.

UPPERS • Financially solid and growing

DOWNERS • Albany not exactly the first name in banking

EMPLOYMENT CONTACT Director of Human Resources Rose Miller [email protected] Fax: (518) 447-8115

THE STATS Chairman: George C. McNamee CEO and President: Alan P. Goldberg Employer Type: Public company Ticker Symbol: FACT (Nasdaq) Revenue: $195.5 million (FYE 12/03) Net Income: $10.6 million No. of Employees: 476 No. of Offices: 19

THE BUZZ


• • • •

“Up and coming” “Who banks in Albany?” “Mediocre research” “Tech focused”


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Vault Guide to the Top 50 Banking Employers First Albany Companies

THE SCOOP Committed to institutions Just as its name suggests, First Albany Companies is a group of companies organized under the First Albany umbrella. The firm has 19 offices in 12 states, including New York, California and Texas, and conducts business through three subsidiaries: First Albany Capital, which provides investment banking and trading services; FA Technology Ventures, which invests venture capital in early stage and expanding technology companies; and Descap Securities, an institutional broker-dealer specializing in mortgage- and asset-backed securities. While First Albany does provide some services to individuals, the company’s main clients are institutions. The firm does not offer retail brokerage services, having divested these operations in August 2000. Although First Albany is a publicly traded company, the firm is more than 50 percent owned by its employees. First Albany Capital is the investment banking and securities trading arm of the company and is run through four divisions (taxable fixed income, municipal capital markets, investment banking and equity capital markets). Through its taxable fixed income group, First Albany Capital trades corporate bonds and provides fixed income research on more than 250 companies. In February 2004, First Albany enhanced its fixed income capabilities with the announcement of a $32 million acquisition of New York City-based Descap Securities, Inc., a boutique brokerage and investment bank focusing on the issuance and trading of mortgage-backed securities. First Albany’s management believes the acquisition will be accretive (increase earnings per share) in 2004. Municipal bonds are traded by the municipal capital markets group, which also underwrites public finance offerings and provides municipal market research. First Albany Capital’s investment banking group provides underwriting and advisory services primarily to small and middle market companies in the consumer, energy, healthcare and technology industries. The equity capital markets division complements the company’s investment banking services by providing research on developing markets within the same industries served by the firm’s investment bankers. First Albany also has a partnership with META Group, giving First Albany access to META Group’s technology research. In addition to offering research, equity capital markets provides sales and trading, and the firm is one of the largest market makers in Nasdaq securities.

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The tech venture First Albany’s venture capital business is run through the FA Technology Ventures subsidiary. The firm makes investments of $3 million to $8 million in young and growing companies in the information technology and energy technology sectors. FA Technology Ventures also delivers strategic advice to companies in which it has invested. In the fourth quarter of 2003, the firm invested a total of $7 million in four small firms, including Adapt Media, Seranoa Networks, Concentrix Corporation and IP MobileNet.

Back (again) in black In its more than 50 years of existence (the First Albany Capital name dates back to 1953), the firm has never ended a year in the red, and in 2003, First Albany actually saw record revenues and earnings. The firm’s results were bolstered by a surge in its equity capital markets and investment banking businesses. Equity capital markets was particularly impressive, increasing its top line to $52.3 million, a 67 percent jump over 2002’s revenues. The boom in banking and trading was more than enough to offset the somewhat down years experienced by the firm’s municipal capital markets and taxable fixed income groups.

Brand sensitive In 2003, First Albany decided to give itself a small makeover. In November, the firm announced a new branding campaign, updating the company’s logo and sprucing up its web site and marketing materials. The company also changed the name of one of its subsidiaries; First Albany Corporation became First Albany Capital Inc. In a statement released by the firm, First Albany president and CEO Alan Goldberg said, “Smart businesses build on their strengths and adapt to new growth opportunities. First Albany is following this model, and we are poised for continued, substantial growth across our business lines. This new identity better reflects our focus on the institutional marketplace.” Additionally, as part of its plan to focus on its core businesses, First Albany announced at the end of the first quarter 2004 that it would be discontinuing FA Asset Management, its asset management business, with the exception of the institutional convertible bond arbitrage advisory group. According to the firm, First Albany “is exploring options for the balance of FA Asset Management, which may include the sale of the business to its employees.”


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GETTING HIRED First Albany lists its job openings through the web site careerbuilder.com, where applicants can review open postings and submit resumes and cover letters. To get to the firm’s page on careerbuilder, follow the link in the “careers” section of the First Albany web site, ww.fac.com. Interested candidates can also directly contact First Albany about opportunities by e-mailing or faxing Rose Miller, the Director of Human Resources, at [email protected] or (518) 447-8115.

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First Horizon National Corporation 165 Madison Avenue Memphis, TN 38103 Phone: (901) 523-4444 www.firsthorizon.com

DEPARTMENTS* First Horizon Financial Services First Tennessee Financial Services FTN Financial Transaction Processing *Business lines

THE STATS Chairman and CEO: J. Kenneth Glass Employer Type: Public company Ticker Symbol: FHN (NSYE) Revenue: $2.45 billion (FYE 12/03) Net Income: $473.3 million No. of Employees: 11,787 No. of Offices: 500+

KEY COMPETITORS BB&T Corporation Regions Financial SunTrust Banks

UPPERS • Family-oriented culture

DOWNERS • Too focused on mortgage business?

EMPLOYMENT CONTACT www.ftncareers.com

THE BUZZ


• “Darn good MBS [mortgagebacked securities] house” • “Never heard of them”


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Vault Guide to the Top 50 Banking Employers First Horizon National Corporation

THE SCOOP The firm formerly known as First Tennessee (National Corporation) In March 1864, Frank S. Davis called a meeting of like-minded folks interested in creating Memphis’s first national bank. The bank’s charter was received two weeks later, and the First National Bank of Memphis was born. Today, the company has a brand new name – First Horizon National Corporation – and ranks as one of the 50largest banks in the U.S., with $24.5 billion in assets. In April 2004, the firm changed its name from First Tennessee National Corporation to First Horizon National Corporation to reflect the company’s growing presence outside of its home state. First Horizon’s operations are divided into four main business lines: First Tennessee Financial Service, FTN Financial (capital markets and investment banking), First Horizon Financial Services and Transaction Processing. The First Tennessee Financial Services group delivers retail and commercial banking services, including deposits, loans, insurance and financial planning to approximately 500,000 clients across the country. FTN Financial is First Horizon’s investment banking arm, offering capital markets, research and advisory services to institutional investors. First Horizon Financial Services, building on a mortgage business that is one of the top 15 providers of mortgage originations and servicing, provides a full range of financial services, including home loans, consumer lending, construction lending, small business lending, financial planning, wealth management products, deposits and credit cards. First Horizon’s fourth major line of business is Transaction Processing, which includes First Horizon Merchant Services and First Express Remittance Processing. These units offer credit card merchant processing, nationwide bill payment processing, check clearing operations and other products and services. First Horizon Merchant Services is one of the largest processors of credit card payments for the travel and entertainment industry. First Express Remittance Processing offers the most next-day check clearing points in the nation. Thanks in large part to an extremely strong mortgage business, First Horizon brought in record profits of $473.3 million in 2003. The bottom line was 26 percent higher than 2002’s results of $376.5 million. Still, some analysts worry that First Horizon is too reliant on its mortgage operations (especially given the forecast for higher interest rates), but chairman and CEO Ken Glass believes the firm’s business mix is sound. “We are very pleased with the consistency of our earnings in 2003 given the dramatically different business environments in which we operated,” explained Glass 466

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in the year-end earnings press release. “The first three quarters were heavily influenced by the refinance market, and the fourth reflected a more balanced contribution from our three major business lines.”

What’s in a name? In April 2004, First Tennessee National Corporation officially became First Horizon National Corporation, reflecting the firm’s growing national presence. Though First Horizon still holds the largest deposit share in Tennessee, over half of its clients are outside of the state. First Horizon National Corporation chairman and CEO Ken Glass released a statement in January 2004 indicating that he and the rest of the company’s leaders “don’t take this lightly. First Tennessee has been our holding company name since 1971. First Tennessee is the name of our extremely successful bank in Tennessee, and that name will not change. But the corporation name should signal to the world that we are a national company, and we believe that First Horizon National Corporation will do just that.” First Horizon’s mortgage, merchant processing and insurance businesses had already operated under the First Horizon name. First Horizon leaders plan to retain the FTN Financial name for investment banking operations.

First-rate workplace Year after year, First Horizon is recognized as a great place to work. The company has appeared on Fortune’s list of the 100 Best Companies to Work For since the list began seven years ago. In fact, the company is among only 24 companies that have been named to the list every year since its inaugural publication in Fortune. First Horizon also made Working Mother’s list of the 100 Best Companies for Working Mothers for the ninth consecutive year and made its first appearance on American Association of Retired Persons’ rankings of the 25 Best Employers for Workers over 50, with an impressive No. 13 ranking. The company’s business practices were recognized as well when First Horizon made Business Ethic’s list of the 100 Best Corporate Citizens. First Horizon is also keeping up with the times. The company was included on the CIO 100: 100 Leaders for the Next Millennium, and on Information Week’s InfoWeek 500.

Leaving home Of the companies included in Fortune’s 100 Best Companies to Work For in America, First Horizon ranked seventh in job growth with 1,426 newly created positions. Part of that job creation came through aggressive geographic expansion. In July 2003, a First Horizon Bank was established in Fairfax, Va., making it First 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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Horizon’s first financial center outside of Tennessee. First Horizon was already providing mortgage, construction lending and wealth management services in Virginia. The company will continue to grow organically and will also make targeted community bank acquisitions in areas where First Horizon mortgage operations are already located, including Atlanta, Baltimore, Dallas, Phoenix and Seattle. One area where First Horizon is reducing its presence is Arkansas. At the end of 2003, the company completed the sale of substantially all of the assets and liabilities of its wholly-owned subsidiary First National Bank of Springdale to First Security Bank. The sale included four branches and was expected to net First Horizon a profit between $1 million and $2 million (First National had been acquired in 1995 for $70 million).

GETTING HIRED What lies inside the Horizon? First Horizon lists career opportunities at www.ftncareers.com, and accepts applications through the site. A source within the company says the firm also recruits “across the country” and applicants can expect “three interviews.” The site lists some of the perks of working at First Horizon. According to the company, it offers a total compensation package that “supports the various needs of employees to help in managing their money, health, family and career.” Benefits include: 401(k) savings plan with a company match after one year of service, life insurance protection at no cost to employees, a dedicated financial center with discounts on company products and services, health and dental plans, short- and long-term disability, Mayo Clinic health and wellness resources, workplace flexibility options, adoption reimbursement, dependent scholarship program, tuition reimbursement, an employee referral program and an online career center with internal job opportunities. The company also provides non-taxable income to assist with the purchase of benefits to subsidize child care, elder care, health care and retirement savings.

OUR SURVEY SAYS Putting people first First Horizon is said to be a “family-oriented,” “very employees-first” place, where “employees are empowered to make their own decisions.” One insider says the company’s atmosphere is “one of coaching and encouraging.” The pleased contact 468

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adds, “Since I began my career in 1984, this is the best bank I’ve worked for. We’re provided the support needed to focus on our goals and mission.” The source identifies support to include “resources of people and materials, training beyond our job and even leadership training.” The contact also says that “the company’s vision is to honor its employees, along with its customers, as the number one priority.” The company has casual Fridays and “plenty of perks to help balance family and work life.” Hours seem to be standard for commercial banking. One recent Nashville hire, a small business relationship manager, reports recieving a “base salary of $60,000 plus bonuses.” The source explains that “bonuses are based on the success of financial centers in meeting their small business goals” and “are designed to encourage teamwork and doing what’s best for the customer.” He adds, “Occasionally, we have special promotions with additional bonuses.”


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KeyCorp 127 Public Square Cleveland, OH 44114 Phone: (216) 689-6300 www.key.com

DEPARTMENTS Consumer Banking Corporate & Investment Banking Investment Management Services

THE STATS Chairman, CEO, and President: Henry L. Meyer III Employer Type: Public company Ticker Symbol: KEY (NYSE) Revenue: $4.5 billion (FYE 12/03) Net Income: $903 million No. of Employees: 19,618 No. of Offices: 906

KEY COMPETITORS Bank One National City U.S. Bancorp

UPPERS • Collegial, team-oriented culture • Good work/life balance

DOWNERS • Losing luster outside of regional footprint • Work can be monotonous

EMPLOYMENT CONTACT www.key.com/careers

THE BUZZ


• “Needs more consistent retail presence” • “Quality” • “Pretty good Midwestern bank” • “Too regional”

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Vault Guide to the Top 50 Banking Employers KeyCorp

THE SCOOP A key regional player With banking roots extending back as far as 1825, KeyCorp is now one of the largest financial companies in the nation, with more than $84 billion in assets. The bank offers consumer banking, consumer finance, commercial banking, investment banking and investment management services to clients located primarily in the U.S. KeyCorp’s 906 KeyCenter branches are spread across 12 states, and the bank has the 11th largest branch and ATM network in the country. In 2003 KeyCorp came in at No. 285 on the Fortune 500 and was ranked No. 262 on the Forbes 2000. KeyCorp’s consumer banking division offers traditional banking services, including deposits, loans and investment products. The unit also handles the financial needs of small companies with annual sales of $10 million or less. The bank’s consumer finance arm provides individuals with mortgage and home equity products as well as financing for automobiles and education. While KeyCorp’s core offerings target individuals, the bank is trying to focus more on building up its corporate and investment banking arm to better service middle market and large companies, as well as institutions and governments. The division is comprised of four subgroups: KeyBank Capital Markets, KeyBank Commercial Banking, Key Equipment Finance and KeyBank Real Estate Capital. Together, the groups offer investment banking, corporate lending, treasury management, securities trading, foreign exchange, equipment financing and real estate financing. Investment banking services are principally offered to middle market clients through KeyCorp’s McDonald Investments subsidiary, a full-service investment firm that provides advisory, capital raising services and equity research. In 2003, The Wall Street Journal selected four McDonald Investments research analysts to its Best on the Street list. KeyCorp rounds out its offerings with investment management services delivered through its Victory Capital Management and McDonald Financial Group subsidiaries. Victory Capital Management manages investments for all client classes, including corporations, governments and individuals. The unit also manages the Victory family of mutual funds. In July 2003, Victory Capital added to its asset arsenal, acquiring New York City-based NewBridge Partners, an investment management company with $1.8 billion in assets under management. KeyCorp’s other investment management subsidiary, McDonald Financial Group, focuses on delivering estate planning and asset management services to high-net-worth clients.


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Acquiring minds want to know KeyCorp saw its profits fall a bit in 2003 (from $976 million to $903 million) as the bank experienced tough times for its commercial lending business, as well as a $15 million loss from the firm’s fund transfer operation. Results were buoyed by a strong performance in commercial leasing and an improvement in the bank’s portfolio of nonperforming loans. The bottom line also benefited from expense controls, which included a reduction in firmwide headcount by 750. Overall profits could have been better, but KeyCorp’s management apparently saw enough good results to raise the company’s dividend for the 39th consecutive year. Notwithstanding KeyCorp’s slightly down year, many view the bank to be an attractive acquisition target, especially given the consolidation wave hitting the financial services industry. For its part, KeyCorp anticipates being independent until further notice, and the firm is looking to grow its asset management business through acquisition.

Timing the markets In March 2004, KeyCorp announced that the SEC, NASD and the New York Attorney General’s office were investigating the bank’s McDonald Investments brokerage subsidiary to determine if the unit’s managers or employees had engaged in any improper trading of mutual funds or other securities. The announcement came shortly after KeyCorp had fired brokers and closed the McDonald Investments office in Chicago in response to an ongoing internal probe, which uncovered improper market timing practices. At the time of KeyCorp’s March announcement, several other Wall Street brokerages were being similarly investigated by federal authorities.

GETTING HIRED Three doors KeyCorp conducts three formal college recruiting programs. The analyst program is within the corporate/investment banking division and includes training on financial analysis and rotations in various lines of business such as portfolio management, global treasury management and commercial banking. Analyst candidates should have a degree in finance or accounting, a 3.3 GPA, relevant internships, strong communication, analytical and interpersonal skills and knowledge of Microsoft Word, Excel and PowerPoint. The finance management associate program focuses on the treasury, finance/planning and forecasting groups, with associates rotating

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through these departments. Candidates should have a strong background in finance or accounting, relevant internship experience, and strong communication, analytical and interpersonal skills. Questions about finance and analyst programs can be emailed to [email protected]. The technology management associate program trains recent grads for IT careers and in IT applications. Candidates should have a degree in a tech field, such as computer science, information systems, or systems analysis, along with IT on-campus or internship work, excellent communication skills, a good academic record and a solid work ethic. E-mail questions about the technology associate program to [email protected]. There are also different paths into the firm. A source says candidates can be found “locally, through both print and the Internet. Higher levels involve a regional or national search, sometimes using a search firm.” Says one insider, “We are very selective in terms of skills and experience. Emphasis is placed on customer service skills.” Prospective employees can take a look at open jobs through Key’s web site (click on “About Key,” then “Working at Key,” then “Jobs”).

The view on the ‘views According to the firm, the formal interview process at Key is a two-round affair; a campus recruiting team conducts the first-round interview on campus and those who pass the screen are invited to Key’s Cleveland headquarters to interview with multiple senior managers. Insiders, however, report varying interviewing procedures. A source in HR, for example, says there is a “minimum of two interviews – a screening interview with HR, a second interview with the hiring manager and, for higher level positions, additional interviews with upper level management.” Another source had “three interviews with the hiring manager, senior VP and executive VP,” with “six months between the first interview and the hire date.” An investment banking salesperson had a less drawn-out experience, sitting through “four interviews with various individuals, including HR, management and brokers on the team.” And a Key commercial banker had “one all-day interview with all members of the department, including supervisors and peers.”


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OUR SURVEY SAYS Employees are customers, too Insiders report that they are very pleased to be working at Key. “This is the best job I’ve ever had,” enthuses one contact. “It’s a great job and a great corporation,” says another. “Key has always been good to its employees,” says one insider. “Its philosophy is employees are customers, too, and should be treated well.” Agrees another satisfied insider: “Key seems to treat its employees very well. There is truly a team spirit here; employees are very loyal to Key.” While one respondent calls Key “entrepreneurial,” another says it is “a little too corporate, but the benefits far outweigh the boring banker image.” A few respondents note the accountability standards at the bank, saying there’s an expectation of “high performance – always looking for continuous improvement.” Dress is “business casual, but you frequently wear suits to meetings with executives,” says one source. Employees say they’re happy with the training, though one clarifies that there’s “excellent banking training but only okay sales-specific training.” Along with formal skills training, Key provides diversity training for both junior personnel and executives. The firm also has employee-led diversity councils as well as an executive-run Board of Inclusion, which works on recruiting and retaining a diverse workforce. In addition, Key partners with various organizations, including the National Black MBA Association, the National Society of Hispanic MBAs, and INROADS to help with minority recruiting efforts. One source, though, still thinks that minorities at Key face a “glass ceiling,” and he urges the bank to “set goals for promoting [minorities] into senior positions.”

This is the life One of the reasons Key employees enjoy working there is the firm’s emphasis on work/life balance. Key management respects the firm’s workforce, one respondent says, and “that respect translates to flexibility – they respect that families are important, and often allow employees to work from home and work flexible hours, as long as the work doesn’t suffer.” Another source says managers are “family friendly.” Still, notes one source, “there are high expectations that come with that flexibility.” Hours are also flexible. Most employees work either 40 to 50, or 50 to 60 hours a week, though not in the typical 9 a.m. to 6 p.m. setup. “I’m a sales rep and am able to work from home,” says one source. Another says, “I frequently take work home with me which averages an additional five hours per week.”

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Taking stock of salary Insiders are generally satisfied with their paychecks, with one source noting that “compensation is directly related to profits earned for the bank, so basically you eat what you kill.” A commercial banking salesperson with a couple of years of experience reported a $52,000 salary with a bonus ranging between $8,000 and $10,000. An experienced professional in the trading group had a salary of $75,000 with a bonus of $200,000. An asset management employee with a couple of years of experience brought in $55,000 with a $6,000 bonus. And an I-banking salesperson had a salary of $90,000. One employee notes that the 401(k) has an “excellent match, far above the industry standards” (the firm matches up to 6 percent of one’s salary). Also, “stock options are frequently granted as incentive for good performance.” In addition, Key employees can purchase the company’s stock at a 10 percent discount. In keeping with the “employees are customers” theme, the Key Discounts program gives employees discounted banking products such as free checking and discounted loans; employees also get reduced prices on the wares of selected retailers. Additionally, philanthropic employees who’ve been at the firm for at least one year can take advantage of the Key Matching Gift Program, which matches contributions to qualifying non-profit organizations.


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Morgan Keegan & Company Morgan Keegan Tower 50 Front Street, 17th Floor Memphis, TN 38103 Phone: (901) 524-4100 www.morgankeegan.com

DEPARTMENTS Equity Capital Markets Fixed Income Capital Markets Morgan Asset Management Private Client Group Regions Morgan Keegan Trust

THE STATS Chairman: Allen B. Morgan, Jr. President and CEO: G. Douglas Edwards Employer Type: Subsidiary of Regions Financial Corporation Revenue: $694 million (FYE 12/03) Net Income: $82 million No. of Employees: 2,725 No. of Offices: 145

KEY COMPETITORS A.G. Edwards & Sons Jones Financial Companies Raymond James Financial

UPPERS • Close knit culture • Good hours for those outside investment banking

DOWNERS • Lacks larger firm resources • Compensation has suffered since acquisition by Regions

EMPLOYMENT CONTACT [email protected] www.morgankeegan.com/html/blue/career_ops

THE BUZZ


• “Good niche shop out of Memphis” • “Small” • “OK regional”

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Vault Guide to the Top 50 Banking Employers Morgan Keegan & Company

THE SCOOP Putting its money where the South is Founded in 1969, Morgan Keegan & Company is one of the largest full service investment banks in the South, offering securities underwriting, sales and trading, and research, in addition to private client services such as investment advice and wealth management consulting. The firm was acquired by Regions Financial Corporation, the nation’s 25th-largest bank, in 2001. Morgan Keegan currently operates out of 145 offices in 15 states, and in 2003 the Memphis-based bank established its first international location with the opening of an equity capital markets office in Toronto. Morgan Keegan’s fixed income group is one of the nation’s premier underwriters of municipal securities. The firm is particularly strong in the south central U.S., where Morgan Keegan was the top underwriter of municipal bonds in 2003, the 10th consecutive year the bank has achieved this rank. Covering more than 200 companies, Morgan Keegan’s research group is also well-respected. In 2004 The Wall Street Journal placed four Morgan Keegan equity analysts on the newspaper’s Best on the Street survey, and five research analysts were included in the review of the Forbes.com-StarMine Top Analyst Performances for 2003 in North America. In 2003 Morgan Keegan’s founder and chairman, Allen Morgan Jr., shifted chief executive responsibilities to president G. Douglas Edwards, who has been with Morgan Keegan for over 25 years. John C. Carson assumed Edwards’ duties as president of Morgan Keegan’s Fixed Income Capital Markets group. In addition to his position as chairman of Morgan Keegan, Morgan Jr. now serves as vice chairman to Regions Financial.

The shoe fits Regions Financial’s footprint in the southern U.S. significantly overlaps with Morgan Keegan’s, allowing for extensive cross-selling opportunities between the two firms. So far, the results of the 2001 merger have been very good, with Morgan Keegan achieving record profitability in 2003 while helping Regions acquire high-net-worth customers. And the cross-selling potential looks to be even bigger in the future. In January 2004, Regions announced it would be merging with Memphis-based Union Planters Corp. to create the 15th-largest bank in the U.S. The firm is expected to be a power in the 15 southern states in which it has a presence.


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GETTING HIRED Stress on Southern students Candidates for positions at Morgan Keegan should expect to go through a “very difficult” hiring process with “two to three interviews.” A senior financial planner notes that when she was hired “in 1991, it was a very easy interviewing process. Now, it’s a much longer procedure, meeting all management and department employees.” Although they can be arduous, Morgan Keegan interviews are generally “informal” and are reported to consist primarily of “questions about experience.” Certain departments at Morgan Keegan such as “investment banking, equity capital markets, and fixed income like to recruit from the top MBA schools in the country,” says a source, “but it’s possible to get a job without that credential. If you are sharp and have a good rapport with management, you can get hired.” Another contact says that Morgan Keegan “mainly recruits by word of mouth,” but says the firm usually swings by the campuses of Duke, the University of North Carolina, the University of Virginia, Vanderbilt, Washington University and the University of Texas on a quest for new analysts and associates. One insider reports that the company hasn’t “hired much in the last three years” and “preference is given to people with ties to the Southeast.” Morgan Keegan lists open positions on its web site, separated by location (headquarters or elsewhere) and division. Interested candidates can apply for desired openings through an online application process.

OUR SURVEY SAYS Family affair According to insiders, Morgan Keegan is “a regional firm with a small, family feeling.” There’s a “Southern flavor,” and it’s “competitive, young, challenging and rewarding.” The employees are said to be “friendly, fun people who have numerous interests outside of work.” Downsides at Morgan Keegan include “competing with bigger firms with more resources,” says one insider. Also, “with the takeover by Regions, raises, benefits and compliance have changed for the worse,” reports another. As for the dress code, a contact in Morgan Keegan’s Memphis headquarters says, “Everyone is expected to be in suits and women are encouraged to be in skirt suits and not wear pants.” Morgan Keegan does allow for casual Fridays during the summer.

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Managers get fairly high marks from the employees. One employee warns, though, that banking “is a tough industry. If you want to get treated with great respect, you should probably work for a government entity, not an investment firm.” For those outside investment banking, the work week isn’t too strenuous, but junior investment bankers can work long hours. As for climbing up the corporate ladder, one contact believes that getting promoted at Morgan Keegan is largely a function of “who you know, not what you know.” The source, a female banker, also complains that “women still fall behind men in pay and management.”

Down (South) compensation Most Morgan Keegan sources believe their salaries could be higher. A salesperson in the investment management group with seven to 10 years of experience reports earnings of $36,000 with a bonus of $15,000. “My salary is fine combined with commission, but my actual salary has not increased in over two years – nobody in my office has received a raise,” says one Atlanta-based source, adding, prior to that, “most people in the firm had received a raise on a yearly basis.” A source in the corporate finance division with about 10 years of experience reports receiving a salary of $85,000. Another insider notes that “bonuses are paid in August and February. The August bonus is a fixed percentage of base salary, while the February bonus is based on the profitability of the department.” Perks at Morgan Keegan include “discounted gym memberships,” plus “the firm matches part of the 401(k) contribution, and it issues options and restricted cash.” There is also a deferred compensation plan. One contact reveals that the firm “used to have a stock purchase plan but it stopped when Regions bought us.” The source adds that “stock options are available for senior VPs and up.” Other benefits at Morgan Keegan include a qualified parking/mass transportation plan, partial tuition reimbursement for approved courses and free counseling for employees and their families.


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National City Corporation National City Center 1900 East Ninth Street Cleveland, OH 44114 Phone: (216) 222-2000 www.nationalcity.com

DEPARTMENTS Asset Management Consumer & Small Business Financial Services National Consumer Finance National Processing Wholesale Banking

THE STATS Chairman and CEO: David A. Daberko Employer Type: Public company Ticker Symbol: NCC (NYSE) Revenue: $8.0 billion (FYE 12/03) Net Income: $2.1 billion No. of Employees: 33,000+ No. of Offices: 1,100+

KEY COMPETITORS Bank One Fifth Third Bancorp KeyCorp PNC Financial Services Group U.S. Bancorp

UPPERS • Diverse work environment • Reasonable hours

DOWNERS • “National” not well-known nationally • Mixed views on training programs

EMPLOYMENT CONTACT www.nationalcity.com/about/careers

THE BUZZ


• • • •

“Stick to commercial” “Top mid-market bank” “Good to employees” “Blue-collar”

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Vault Guide to the Top 50 Banking Employers National City Corporation

THE SCOOP Capitalizing on the Midwest Founded in 1845, Cleveland-based National City Corporation is now one of the 10 largest financial holding companies in the U.S., with close to $120 billion in assets. The company operates through five lines of business (consumer and small business financial services, wholesale banking, asset management, national consumer finance and national processing) and does most of its business in Ohio, Michigan, Pennsylvania, Indiana, Kentucky and Illinois. The consumer and small business financial services arm includes National City’s retail banking operations, which are delivered through more than 1,100 branches in the six states in which the company has a presence. The unit also provides services to small businesses. For larger companies, National City’s wholesale banking business offers services such as lending, structured finance, treasury management and venture capital. National City’s asset management division offers investment services to high-networth individuals and institutions. The unit includes the National City Investment Management Company subsidiary, which manages the Armada family of mutual funds. National City’s mortgage business is run through its national consumer finance division, which has more than 330 offices across the U.S. At the end of 2003, National City was the eighth-largest residential mortgage loan originator according to Inside Mortgage Finance magazine. National City is also heavily involved in the credit card business. The bank’s National Processing subsidiary is the second-biggest credit card payment processor in the world, and the company also provides merchant card processing and payment services. National Processing is separately traded on the NYSE and is 83 percent owned by National City.

Best year ever In 2003 National City reported net income of $2.1 billion, the bank’s best performance ever. The record results were driven by a healthy demand for consumer loans and a boom in mortgage financing. In fact, mortgage lending was so strong that it made up 45 percent of National City’s net income, a big jump from the 20 percent contribution National City had grown accustomed to expecting. Given that the mortgage business is expected to slow in 2004, some skeptics question whether National City can keep its bottom line growing, but bank CEO Dave Daberko believes in National City’s product mix. “For 2004, the baton will be passed to the rest of the company,” said Daberko when asked to forecast future results in a January 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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2004 article in The Plain Dealer. To keep up the good results, National City will focus on growing its home equity, student loans, credit cards and small-business banking businesses.

Add Missouri to the list National City announced two major acquisitions in the last year. In November 2003, the bank signaled its expansion into St. Louis with the purchase of Allegiant Bancorp for $475 million. The move brought 37 branches in the St. Louis metropolitan area along with $2.5 billion in assets. Allegiant has a strong commercial banking practice, targeting its services to small and middle market businesses. The firm offers other traditional financial services, including deposits, lending, mortgages, brokerage, insurance products and wealth management. National City made a bigger splash in February 2004 with its announcement that it would acquire Cincinnati-based Provident Financial Group for $2.1 billion. The purchase added 65 branches in Ohio and Kentucky and gave National City the largest deposit market share in Ohio, with $34 billion (rival Fifth Third Bancorp holds $25.4 billion). National City CEO Daberko was excited about the deal. In a statement announcing the acquisition, he said, “This is a logical and desirable fill-in to our franchise. We’ve been trying to find an attractive entry into the Cincinnati market for 35 years.” Although National City has not confirmed the numbers, reports surfaced that the bank would lay off up to 800 people in Cincinnati when the Provident Financial deal closes. In addition to expanding in St. Louis and Cincinnati, National City is continuing to grow its presence in Chicago. The bank will spend $130 million to increase the number of National City branches in the area from 34 to 80 by 2007. National City added four Chicago branches in 2003 and plans to add 17 more in 2004.

GETTING HIRED Two to three The company is looking for “specific grade point levels,” but the interview process seems to differ according to company division. One source in the research division says he had “two phone interviews, one all-day session with seven interviews and an essay.” A corporate finance source, meanwhile, reports having three interviews: “I met with a specific manager, his boss and a credit administrator.” The path was slightly different for a salesperson. “I came to the bank on a temp basis, then was 482

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hired full time after four months. I had to meet with HR, my current boss and other people in the department. I was mostly asked about my job history and why I left my previous employers.” Another insider reports three interviews: one with an initial phone interview with his eventual immediate supervisor; a second, in-person, with his immediate supervisor, the insider’s boss and the senior VP of the region; and a third interview with the HR consultant which he now supports in his current job. The respondent notes, “Most interviewers stick to behavioral questions, assuming that the necessary finance skills either have been developed in school or can be taught.”

OUR SURVEY SAYS Likin’ it, for the most part At National City, employees like the “great people,” “the hours” and that there are “lots of recognition and reward programs.” Some say it’s “customer-centered,” which can be both good and bad (one source gripes about the “angry customers”), while others find that it’s “far too production-oriented – we need more customer retention efforts.” There are some reports that it is a “performance-driven” place, with an “aggressive sales culture” and “large corporate focus.” One source calls it “stuffy,” and another respondent finds that “credit admin dominates.” A vice president hired in 2003 has nothing but praise for National City. He says the bank has “made me feel very welcomed and appreciated since joining the company.” He adds, “The bank helped me through this both financially and by being very understanding about the time needed to take care of moving my family.” Managers get fairly high marks from our survey takers. “My manager and the managers in other departments are very respectful to the “worker bees,” reports one source. An employee says, “My manager is one of the smartest people I know, and is very fair in assessing people’s attributes. Another says, though, that “recognition is primarily focused on sales and not day-to-day operations.” Advancement within National City is expected. “There is a lot of competition for advancement opportunities, but the bank moves people into new roles frequently, helping open up opportunities often,” explains one insider. “People who come through the Leadership Development program are expected to move up quickly and change jobs every two to five years.”


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Treating them (employees) well Salaries are rated just above average. A vice president hired in 2003 reports he was offered a $94,000 base, with a $15,000 signing bonus and year-end bonus opportunities of up to around 25 percent of base, but without any stock options. However, he was offered 20 days per year to start, as well as “free downtown parking and a cell phone.” Two high-ranking corporate finance employees, both of whom have been with the firm over a decade, report 2003 salaries of $145,000 plus a $42,000 bonus, and a $109,000 salary with a $10,000 to $40,000 bonus. Employees say the 401(k) plan is “great” and other benefits are “good.” However, says one source, “all business-related travel must be paid up-front. Reimbursement comes after the fact and is highly scrutinized.” A corporate banking officer hired in December 2003 notes that his “health insurance provided is probably better then average, although like most health care plans has seen significant increases in the past few years, especially in the family plans.” He also adds that he has “memberships at various clubs that are paid for by my employer.” The company details benefits given to employees on its web site. These include flex spending plans; health benefits; life, accidental death/dismemberment, short-term disability, and long-term disability coverage; a 401(k) that allows contributions of up to 12 percent of salary, with company matching of 115 percent on the first 6 percent (it starts after one year of employment); a pension plan; tuition reimbursement; an employee stock purchase plan; and discounts on selected financial services (including checks, reduced charges on National City credit cards and reduced interest/fees on loans). Flexible work arrangements are available, as is discounted childcare and an employee assistance program. There’s also an in-depth orientation program called National City Institute (see www.national-cityinstitute.com).

Time in the office: not a lot of it Hours are said to be very good at National City. Most respondents report working 40 to 50 hours a week, with a few stretching the workweek to 50 to 60 hours. “I have great hours: 8 a.m. to 4:30 p.m.,” says a source in sales. Plus, “bank holidays” are, of course, given. Offices seem to be fine, though a Pittsburgh source says, “Our chairs are on the uncomfortable side.” Dress is reportedly “formal always” in Chicago, with casual Fridays at other locations. As for training, respondents report that it could use some work. Says one source, “I received little or no training in my current position. If I wasn’t sure how to do something, I had to go find out from someone else. It seems to be the norm in our department. For our sales and service reps, they plop them down in a cubicle and give them these huge manuals to read.”

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Diversity in the office: indeed, a lot of it “Women and minorities are given the same opportunities as anyone else,” says an insider. “A job is based on a person’s ability and qualifications no matter what color, gender or background they are. But another employee notes that “except at the top, there are very few high-ranking women in comparison to men.” Still, one female insider relates that “National City has always treated me fairly and I would recommend it highly to someone considering employment with the company.”


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The PNC Financial Services Group One PNC Plaza 249 Fifth Avenue Pittsburgh, PA 15222 Phone: (412) 762-2000 Fax: (412) 762-7829 www.pnc.com

DEPARTMENTS BlackRock PFPC PNC Advisors PNC Bank PNC Business Credit PNC Real Estate Finance

THE STATS Chairman and CEO: James E. Rohr Employer Type: Public company Ticker Symbol: PNC (NYSE) Revenue: $5.97 billion (FYE 12/03) Net Income: $1.0 billion No. of Employees: 23,900 No. of Offices: 700+

KEY COMPETITORS Mellon Financial National City Sovereign Bancorp Wachovia

UPPERS • Diversifying, and strengthening its core business in recent years

DOWNERS • Still mainly a regional banking player in the U.S.

EMPLOYMENT CONTACT www.pnc.com/careers

THE BUZZ


• “Retail banking in the ‘Burgh” • “Should get acquired”

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Vault Guide to the Top 50 Banking Employers The PNC Financial Services Group

THE SCOOP Pennsylvania power Headquartered in Pittsburgh, The PNC Financial Services Group is a holding company for a slew of financial services outfits, which together provide retail banking, investment banking, real estate finance, wealth management, global fund services and asset management. The modern PNC was principally formed by the 1982 merger of Pittsburgh National Corporation and Provident National Corporation. Today, the bank is one of the nation’s largest financial services firms, with main markets in Pennsylvania, New Jersey, Delaware, Ohio and Kentucky. PNC also offers many of its services throughout the U.S. and internationally. PNC Bank is PNC’s retail and wholesale banking arm. PNC Bank’s regional community bank offers deposit, lending and online investment services to individual and business banking clients in Pennsylvania, New Jersey, Delaware, Ohio, Kentucky and Indiana. Wholesale banking includes investment banking, treasury management and lending services for corporations. In December 2003, PNC completed its $638 million acquisition of United National Bancorp, strengthening the bank’s footprint in Eastern Pennsylvania and New Jersey. United National Bancorp is the parent company of UnitedTrust Bank, which has 45 New Jersey and seven Pennsylvania retail and commercial banking branches. With $53 billion in assets under management, PNC Advisors delivers trust and wealth management services (the latter offered through its subsidiaries PNC Investments and Hilliard Lyons). PNC Advisors also includes the Hawthorn subsidiary, which focuses on servicing high-net-worth clients with portfolios worth more than $20 million. In March 2004, PNC Advisors agreed to sell its Hawthorn investment consulting business to Veritable LP, a firm comprised of a group of PNC Advisors executives. The sale included approximately $6 billion of assets, a bit less than 40 percent of the total assets managed by Hawthorn.

A large piece of the Rock PNC’s other main businesses are BlackRock Financial Management and PFPC. Separately traded on the NYSE, BlackRock is one of the largest publicly traded investment management companies in the U.S. (PNC holds a majority interest in BlackRock with more than two-thirds ownership). BlackRock manages more than $300 billion in assets and provides asset management and risk management products and services.


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PFPC offers fund accounting, custody, securities lending and transaction services to mutual funds and retirement plans. The company is the biggest mutual fund transfer agent and the second biggest fund accounting firm in the U.S. In October 2003, PFPC acquired ADVISORport, an Internet application service provider that offers performance monitoring, modeling and report generation for financial services companies. ADVISORport was combined with PFPC’s existing managed account services business giving PFPC the ability to cater to both managed account sponsors and money managers.

Compensating for a down year PNC’s 2003 profit of $1 billion was 15 percent lower than its 2002 bottom line. The bank’s results were hurt by lower revenues and by a significant charge the bank took to reflect a settlement with federal regulators. In June 2003, PNC settled with the U.S. Justice Department over fraud allegations regarding its PNC ICLC subsidiary, which had improperly transferred $762 million in nonperforming loans and bad venture capital investments in order to exaggerate profits. As part of the settlement, PNC was fined $25 million and was forced to pay $90 million in restitution to victimized shareholders. Given the bank’s lower profits and trouble with its PNC ICLC unit, some observers were a bit shocked when they learned that PNC CEO James Rohr was paid more than $10 million in 2003, a 58 percent jump over his salary in 2002. In a statement released via a proxy filing, the PNC compensation committee said Rohr’s pay was justified given the bank’s financial results, improved credit risk profile and strengthened corporate governance.

GETTING HIRED Midwest talent search PNC runs several training/management programs for recent grads, including programs in finance (analysis and forecasting), corporate banking, real estate finance (lending, leasing, real estate) and investing (PNC Advisors, BlackRock, and PFPC). It also offers internships. The company recruits on campus for undergrads at Duquesne, Hampton, Miami University of Ohio, Notre Dame, University of Pittsburgh and Penn State. It recruits for grad students at Carnegie Mellon, Clark Atlanta, Case Western Reserve, Northwestern, University of Pennsylvania, Penn State and the University of Pittsburgh. Candidates not from these schools are

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welcome to submit resumes at the firm’s extensive “careers” section of its web site. Overall in 2003, PNC hired 1,000 recent college graduates.


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Putnam Lovell NBF Securities Inc. The Park Avenue Tower 65 East 55th Street New York, NY 10022 Phone: (212) 546-7500 www.putnamlovellnbf.com

DEPARTMENTS Canadian Equity Sales & Trading Client Finance Equity Capital Markets Fixed Income Mergers & Acquisitions

THE STATS CEO and Managing Director: Donald H. Putnam Employer Type: Subsidiary of National Bank Financial No. of Employees: 115 No. of Offices: 5

KEY COMPETITORS Friedman, Billings, Ramsey Group Keefe, Bruyette & Woods Sandler O’Neill & Partners

UPPERS • In this case, small = prestigious

DOWNERS • But small = very tough to get in

EMPLOYMENT CONTACT U.S.: [email protected] London: [email protected]

THE BUZZ


• • • •

“Small, but growing” “Good at what they do” “Not a favorable opinion” “Solid”

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Vault Guide to the Top 50 Banking Employers Putnam Lovell NBF Securities Inc.

THE SCOOP Serving financial services Founded in 1987, Putnam Lovell NBF is a financial services company that delivers investment banking offerings to other financial services companies. The firm was acquired by one of Canada’s largest investment banks, National Bank Financial, in June 2002. Today, Putnam Lovell operates out of offices in Boston, New York, San Francisco and London. The firm provides M&A advisory, fixed income, equity capital markets, Canadian equity sales and trading, and client finance services to financial institutions, banks, private investment firms, broker dealers, insurance companies, mutual funds and financial technology companies. Putnam Lovell’s investment banking arm has over 60 professionals and counts as clients such firms as American Century, Bank of America, First Union and Prudential. The client finance group offers various financing options, including senior and mezzanine debt and asset-backed securities. The firm’s fixed income group currently helps its parent distribute fixed income products to U.S. institutions, and the unit will be expanding its scope to serve additional clients, including hedge funds and insurance companies.

Less research, more advice Putnam Lovell underwent some major strategic changes in 2003. By the end of the year, the firm had shuttered its U.S. equities underwriting, research, and sales and trading capabilities, while expanding its advisory, merchant banking and finance offerings. As part of the plan, Putnam Lovell laid off about 40 employees, effectively eliminating the equities group. The bank’s cutbacks came after several rounds of firmwide layoffs earlier in the year. Putnam Lovell has since replenished its U.S. advisory business by hiring several new bankers in its growing Boston office. In February 2004, Putnam Lovell spun off its Los Angeles-based private equity group, which invests in emerging financial services companies and manages $150 million in private equity funds. The newly independent firm is now known as Lovell Minnick Partners, and Putnam Lovell parent National Bank Financial holds a minority stake in the company.


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Vault Guide to the Top 50 Banking Employers Putnam Lovell NBF Securities Inc.

GETTING HIRED What they’re looking for Applicants in the U.S. should e-mail a resume and cover letter describing experience and area of interest to [email protected]. Those interested in positions across the Atlantic should e-mail [email protected]. The firm runs a financial analyst program for recent college grads that lasts two or three years. The programs are in the San Francisco, New York and London offices, and include financial analysis, preparing books, comparing companies, pulling together presentations and researching transactions. Candidates must be familiar with financial statements and with Excel, Word and PowerPoint, and must possess good communication and problem-solving skills. An academic and extracurricular concentration in finance or accounting is ideal, as far as Putnam Lovell is concerned. The firm also recruits for full-time positions on various campuses each fall. The firm’s financial associate program also lasts two to three years and is run out of the San Francisco, New York and London offices. According to the firm, “Associates work directly with senior bankers in the development and execution of a wide range of M&A advisory and corporate finance assignments.” Specific duties are typical of investment banking associates on the Street – financial analysis of transactions, preparing offering memoranda, business development activities, and managing and mentoring junior staff. Putnam Lovell has a few summer internships available in San Francisco, New York and London. The duties are similar to those in the financial analyst program. Candidates should send a resume and a cover letter specifying interest in an internship and office preference to one of the e-mail addresses above.

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Regions Financial Corporation 417 N. 20th Street Birmingham, AL 35202 Phone: (800) REGIONS Fax: (205) 326-7756 www.regions.com

DEPARTMENTS Asset Management Commercial and Retail Banking Insurance Investment Banking Leasing Mortgage Banking Mutual Funds Securities Brokerage Trust

THE STATS

KEY COMPETITORS AmSouth SouthTrust SunTrust

UPPERS • A force in the South – and expanding its reach

DOWNERS • For the time being, still a regional, not a national name brand

EMPLOYMENT CONTACT www.regions.com/Careers/index.html

Chairman, CEO and President: Carl E. Jones Jr. Vice Chairman and COO: Richard D. (Rick) Horsley Employer Type: Public company Ticker Symbol: RF (NYSE) Revenue: $3.62 billion (FYE 12/03) Net Income: $652 million No. of Employees: 16,180 No. of Offices:

THE BUZZ


• “Getting there” • “Should spin-off Morgan Keegan” • “Retail bank”


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Vault Guide to the Top 50 Banking Employers Regions Financial Corporation

THE SCOOP Sweet home Alabama Headquartered in Birmingham, Ala., Regions Financial is one of the leading retail and commercial banks in the southern U.S. As of March 31, 2004, Regions had $48.8 billion in assets and its main subsidiary, Regions Bank, operated more than 680 offices across nine states (Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas.) Soon, the firm will expand its footprint, not only in the South, but also across the Midwest, Ohio Valley and Texas. In January 2004, Regions announced it would be merging with Memphis, Tenn.based Union Planters Corp. When the transaction receives regulatory and shareholder approval (expected in mid-2004), the company will be among the 15 largest banks in the U.S. The new Regions expects to have a market capitalization of approximately $14 billion, total assets of more than $80 billion, deposits of $56 billion and a 15-state network of 1,400 banking branches, 1,700 ATMs and more than 140 brokerage offices. According to the agreement, Carl E. Jones Jr. will continue in his role as chairman and CEO until his planned retirement in June 2005, at which time Jackson W. “Jack” Moore, CEO of Union Planters, will succeed him as chief executive. Jones will remain chairman of the Regions Board of Directors until June 2006, when Moore will assume that position, too. In addition to a full slate of retail banking services, Regions also provides investment banking, securities brokerage, mortgage and insurance products and services. Through Morgan Keegan (see page 476 for more info), the firm provides investment and brokerage services from more than 140 offices. In 2003, Regions was named one of the most admired companies in the U.S. in Fortune magazine’s annual survey. Additionally, the firm consistently ranks on both the Fortune 500 and Forbes 500 listings of America’s largest companies. Regions history dates back to 1971, when three Alabama-based banks combined to form a bank holding company (First Alabama Bancshares) with $543 million in assets and 40 banking locations in Birmingham, Huntsville and Montgomery. To reflect its growing presence throughout the South, the firm was renamed Regions Financial Corp. in 1994.

Mortgage masters Regions Mortgage is the firm’s primary mortgage banking arm; it was founded as Real Estate Financing, Inc. in 1946 to originate mortgages for local servicemen

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returning home at the end of World War II. Today, Regions Mortgage is a top-50 mortgage originator in the U.S. and the country’s 35th-largest mortgage loan servicer. Its servicing portfolio currently tops $16 billion. In addition to Regions Mortgage, the firm offers nonconforming and specialty mortgage lending services through EquiFirst Corp., headquartered in Charlotte, N.C. In 2003, Regions’ mortgage banking operations reached a record $9.4 billion in single-family residential mortgage loan production. When the company completes its merger with Union Planters, which also has a strong mortgage business, its new mortgage operations will be among the top 20 in the U.S. Founded in 1928, Regions’ primary insurance arm, Rebsamen Insurance, ranks among the 50 largest insurance agencies in the country. Rebsamen provides insurance services to both commercial and retail customers throughout the South.

Banking on fundamentals For the year ended December 2003, Regions reported record net income of $651.8 million, a 6.6 percent increase over 2002. The company kept the good numbers coming in 2004, posting net income of $168.5 million in the first quarter, a 3 percent per share increase over first quarter 2003 numbers. Total revenues for the quarter improved to $731.7 million, a 5.8 percent increase as compared to the first quarter 2003. Upon announcement of the quarterly results, Chairman and CEO Jones called the company’s “strong financial performance in the first quarter consistent with what we have achieved over the past year – solid, steady growth built on positive fundamentals.” He added that the firm “generated healthy results across our business lines, our credit quality was excellent and we continued to strengthen our long-term growth position.” According to Regions, the key driver for the strong first quarter was the “balanced mix of business in [its] brokerage and mortgage operations.” Additionally, the company’s nonconforming mortgage company, EquiFirst, reported record results, and the Morgan Keegan unit performed exceptionally well, banking $21 million in net income on revenues of $176 million (its private client group had an especially strong quarter). Also, net loan charge-offs were at their lowest levels since 1996, and non-performing assets fell 18 percent to their lowest levels in 13 quarters.


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GETTING HIRED Five to choose from Regions Financial has a career web site (www.regions.com/Careers/index.html) where interested candidates can search for jobs and apply online. The site also notes the company’s extensive benefits offerings, retirement-plan options and quality-oflife benefits, including child and elder care, incentive programs, associate referral programs and vacation time. In addition, the company touts its extensive job training and professional development opportunities. Like many financial institutions, Regions requires a drug test, criminal background check and verification of education and past employment before giving out a final hiring approval. The company also notes that in some cases, a pre-employment credit check is required.

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Ryan Beck & Co. 18 Columbia Turnpike Florham Park, NJ 07932 Phone: (973) 549-4000 www.ryanbeck.com

DEPARTMENTS Capital Markets Investment Banking Private Client Group

THE STATS Chairman and CEO: Ben A. Plotkin Employer Type: Subsidiary of BankAtlantic Bancorp, Inc. Revenue: $221.4 million (FYE 12/03) Net Income: $10.8 million No. of Employees: 1,255 No. of Offices: 36

KEY COMPETITORS Friedman, Billings, Ramsey Group Keefe, Bruyette & Woods Sandler O’Neill & Partners

UPPERS • Senior level attention and accessibility

DOWNERS • Limited name recognition on Wall Street

EMPLOYMENT CONTACT Liz Maynor Staffing Specialist 220 South Orange Avenue Livingston, NJ 07039 Phone: (973) 597-5980 Fax: (973) 597-6408 E-mail: [email protected]

THE BUZZ


• “Small” • “Underwriter”


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Vault Guide to the Top 50 Banking Employers Ryan Beck & Co.

THE SCOOP Financial advice for financial institutions In 1946 John J. Ryan, a former Lehman Brothers bond buyer, founded John J. Ryan & Co. to underwrite and distribute tax-exempt municipal bonds. Soon after, Ryan was joined by bond salesman and new partner Roy G. Beck, and the two continued to strengthen the firm’s public finance capabilities. In 1969 the firm added a corporate finance department and began servicing financial institutions. In 1986 Ryan Beck & Co. had grown to the point where it decided to go public, but in 1998, the firm again became privately held when it was purchased by BankAtlantic Bancorp, one of Florida’s largest financial institutions. Today, Ryan Beck is a full-service investment bank delivering corporate finance, underwriting and brokerage services out of 36 offices in 13 states. The firm is organized into three divisions: private client group, capital markets and investment banking. The private client group caters to individual investors seeking advice on investing, retirement plans and insurance. Institutions are serviced by the capital markets group, which offers equity and fixed income underwriting, sales and trading, and research. The research unit covers close to 100 companies in various industries, but most of the firm’s research analysts focus on small- and mid-cap financial institutions. Ryan Beck’s investment banking group is divided into three subgroups (middle market, financial institutions and public finance), each of which tailors its advisory services to the needs of its particular client. Middle market bankers at Ryan Beck concentrate primarily on health care, consumer and technology companies. The financial institutions group caters to community banks and thrifts, and specializes in servicing Mutual Holding Companies (MHCs). In fact, Ryan Beck has advised more MHCs than any other investment bank and was the first firm to offer research specific to MHCs.

Getting Gruntal In April 2002, Ryan Beck completed its acquisition of certain assets and related entities from brokerage and investment firm Gruntal & Co., LLC. The move significantly enhanced Ryan Beck’s private client offerings and added additional sales, trading and research capabilities. With the purchase came 21 offices, more than 500 financial representatives and $14 billion in client assets, nearly quadrupling Ryan Beck’s total to over $18 billion. Ryan Beck CEO Ben Plotkin provided the rationale for the deal: “This transaction has allowed Ryan Beck to rapidly expand virtually every one of our businesses through the hiring of Wall Street veterans.”

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As part of the Gruntal purchase, Ryan Beck acquired Gruntal’s full-service brokerdealer unit, GMS Group Holdings Corp. Officials at GMS and Ryan Beck parent BankAtlantic could not agree on a common strategy, and in August 2003, Ryan Beck sold its ownership position in GMS to an employee group led by John Feeney, the unit’s president and CEO.

Breaking the record In 2003, Ryan Beck brought in a firm record $221.4 million in revenues, over 70 percent of which came from the firm’s private client business. The firm’s investment banking business was also strong, with almost $28 million in revenues. Ryan Beck’s financial institutions practice was particularly busy, and the bank was ranked as the No. 1 thrift conversion advisor and the No. 3 M&A advisor of financial institutions in the U.S., according to SNL Securities and Sheshunoff Information Services. Major deals included co-managing Commerce Bancorp’s $218 million common stock issuance and managing BankMutual Corporation’s $411 million equity offering. The group also advised First Niagara Financial Group on its $410 million common stock offering and concurrent acquisition of Finger Lakes Bancorp. Ryan Beck’s public finance subgroup continued to produce as well, acting as a manager, co-manager, remarketing agent or member of the selling group on over 25 transactions with a total value of $5.5 billion. Included in these deals were comanager roles on a $1.45 billion turnpike revenue bond issuance by the New Jersey Turnpike Authority, and a $927 million transportation system bond offering by the New Jersey Transportation Trust Fund Authority.

GETTING HIRED Relaxed recruiters At Ryan Beck, there isn’t any set recruiting schedule. Insiders say the firm is selective, and one analyst notes that Ryan Beck tends to target major universities located in the Northeast. Internships are based on a “word of mouth” basis, according to one contact, but full-time positions follow a more traditional interview schedule. That source explains that his experience consisted of three interviews, as well as a “behavioral assessment.” A VP in corporate finance says he went through a “lengthy” process, and “met with everyone in my group, from senior to junior bankers.” He adds that Ryan Beck typically “recruits selectively,” focusing on “experienced bankers.” Ryan Beck hires in the following areas: brokerage, sales support, client services, operations and investment banking. The firm recruited 50 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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new financial consultants and opened one new office in 2003, and plans to continue to recruit consultants and explore opportunities for branch growth throughout 2004.

OUR SURVEY SAYS No longer family, but still very friendly Even though Ryan Beck is “changing from a small, boutique, ‘family’ culture to a more high performance” one, according to one insider, the firm is “still friendly and collegial.” An assistant vice president agrees, saying that the culture at Ryan Beck remains “open,” “friendly” and “collegial,” and notes that “overall, management is very good.” In general, sources say managers treat them with respect, and the company receives good marks in the areas of diversity with respect to women. Training, though, just receives average grades from insiders. Hours at the firm are reasonable by investment banking standards, with contacts citing workweeks between 50 and 80 hours, with “frequent” weekend work, at least among those in the vice president ranks. However, a vice president says that employees can “often work from home on the weekends.” The flexibility extends to the company’s casual dress policy, which is in effect throughout the company (except for client contact). Generally speaking, Ryan Beck employees are pleased with the overall environment, rating the firm near the top of the scale.

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Sandler O’Neill & Partners, L.P. 919 Third Avenue 6th Floor New York, NY 10022 Phone: (212) 466-7800 Fax: (212) 466-7888 www.sandleroneill.com

KEY COMPETITORS Friedman, Billings, Ramsey Group Keefe, Bruyette & Woods William Blair & Co.

UPPERS DEPARTMENTS Capital Markets Equity Trading & Sales Fixed Income Investment Banking Mortgage Finance Research

• Well known in financial services banking world

DOWNERS • Narrow focus

EMPLOYMENT CONTACT THE STATS Senior Managing Principal: James J. Dunne III Employer Type: Private company No. of Employees: 260 No. of Offices: 6

Larry Belinsky Principal 919 Third Avenue 6th Floor New York, NY 10022 E-mail: [email protected]

THE BUZZ


• • • •

“Good research” “Good in financial services space” “Under-cutters on price” “Solid niche player”


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Vault Guide to the Top 50 Banking Employers Sandler O’Neill & Partners, L.P.

THE SCOOP Financial services for financial firms New York-based Sandler O’Neill is one of the largest investment banks focusing exclusively on financial services companies. The firm is relatively young by Wall Street standards, having been started in 1988 after founder Herman Sandler left Bear Stearns. Sandler O’Neill was devastated by the September 11, 2001, attacks on the World Trade Center, losing 66 people (a third of its staff), including Sandler and Christopher Quackenbush, the firm’s head of investment banking. Sandler O’Neill has successfully rebuilt itself, however, and now ranks as a leading provider of capital raising, research, strategic business planning, mergers and acquisitions advisory, mortgage financing, and sales and trading services to its core customer base, which includes banks, thrifts, insurance companies, eFinance and real estate investment trusts. Sandler O’Neill’s M&A practice is well-regarded in the financial services industry, and from 1998 through June 2003, the bank was the top advisor in bank and thrift transactions. In 2003 the group worked on a variety of financial services deals, including New York Community Bank’s $2.1 billion purchase of Roslyn Bancorp and Sovereign Bancorp’s $481 million acquisition of First Essex Bancorp. Sandler O’Neill is staying active in 2004 and was recently tapped to advise North Fork Bancorporation on its $6.3 billion acquisition of GreenPoint Financial Corporation, announced in February. The firm has also advised Gold Banc Corp. on its $671.5 million merger with Silver Acquisition Group, and First Federal Capital Corp. on its $612.3 million merger with Associated Banc Corp. For the first five months of 2004, Sandler O’Neill advised on 23 M&A transactions with a total deal value of $11.9 million.

Capital offerings Sandler O’Neill is also heavily involved in the capital markets, helping its clients raise funds through various securities offerings. The firm specializes in two rare types of financing transactions (pooled trust preferred transactions for banks, thrifts, and insurance companies; and convertible securities transactions for financial institutions), but Sandler O’Neill does offer a full range of debt and equity securities services. Overall, Sandler O’Neill participated in more than 120 public and private securities offerings and raised over $52.2 billion in the 18-month period from January 2003 to June 2004. Included in these deals were lead manager and sole manager roles on $150 million senior notes issued by Webster, and a $70 million Trust

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Vault Guide to the Top 50 Banking Employers Sandler O’Neill & Partners, L.P.

Preferred Issue for Dime Community Bank. Sandler O’Neill kept up the good work, participating in a number of equity transactions, including a co-manager role on a $220 million common stock follow-on issuance by National Financial Partners.

Covering the rest Sandler O’Neill’s research team covers more than 200 financial services companies, and the bank’s analysts have been recognized for excellence and stock picking by Institutional Investor, The Wall Street Journal and American Banker. Within the fixed income department, Sandler O’Neill bankers provide balance sheet management, fixed income underwriting and trading services, and research, including Financial Debt Quarterly, the firm’s fixed-income newsletter. Sandler O’Neill’s mortgage finance group, which assists companies in maximizing the values of their loan portfolios, advised on more than 400 transactions worth a total of $19 billion from 1996 to 2002.

GETTING HIRED No info on site Sandler O’Neill doesn’t have any information about its hiring practices on its web site, but would-be analysts can send a resume and cover letter to the firm. “You’re better off mailing [than faxing],” says a source at the company, “and e-mailing is the absolute best.” Interested candidates can send information or inquiries to Larry Belinsky at [email protected], or mail him at the firm’s headquarters office.


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SouthTrust Corporation 420 North 20th Street Birmingham, AL 35203 Phone: (205) 254-5000 www.southtrust.com

DEPARTMENTS Capital Management Commercial Banking Funds Management Regional Banking

THE STATS Chairman and CEO: Wallace Malone Jr. Employer Type: Public company Ticker Symbol: SOTR (Nasdaq) Revenue: $2.3 billion (FYE 12/03) Net Income: $705.2 million No. of Employees: 12,400 No. of Offices: 717

KEY COMPETITORS AmSouth Bank of America Regions Financial

UPPERS • Strong in core southern market

DOWNERS • Wachovia could mean redundancies and layoffs

EMPLOYMENT CONTACT www.southtrustcareers.com

THE BUZZ


• “Solid southeastern bank” • “Stay retail” • “Wanna be”

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Vault Guide to the Top 50 Banking Employers SouthTrust Corporation

THE SCOOP The big south SouthTrust Corporation’s history dates back to 1887 when Birmingham Trust and Savings Company began doing business. Today, the bank is still headquartered in Birmingham, but SouthTrust has grown a little, holding $52.7 billion in assets and ranking as the nation’s 17th-largest bank. The company operates 717 branches in the southeastern U.S. and Texas, and offers a host of financial services, including personal and business banking, mortgage banking, asset management, investment banking, insurance and estate planning. SouthTrust has been designated a Forbes Platinum 400 company (one of the best big companies in the U.S.), is a member of the Fortune 500, and is included in the S&P 500. In June 2004, SouthTrust agreed to be acquired by Wachovia Corporation in a deal valued at more than $14 billion. In a press release announcing the transaction, SouthTrust Chairman and CEO Wallace Malone said, “This combination offers something rare. Our goal is for all of our stakeholders to benefit from the expanded resources and broad product set of Wachovia – a big company that takes pride in not acting like one.” Malone added, “We have watched carefully as Wachovia completed its recent merger while continuing to improve the customer experience and generating strong earnings growth. Our merger integration timeline and focus on retaining customers is modeled on the Wachovia-First Union model, which we believe is the best in the industry.” Malone will serve as Wachovia’s vice chairman following the completion of the merger, which is subject to regulatory and shareholder approval. The deal’s expected to close in the fourth quarter of 2004. SouthTrust conducts business through four divisions: commercial banking, regional banking, capital management and funds management. Commercial banking offers various lending alternatives and cash management services to corporate clients. Retail customers and small businesses are served by SouthTrust’s regional banking group, which provides depository, lending, mortgage and auto leasing services. The capital management division delivers trust, brokerage, investment, insurance and private banking services; included in this unit is SouthTrust Securities, a brokerage subsidiary. Asset and liability management is offered by SouthTrust’s funds management segment.

Making an income statement “I’m proud to report that SouthTrust had another record-setting year in 2003,” declared Chairman and CEO Wallace Malone Jr. when SouthTrust announced its 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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annual earnings in January 2004. The Southern giant raked in more than $705 million in profits, the 13th year in a row that SouthTrust has seen its earnings grow. Boosted by a very active mortgage market, Regional Banking was the star division, bringing in $369.9 million in profits, an 85 percent jump over 2002. SouthTrust kept up the good work in the first quarter of 2004, netting record earnings of $183.0 million. The strong results came notwithstanding a reduced demand for mortgages due to rising interest rates. Buoyed by the bottom line success, SouthTrust raised its dividend 14 percent to $0.96 per share, the 34th consecutive year that the bank has increased its payout. In 2003 SouthTrust had upped its dividend by 24 percent and was placed on Standard & Poor’s list of Dividend Aristocrats for increasing dividends for more than 25 years. Given SouthTrust’s success and a consolidation trend hitting the financial services industry, analysts have speculated that the Birmingham-based bank might be ripe for the taking. SouthTrust management, however, seems to feel differently. “That’s a bunch of nonsense,” snorted Malone in a January 2004 interview with The American Banker. “This company is not for sale, and this company is not talking to anybody.” Still, Malone has let slip that he is considering retirement, and some contend that a change at the top might be an opportune time for a change of ownership.

Liking it big in Texas and Florida In 2003, SouthTrust opened 26 branches, and the company plans to open 40 more in both 2004 and 2005. Even so, the bank isn’t content to grow solely through organic means. SouthTrust has made strategic acquisitions in desirable markets. In April 2003, SouthTrust completed its $23.2 million purchase of Founders Bancshares, a holding company for Dallas-based Founders National Bank. The acquisition of Founders National added two branches in Dallas and more than $117 million in assets. Offering the rationale for the transaction, CEO Wallace Malone said, “This acquisition helps SouthTrust continue making progress toward becoming the financial services provider of choice for customers in the Dallas area.” Including the Founders National purchase, SouthTrust has 64 branches in Texas, including more than 20 in the Dallas-Fort Worth metropolitan area. Texas isn’t the only market where SouthTrust is making purchases. In February 2004, SouthTrust announced a $146 million agreement to acquire FloridaFirst Bancorp, a bank holding company with more than $820 million in assets and $550 million in deposits. The transaction, which is expected to close in the second quarter of 2004, will add 19 locations to the 252 branches SouthTrust operates in Florida. Currently, SouthTrust ranks as the fourth-largest bank in Florida in terms of deposits.

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GETTING HIRED A bounty in benefits To search for open opportunities at SouthTrust, visit the firm’s career section of its web site at www.southtrust.com/st/AboutUs/Careers. On the site, you can create a user profile and apply for desired positions. The site also has a “Job Agent” that will alert users when jobs meeting certain criteria become available. On the job, SouthTrust employees receive a full suite of benefits including medical, dental and vision coverage, life insurance, a pension plan and a 401(k) plan. For the 401(k) plan, employees become eligible on either January 1 or July 1 following six months of employment. SouthTrust matches dollar-for-dollar for up to 6 percent of an employee’s salary. The firm also offers an employee stock ownership plan (ESOP), cash profit-sharing and a discount stock payroll purchase plan. Under the firm’s ESOP, eligible SouthTrust staffers may receive either stock or cash at the end of the year based on the bank’s fiscal performance; employees must have worked for the bank for at least two years to be eligible for the plan, and the actual allocation is based on an employee’s salary. SouthTrust’s cash profit-sharing plan aims to reward employees who have been with the firm for at least a year with a cash bonus that, depending on the firm’s profitability, can be as much as four weeks’ salary. The firm’s discount stock program allows staffers with at least two consecutive years of employment at the firm to purchase SouthTrust shares at a 15 percent discount (shares purchased under the plan are subject to a one-year holding period).


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Stephens Inc. 111 Center Street Little Rock, AR 72201 Phone: (501) 377-2000 www.stephens.com

DEPARTMENTS Capital Management Capital Markets Insurance Services Private Client Group Public Finance Research

THE STATS Chairman, CEO, and President: Warren A. Stephens Employer Type: Private company No. of Employees: 700+ No. of Offices: 18

KEY COMPETITORS Harris Williams Houlihan Lokey Howard & Zukin Morgan Keegan

UPPERS • Treats employees very well

DOWNERS • Not well known in the North

EMPLOYMENT CONTACT Human Resources P.O. Box 3507 Little Rock, AR 72203-3507 Fax: (501) 377-2111 E-mail: [email protected] www.stephens.com/stephens/careers

THE BUZZ


• “Solid niche player” • “Small underwriter” • “Mediocre research/co-manager” • “Going to take a while to get good”

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Vault Guide to the Top 50 Banking Employers Stephens Inc.

THE SCOOP Big on relationships Former farmer Witt Stephens started his family-named firm in 1933, buying Arkansas bonds at 10 cents on the dollar as the state was struggling during the Great Depression. The bet paid off a few years later as Arkansas recovered and the bonds traded at par. Buoyed by this early success, Stephens Inc. established itself as a public finance powerhouse, advising on and underwriting many Arkansas issues. The firm slowly branched into other areas, eventually becoming a strong corporate finance player through such transactions as the IPO of Wal-Mart in 1970. Today, Little Rock-based Stephens is one of the largest full service investment banks outside of New York. Operating out of offices throughout the U.S. and in London, the firm offers investment banking, capital management, equity research, insurance services, wealth management and financial planning. Stephens doesn’t have a large balance sheet like its big city competitors so it relies on a strong sales force and rich network of Southern connections to get its deals done. One senior Stephens banker described the bank simply, “We’re a Southern firm. We’re big on relationships.” What this means in practical terms is that Stephens does a relatively small number of deals per year, but the bank gives its clients a lot of attention. Over the last five years, Stephens’s investment banking workload has averaged about 20 deals per year, a far cry from the 100 and more transactions that league table leaders commonly work on. Another thing that distinguishes Stephens is that the bank gives investment bankers the option to co-invest in firm investments, a rare opportunity at an investment bank. The firm believes the co-investment perk helps in its recruiting efforts as the bank tries to lure away bankers from larger competitors, and a look at some of the firm’s results shows the potential for big payoffs. Past Stephens investments have included fast-growing appliance maker Viking Range Co. and appliance retailer Conn’s, Inc. (Stephens took Conn’s public in 2003 in a $60 million offering.)

More than the middle market Stephens’ capital markets practice is run out of offices in Little Rock, New York, Atlanta, and Dallas and concentrates primarily on middle market companies; the bank does, however, see some larger deals. Significant M&A deals in 2003 included advising Alltel Corp. on its $1 billion divestiture of Alltel Information Services and advising (along with Citigroup) Northrop Grumman Corp. on its $4.7 billion divestiture of TRW Automotive. As for underwriting highlights of 2003, Stephens 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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worked on a $100 million offering from OGE Energy Corp. and a $62 million deal from Marten Transport in addition to the IPO of Conn’s. The equity research group at Stephens covers more than 200 stocks and specializes in the aerospace and defense, business software and services, consumer, power and energy solutions, transportation and logistics, telecommunications, health care, and commercial products and business services industries.

Publicly seeking private clients The Stephens family has been in control of Stephens (the firm) since its inception, holding shares in its parent company, Stephens Group, Inc. (which also holds other family interests). Jackson Stephens, the brother of Witt and the father of current Stephens leader Warren Stephens, became CEO of the firm in 1956, a post he held until he retired in 1986, at which point his son took over. Warren Stephens’s recent focus has been overseeing the growth of his firm’s relatively young private client services practice. The private client group at Stephens was started in 1998, and in the last four years, the firm has aggressively expanded its capabilities, growing from four to 80 employees. In the near future, the bank plans to hire 50 financial advisors to bolster its private client teams in New York and in the southeast and southwest U.S. Longer term, Stephens hopes to expand the number of its private client advisors to 150.

GETTING HIRED Warm reception Stephens lists open positions on its web site; applicants can submit a resume and salary requirements to the firm’s Little Rock address. According to one insider, “First round interviews are held on campus with an associate.” The contact adds, “After passing that round, I was invited to a Super Saturday at the headquarters.” Expect a nice reception on interview weekend. One source reports that “Friday night involved a five-course dinner in the penthouse on the top floor [of the firm’s headquarters] with an open bar and mingling with the senior vice presidents and managing directors. This was followed by “an open tab at a local brewery to mingle with everyone else in the department, including employees from other offices in different cities.”

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The Saturday interviews “started at 8 a.m.,” offers one contact, “and there were eight of them, with people ranging in rank from associate to MD to the head of the department.” The source adds that the firm is “mainly after personality and fit, but a few simple finance questions were asked.”

OUR SURVEY SAYS Mile-high morale Employee morale is quite high at Stephens, and “being the largest full service investment bank headquartered in the South as well as family-owned” only helps to boost this morale. “Stephens takes care of its employees,” says one insider. “Even under bad market conditions Stephens pays its employees extremely well – more than I would have expected after talking to my friends on Wall Street.” One banker says, “Bonuses for first years are up to 70 percent of base salary.” Explains another contact, “Because Little Rock is an extremely cheap place to live, $45,000 there is probably equivalent to $80,000 in New York.” The contact adds, “If you enjoy doing things outdoors, being in Little Rock puts you within 20 minutes of hiking, biking, water sports, hunting – you name it.” However, one former insider calls Stephens’ culture “somewhat good ole boy,” explaining that “some people were hired because they were smart, while others were hired because their fathers were golfing buddies at Augusta with the higher-ups.” The contact concedes, though, “The corporate culture fosters learning at all costs.” Stephens also fosters loyalty, say insiders. “By looking to promote junior bankers from within,” observes a source, “they have an extremely loyal employee base. It’s not uncommon for bankers to have come to Stephens right out of college and stay there until they retire, after having made millions.”

By the numbers, for the benefits First-year analysts “can expect to work between 70 and 100 hours per week,” says an insider, “with the average non-holiday workweek to be about 80 hours, including weekends.” Diversity at Stephens is lacking, saying employees. One source estimates that, excluding support staff, there are “maybe 15 minorities in the whole firm.” The source adds, “Women are severely under-represented.” The dress code is “business formal attire everyday until 8 p.m., excluding the weekends.” “Business casual on Fridays is observed in the summers between Memorial Day and Labor Day,” notes a banker, adding, “If traveling to a client who is business casual, you are allowed to be business casual as well.” 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 jet set Perks are praised by employees. “After six months of work, you are given two weeks of paid vacation,” notes a contact, “but the department is flexible and gives you a day off around Christmas and at Thanksgiving, and makes allowances for weddings and other important events.” As a private company, Stephens doesn’t offer stock options, but “they match your 401(k) with a contribution of up to 2 percent of your pay,” observes an insider, who adds, “You vest 20 percent a year and become fully vested after five years.” Another perk is “travel almost exclusively by private plane, as Stephens has a fleet of seven jets that the corporate finance department has first dibs on for legitimate business travel.”

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SunTrust Banks 303 Peachtree Street, NE Atlanta, GA 30308 Phone: (404) 588-7711 www.suntrust.com

DEPARTMENTS Commercial Banking Corporate & Investment Banking Mortgage Private Client Services Retail Banking

THE STATS Chairman, CEO, and President: L. Phillip Humann Employer Type: Public company Ticker Symbol: STI (NYSE) Revenue: $7.1 billion (FYE 12/03) Net Income: $1.3 billion No. of Employees: 27,578 No. of Offices: 1,201

KEY COMPETITORS Bank of America BB&T Corporation SouthTrust Wachovia

UPPERS • Excellent, extensive training program • Good work/life balance • Friendly culture

DOWNERS • Regional compensation and relatively low first-year salaries • “Conservative” culture • “Not a lot of lead-bank work”

EMPLOYMENT CONTACT www.suntrust.com/careers

THE BUZZ


• “Pretty good southern corporate bank” • “Robinson Humphrey is respected in the Southeast” • “Middle market average” • “Small underwriter” 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 SunTrust Banks

THE SCOOP A peach of a bank With total assets of more than $125 billion, Atlanta-based SunTrust Banks is a holding company for 50 banking units each focusing on a particular geographic area. The bank operates under a decentralized management structure whereby local managers are responsible for business generation and community involvement. Overall, the firm is one of the largest banks in the nation, offering consumer banking, commercial leasing, mortgage banking, credit-related insurance, asset management, brokerage and investment banking. SunTrust has a significant presence in the southeastern U.S. with more than 1,200 branches in Alabama, Florida, Georgia, Maryland, South Carolina, Tennessee, Virginia and Washington, D.C. SunTrust’s retail banking group serves customers and small businesses (annual sales of $5 million or less) while the bank’s commercial banking arm focuses on companies with annual sales in the $5 million to $250 million range. SunTrust’s corporate and investment banking business includes SunTrust Robinson Humphrey Capital Markets, a full-service investment bank offering capital markets, sales and trading, equity research and asset management. SunTrust also has a private client services division that manages over $180 billion in assets and offers brokerage services and investment management to institutions and high-net-worth individuals. In 2002 Bank Investment Marketing named 15 of SunTrust’s financial advisors to the magazine’s list of the top 50 bank investment sales representatives. SunTrust Mortgage is one of the top 15 mortgage originators and servicers in the U.S. In June 2003, SunTrust agreed to acquire Sun America Mortgage, one of the leading residential retail mortgage lenders in Atlanta. Combined with its existing operations, the purchase gave SunTrust the third-highest market share in Atlanta and Georgia residential mortgage originations. Also in June, SunTrust completed its $130 million acquisition of Lighthouse Financial Services, a top provider of mortgages and insurance in the affluent market of Hilton Head, South Carolina.

That’s a bonus? SunTrust’s 2002 was so disappointing that management decided to withhold bonuses for 130 of the bank’s senior executives, including chairman and CEO L. Phillip Humann. In 2003 however, SunTrust’s fortunes turned around enough where Humann was rewarded with a bonus equal to his salary ($950,000). Still, SunTrust’s financial results in the last few years haven’t been stellar, and the bank was hurt by being on the wrong side of a $20 billion interest rate bet when it shortened the 514

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maturity of its bond fund and gave up higher returns than its competitors. Even Humann has admitted the error, saying, “In retrospect, it was a big mistake. That’s the bad news. The good news is now it’s reasonably clear that it’s unlikely that rates will go even lower.” Notwithstanding Humann’s assurances, many analysts believe shareholders are displeased with SunTrust’s CEO and upper-level management, and some think the bank is vulnerable to a takeover. For his part, Humann has stated that SunTrust doesn’t need a merger partner, and the company will be better off if it remains independent. Even so, SunTrust’s strong southeastern presence might be attractive to would-be acquirers, and the bank may very well be swept up in the ongoing consolidation trend hitting the financial services sector.

GETTING HIRED Get with the program For entry-level positions, SunTrust actively recruits at about 25 institutions located within its southern footprint (e.g., Emory, University of Florida, Vanderbilt, University of Virginia, Wake Forest). “As with most companies, SunTrust hires selectively with certain universities,” explains an insider. “However, human resources is open and accommodating to outside schools.” The bank’s full 2004 recruiting schedule is provided in August on the firm’s web site, which also allows interested candidates to search for open positions at any time. Many incoming SunTrust employees participate in one of the firm’s associate training programs, which include the business banking associate program, the commercial banking associate program, the commercial real estate associate program, the corporate and investment banking analyst program, and the private banking associate program. Most programs last 11 months (the corporate and investment banking program lasts a full year) and combine classroom training with on-the-job learning to give entering employees the skills necessary to be successful at their particular jobs. To land spots in these programs, candidates must have at least a 2.8 GPA and should have some coursework in finance or accounting. SunTrust Robinson Humphrey Equity Capital Markets runs separate investment banking analyst and associate programs. The analyst program lasts for two years and includes three weeks of classroom training followed by six months in a generalist pool. For the remainder of the program, analysts join industry-specific teams. Prospective analysts are expected to have taken some accounting or finance courses 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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(though the program takes undergraduates with various majors). SunTrust Robinson Humphrey equity capital markets associates are expected to have an MBA (preferably with a concentration in finance), and the bank is more likely to hire former investment banking analysts and summer associates. Associates begin their careers as generalists, working across industries and product lines for six months. Following this initial period, an associate joins a specific industry or product group with the option to rotate groups every six months until a permanent home is found.

If the personality fits… According to SunTrust insiders, getting a job at the bank is “extremely competitive.” An investment banking analyst finds the hiring process to be “pretty difficult considering they not only take your qualifications into consideration but are very selective as far as making sure one’s personality fits into the overall culture of the company.” Another source agrees that SunTrust takes everything into account, saying that an applicant “won’t get a job on either grades or personality alone.” Still, the biggest factor SunTrust considers seems to be “cultural fit.” Candidates may experience two or three rounds of interviews, the first of which will likely be on campus. The second round consists of multiple (typically four or five) interviews at SunTrust’s offices, where applicants meet professionals of varying levels of seniority (when they occur, third round interviews are normally with senior managers). In Atlanta, one source says that candidates fly in the day before interviewing and are “invited to a cocktail party [the night before] with a mixture of employees.” Interviewees may be asked “tough” but “good” questions about “current economic conditions,” their “finance-related experience,” and their interest in the bank and the particular position being sought. One insider who reports that most of the questions he faced “had to do with ‘fit,’” said that he wasn’t “grilled, but [the] questions were very structured.” Multiple sources report “many ‘scenario’ type questions” where interviewers present hypothetical circumstances and ask “what I would do if I were in a particular situation or a client asked such and such of me.” Applicants may also be probed to display “problem solving, leadership, finance, background and sales skills.” And some sources actually went through a highly organized hiring process where each interviewer “focused on a different topic,” including experience, leadership and personality. One source gives his big picture view of interviewing with SunTrust: “Of all the Ibanking interviews that I went on, SunTrust was by far and away the least technical.” The contact remembers being asked: “Tell me how you worked as a part of a team 516

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to get something difficult done in a short period of time,” and “How would you approach a meeting in which the people you were presenting to were more experienced than yourself?” It wasn’t purely a personality probe, though, and the source, an investment-banking analyst, was asked to “explain, in detail, the breakdown of free cash flow.”

OUR SURVEY SAYS One-party system Most insiders agree that SunTrust’s culture is “laid-back” but “professional” with an “emphasis on teamwork.” Above all, though, SunTrust employees find their company to be “very conservative” with a “follow the rules” mentality. Some believe the bank’s conservative style is a result of its “very southern” and “Republican” roots while others point to an “older” workforce (“many people have worked here for over 20 years”) that is used to doing things in certain ways. Still, most SunTrust employees seem to enjoy working at the firm and laud the “family-like atmosphere.” One contact says, “The culture at SunTrust is one of the most attractive things about the bank. It is very conducive to sharing ideas, interacting with others and working together.” Another source says that his “great” coworkers are “willing to work really hard,” but “everyone is willing to take time to answer questions to help you out.” And one insider who calls the culture “wonderful” appreciates the bank’s emphasis on “strong moral values” and “ethical decision making.” Some sources caution, though, that the firm’s culture “varies based on the location.” One dissatisfied contact in St. Petersburg, Fla., chastises the bank for being “very bureaucratic” and having a “very competitive” work atmosphere. Most employees, however, disagree, and while one source sees an element of “competitiveness,” he says his co-workers aren’t “cut-throat” and believe in teamwork. SunTrust has recently been putting an emphasis on becoming younger (i.e., hiring more recent graduates), and one insider says that SunTrust now has a “fun group of young associates” and is a “great place to work out of college.” In addition, SunTrust strongly encourages employees to “help the communities that we work and live in,” says a source, who also reports being urged to “volunteer time and resources to charitable organizations.” In keeping with the bank’s conservative approach, the firm for the most part follows a formal dress code allowing for casual Fridays. Some SunTrust offices may require more or less formality, however, depending “on the department and the extent 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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client contact.” Workers in the Savannah office, for example, sport suits throughout the week (including Friday). In Miami, there are casual Fridays, but “if a polo is worn, it is encouraged that it have the SunTrust logo.” In the Atlanta headquarters, the attire standards differ across groups; some employees are able to wear business casual clothes except when meeting clients, while others are in a “suit and tie everyday except Friday.” Whatever the custom of a given office, one source warns that everyone should just stay within the rules. The contact, an employee in the always-formal D.C. office, “tried wearing khakis once and was reprimanded.”

Southern gentle managers Managers at SunTrust get very high marks from their subordinates, so high in fact that some employees are simply stunned. “I am constantly shocked by how well I am treated,” says an overjoyed contact. “I am talked to as a peer. Senior management always wants my opinions after a meeting. I feel extremely valued, and my boss is constantly telling me how well I am doing.” Another pleased insider says that his superiors are “friendly, approachable and concerned about your life outside of work.” He adds that SunTrust is “not a place that is dominated by strong personalities” and that “every manager I’ve worked for has shown the utmost respect for me.” Others call SunTrust executives “great” and “helpful” and say that “most of the managers will go out of their way to make the other employees feel valued.” Of course, there is likely to be a mix of personalities at any firm, and there are those at SunTrust who report poor experiences with management. “My direct superior is amazing and treats me with respect,” says one source, but “I support several managers who aren’t quite as personable.” Another complains, “Management usually does not show appreciation for my work, and does not acknowledge me regularly.”

Long and strong training Along with the firm’s management, junior personnel are also quite happy with the firm’s training programs, which are described as “great,” “outstanding,” “tremendous” and “intense.” One contact goes so far as to say that “the main reason I joined the bank was due to its training program.” Another says, “SunTrust has one of the best training programs that I’m aware of.” SunTrust’s associate programs can last up to a year and initially consist of two months of classroom learning in Atlanta with other first-year employees from all locations. Sources report splitting time between Atlanta and their home offices for the remainder of the training period, as they participate in further classroom learning as well as “on-the-job rotations.” A first-year portfolio specialist in commercial 518

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banking says that training can vary “from classroom lectures, case studies and interaction with relationship managers to work rotations with different commercial groups and other areas of the bank.” He adds that training can also include “online studies and tests and offsite creative training.” Coursework consists of “accounting work, followed by classes ranging from client contact, risk management and corporate finance,” reveals a first-year investment banking insider. “Classes are scheduled during our rotations to further our skills; for example, we just finished up a two week-long deal structuring class.” And according to a first-year sales associate in commercial banking, the formal training period ends with “a final week in Atlanta where I have to demonstrate everything I have learned in a single project. I will be placed with a group after the training is complete.” After the formal training, employees are afforded the opportunity to participate in an “extensive amount of ongoing training.”

The days fly by Most SunTrust employees agree that the hours aren’t bad for banking. A first-year analyst who works 40 to 50 hours per week says the “hours are great” and he has “never even considered working [a] weekend.” “I could not ask to be in a more flexible environment for work hours,” says a first-year portfolio specialist who works 40 to 50 hours per week. “I stay when there is work to do, and I leave if there is not. When I have to leave town early on a Friday, it is completely acceptable.” Other sources report a more structured work schedule where there is “unspoken pressure to not bill overtime.” An associate in commercial banking says that “during the associate program, you are limited to a 40-hour work week monitored by time sheets.” Outside of the training programs, others agree that the hours at SunTrust are generally good, but they do vary from group to group with hours being “more laidback on the corporate side versus the capital markets side.” However, a first-year investment banking analyst who works 50 to 60 hours per week and often on the weekend is “pleased at the amount of time I spend in the office. There is pressure, but I’ve never felt that I was so overloaded that I couldn’t complete my duties. I’d say it was a selling point for me when I was sizing up offers, especially considering the hours my friends work in New York City.”

Light on the pay “We don’t get paid that much,” says a SunTrust source, and in general, his peers agree. A first-year investment banking analyst believes that he makes 20 percent less than those on Wall Street and says SunTrust pays “lower bonuses for analysts and associates.” Still, the source, who reports a salary of around $50,000 per year with 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 expected bonus of $5,000 to $15,000, admits that the pay rate is “somewhat typical of regional investment banking firms.” However, another contact says that he doesn’t “believe that our employees are compensated well compared to other companies.” A first-year portfolio specialist who makes $44,000 concedes that the salary at SunTrust is “not as high as some other programs” but she feels her compensation is “completely appropriate and acceptable. It is a great paying first job with the opportunity to only move up.” But a business banking associate who makes $38,000 and who’s been with SunTrust for a decade believes that she’s not “compensated well based on the number of years of banking experience I have.” In addition to monetary compensation, SunTrust provides a 401(k) program that matches dollar-for-dollar contributions of up to 3 percent of an employee’s salary; the bank makes 50 percent matches for additional contributions up to 5 percent of one’s salary. According to one source, “100 percent of the matching contribution is in SunTrust stock.” While many gripe about the lack of significant non-monetary benefits, analysts seem to be the least pleased with the lack of benefit trickle down, complaining that “little is seen at the analyst level.” Junior staffers do report some perks, though, including corporate discounts (such as gyms and cell phone service providers) as well as discounts on certain SunTrust banking products.

From the home offices in Atlanta Workers in SunTrust’s Atlanta headquarters find the office to be “spacious” but “not too luxurious.” Whether a junior employee works in a cubicle or an office depends on the group. One source says that the Atlanta building is “nice, but the trading floor as well as several client management floors could use an update.” The source calls SunTrust “the least posh investment bank I interviewed with.” Other SunTrust offices seem nice enough, though one employee in St. Petersburg calls the digs a “warehouse-type of establishment, where it leaks and water gets in when it rains heavily.” The source also says there’s a “slight odor in the building.” In D.C., the offices are “nice,” but employees expect to “move to a newer building soon.” In Jacksonville, an employee reports that she has her own office. “However, we are soon to be moving buildings and everyone’s offices will be downsized, either to smaller offices or cubicles.”

Making inroads While one insider acknowledges that “banking in general is still dominated by a greater presence of males,” she says that “SunTrust is extremely receptive to women for filling positions.” Still, the source adds, while “SunTrust loves to add to the diversity, when it comes down to it, they choose the best candidate, regardless of race 520

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or sex.” Many sources report that SunTrust has a relatively high number of women in management positions, though one contact feels the company “could do with more women in upper level positions.” One insider even believes that SunTrust employs “more females than any other investment bank.” Most SunTrust employees find the firm to be “very receptive to minority diversity” as well, though some believe the firm lacks a sufficient number of minority employees. One contact thinks “the bank tries to make an effort to hire a diverse group – but they don’t always succeed.” Another source points to recent success and says, “In my training class, there were as many or more minorities than nonminorities.” To recruit and retain minority employees, SunTrust implements various diversity initiatives and partners with selected professional associations, including INROADS, the National Association of Black Accountants, the National Black MBA Association, the National Society of Hispanic MBAs, the National Association of Asian American Professionals, the Urban Financial Services Coalition, the Black Data Processing Associates and Women In Technology. SunTrust employees “are also presented with various diversity training classes.”


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Susquehanna International Group 401 City Avenue, Suite 220 Bala Cynwyd, PA 19004 Phone: (610) 617-2600 www.sig.com

DEPARTMENTS Institutional Sales & Research Market Making (Options, Nasdaq, NYSE, International, Exchange Traded Funds, etc.)

THE STATS Director: Drew Milstein Employer Type: Private company No. of Employees: 1,300 No. of Offices: 10

KEY COMPETITORS Goldman Sachs Knight Trading Morgan Stanley

UPPERS • Strong training program

DOWNERS • Susque-who?

EMPLOYMENT CONTACT Recruiting Department 401 City Avenue, Suite 220 Bala Cynwyd, PA 19004 www.sig.com/careers

THE BUZZ


• • • •

“Very prestigious for traders” “Very smart” “Niche player” “Not well known outside equity option circles”

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Vault Guide to the Top 50 Banking Employers Susquehanna International Group

THE SCOOP Wanna trade? Founded in 1987, Susquehanna International Group (SIG) is a collection of companies offering institutional brokerage, research and market making services to institutional investment clients. The majority of the company’s offices are located in the U.S. (Atlanta; Bala Cynwyd, Penn.; Boston; Chicago; New York; Philadelphia; San Francisco and Washington, D.C.). The firm also has an international presence in Dublin and Sydney. SIG is perhaps best known for its impressive trading capabilities. The firm trades over 80 million shares on a daily basis. It’s a market maker in more than 3,000 Nasdaq stocks and acts as a NYSE specialist for more than 150 companies, including Revlon, Reebok and OfficeMax. SIG is also one of the biggest U.S. option market makers and a specialist in more index options than any other market maker. The firm is a big player in other securities as well, including ADRs, international securities and exchange traded funds (ETFs). Overall, the trades that SIG is involved in represent up to 2 percent of NASDAQ volume, 3 percent of listed stock volume, 15 percent of options volume and 15 percent of ETF volume. Susquehanna Financial Group, LLC is SIG’s institutional brokerage affiliate, providing execution services in Nasdaq and listed stocks, ETFs, ADRs, options and program trading. SFG also provides equity research to institutional investment managers. The firm prides itself on providing unbiased, independent research – SIG does not offer investment banking services (thereby avoiding any potential conflicts of interest.

Gaining experience In the last few years, SIG has been expanding its institutional business in part by attracting seasoned research, trading and sales professionals from its competitors. SIG’s institutional sales and research operation now numbers over 150 professionals and includes recent hires from Thomas Weisel, JPMorgan Chase, Merrill Lynch, UBS, Deutsche Bank, Morgan Stanley, Banc of America Securities, Credit Suisse First Boston, Citigroup and Goldman Sachs, among others.


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GETTING HIRED SIGning up SIG recruits at numerous top schools including Babson, Bryn Mawr, Bucknell, Caltech, Carnegie Mellon, Cornell, Dartmouth, Duke, Harvard, Haverford, Lehigh, Massachusetts Institute of Technology, Northwestern, Princeton, Purdue, Stanford, Swarthmore, University of Chicago, University of Illinois at Urbana Champaign, University of Michigan, University of Minnesota, University of Pennsylvania, University of Virginia, Villanova and Yale. For students not enrolled at these schools, the company accepts online applications as well as snail mail cover letters and resumes. SIG seeks competitive team players who are good at communicating and using critical reasoning and who can also handle the pressure of the trading business. The interview “focuses on skills that range from the quantitative to informed decision making,” according to the company’s web site. One contact who interviewed for an assistant trader position reported an “initial round over the phone with a member of the recruiting team” where he was “asked about general information from [his] resume and then some basic probability questions.” The second round was another phone interview with a recruiter, but it was a “much more quantitative round.” The contact’s final round “included much more math.” That interview included members of the recruiting team as well as a managing director.” Throughout the experience, the candidate found SIG to be “more concerned with skill set than experience in industry or grades,” and he “ended up accepting their offer because I was challenged by everyone I met and liked the emphasis on education and in-house training.”

OUR SURVEY SAYS Unrestrained … SIG’s web site describes the firm’s culture as “a flat corporate structure, absent of hierarchies.” A recruiter in the firm’s Bala Cynwyd headquarters echoes this characterization, saying the firm has “as few levels of management as are necessary to run a business efficiently.” As a consequence, the source finds the structure at SIG fosters “open communication and accessibility.” In addition, says the contact, “merit-based advancement and an entrepreneurial spirit allow for creativity and success in terms of responsibility assumed at a very young age.” SIG also claims to maintain a work environment that “allows employees to excel without being bogged

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down by red tape, job descriptions or other ‘corporate’ constraints. This unrestrained atmosphere has attracted some of the smartest, most competitive and creative people to our doors.” And according to the firm, those people stay at SIG, as “turnover is very low.” Dress at the firm is “casual” and one source who went in for an interview said, “The environment was so laid back and casual, I had no idea the interviewer was a managing director until he left the room and someone told me. He was wearing jeans and a plaid shirt.” In addition, human resources reports that there is “no emphasis on face time so while the hours vary in terms of product, desk or area, employees only need to be in the office to be productive.”

… Well-trained SIG has an education department that makes sure traders, tech support staff, and analysts keep abreast of the latest developments in their field. Senior traders take the lead in educating the staff, supplemented by professors brought in to teach seminars on derivative valuation, financial engineering, or game theory. Assistant traders are also enrolled in a two-week orientation on complex financial frameworks, after which they attend after-work sessions on similar topics, culminating in a 10-week course at Susquehanna headquarters.


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TD Securities 66 Wellington Street West P.O. Box 1, TD Bank Tower Toronto, Ontario M5K 1A2 Phone: (416) 982-6160 31 West 52nd Street New York, NY 10019 Phone: (212) 827-7000 www.tdsecurities.com

KEY COMPETITORS Banc of America Securities CIBC World Markets Lehman Brothers

UPPERS • Flexible work/life balance • Exposure to senior level employees

DEPARTMENTS Debt Capital Markets Foreign Exchange Institutional Equities Investment Banking Private Equity

DOWNERS

THE STATS

Canada: Human Resources – Recruitment TD Securities 66 Wellington Street West P.O. Box 1, TD Bank Tower Toronto, Ontario M5K 1A2 Phone: (416) 982-6160

Chairman and CEO: Robert Dorrance Employer Type: Subsidiary of TD Bank Financial Group Revenue: C$2.2 billion (FYE 10/03) Net Income: C$363 million No. of Employees: 3,000 No. of Offices: 19

• Conservative growth strategy • Brand recognition could be stronger

EMPLOYMENT CONTACT

U.S.: Human Resources – Recruitment TD Securities (USA) 31 West 52nd Street New York, NY 10019 Phone: (212) 827-7000 E-mail: [email protected] www.tdsecurities.com/careers

THE BUZZ


• “Solid niche player” • “Retail brokerage”

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Vault Guide to the Top 50 Banking Employers TD Securities

THE SCOOP Keeping on in Canada TD Securities is the wholesale banking arm of TD Bank Financial Group, one of the largest financial banks in Canada. The unit is headquartered in Toronto and offers a host of financial services, including securities underwriting, sales and trading, equity research, M&A advisory, foreign exchange, real estate advisory and private equity investments. TD Securities works closely with TD Bank and TD Bank’s brokerage subsidiary, TD Waterhouse. TD Bank’s other subsidiaries include TD Canada Trust (retail banking), TD Commercial Banking and TD Asset Management. TD Securities is best known in Canada where it regularly enjoys critical acclaim and annual showings on the country’s league tables. The investment banking group provides M&A, divestiture, capital structuring and risk management services; the bankers deliver these offerings out of particular industry groups, including communications and media, diversified industries, financial institutions, oil and gas, technology, and utilities and power. The institutional equities group (known as TD Newcrest) delivers equity research in addition to underwriting, sales and trading, and distribution. The firm also has a debt capital markets team that trades and sells various fixed income products and derivatives. TD Capital is TD Securities’ private equity arm, investing mezzanine and equity capital primarily in middle market companies. The bank’s foreign exchange group is a major player in the Canadian derivatives market.

By the numbers In its fiscal 2003, TD Securities contributed more than $360 million to TD Bank’s bottom line. Still, the ghost of financial failures past continued to haunt the division as the firm took charges for bad loans and for restructuring the bank’s equity options business. Business wasn’t so robust, either, as TD Securities suffered an 18 percent decline in revenue. The bank also didn’t have a banner year on the Canadian league tables. According to Thomson Financial, TD Securities fell three spots to No. 9 in Canadian announced M&A, with 12 deals worth $2.5 billion, a more than a 68 percent reduction from the firm’s 2002 deal value. The firm had a similarly poor showing on the Canadian completed M&A league table, falling to No. 7 from No. 4 with 12 deals worth $2.4 billion, an 81 percent decrease in deal value from the previous year. Although TD Securities’ 2003 results were not spectacular, parent company TD Bank believes its wholesale banking unit had a successful year. According to the firm’s 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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annual report, “Fiscal 2003 was a very satisfying year for wholesale banking. We repositioned the business to focus on our core strengths and strategy to deliver consistent lower risk earnings, implemented stricter limits around credit exposures and industry concentrations, and reduced the non-core lending portfolio with no additional negative impact on earnings.” Heading into 2004, TD Securities looks to continue to benefit from its conservative growth strategy and to improve its Canadian market share position.

GETTING HIRED It’s not easy One analyst notes, “Because of [the firm’s] small size,” TD’s program is “selective.” A second-year associate concurs, saying, “We like to run a lean shop, so hiring is generally driven by need, rather than by our desire to maintain a presence on campus.” However, another insider notes that “selectivity is high, but the stronger applicants often do not apply to TD.” Nonetheless, one banker explains, “The firm is looking for motivated individuals with an entrepreneurial spirit, as you must be able to hit the ground running.”

Doing the rounds For the most part, getting hired at TD Securities doesn’t require as many rounds of separate interviews as some bulge-bracket firms. Initial interviews are held at college campuses, usually the top-level schools, where 10 to 30 percent of applicants are asked to continue the interview process, according to a director with TD. Then, it’s “on to headquarters, where the person has one or two rounds of 30-minute interviews, each with four to six people.” Another analyst adds that “a first-round interview is usually held on campus, and the second round is a gauntlet of interviews in the office.” A first-year analyst notes that he “went through two rounds of interviews, and met with almost everyone at the firm,” and that the questions “seemed to be more on the fit and behavioral side.” Another banker concurs, but adds that he was asked “more technical questions about finance and valuation” in addition to the behavioral questions. A trader in the New York office had a more extensive interview process, going on 12 interviews, with associates through the head of the New York office. However, he relates that “most questions were to determine fit, with few technical questions.”

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OUR SURVEY SAYS Into the great wide open culture Insiders praise the culture at TD. One analyst notes the firm’s “open, tolerant, respectful, kind and fun,” culture, while another highlights the lack of typical hierarchies. “It is a lean organization where you will have a lot of responsibility early on,” he says. “As such, it is not very hierarchical and people are very approachable and willing to help out. In addition, there is not a lot of emphasis on ‘face time’ or any other such typical investment banking behavior.” Higher up the chain, VPs agree. “The culture is fairly relaxed,” one VP notes, pointing out that “the management structure is flat.” While TD is a Canadian firm, “the U.S. office has more of a boutique culture,” says one source. Overall, the “smaller, more cordial” environment at TD seems to please its employees. “I am very satisfied overall with my experience at the firm,” says one first-year associate. “I enjoy working [for a firm] where everyone knows each other well and works hard together.” A credit analyst agrees, praising TD as a “great company for an entry-level position,” adding that the firm “provides the deal exposure and mobility to achieve long term goals.”

Getting to know your boss Though TD doesn’t have the prestige of a bulge bracket firm, the opportunity to interface with experienced staff is seen as a major plus. One experienced banker explains, “A small bank results in small deal teams, with significant exposure to senior bankers.” As a result, “you are able to take on a lot of responsibilities, and learn a lot.” Another insider agrees that TD Securities is very “self-starter friendly.” While at work, TD fosters a sense of camaraderie and respect. “The managers here are very respectful and encourage a lot of interaction between junior and senior staff,” reports one first-year associate. A credit analyst agrees, noting, “Everyone is trying to excel, but also have the time to help subordinates with problems or questions. I feel that my treatment has been very fair and would recommend anyone that is interested in banking to consider the firm.”

Life after work Although one source reports that TD can be “intense at deal time,” it’s possible to have a life outside the firm, and “if you aren’t busy, you keep very reasonable hours.” Indeed, hours aren’t as rough as at other banks. One VP notes, “TD has a far better work/life balance than many other firms. Those who work long hours here do it 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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because of self-discipline and work-pride.” And “face time is frowned upon,” reports one first-year associate. “I leave when I have completed my tasks.” The source adds, “Obviously, I stay as late as it takes to get a task done, which sometimes can be very late.” Another associate confirms this work schedule, saying work hours are “tolerable,” with “some bad stretches, but never sustained insanity.” Not surprisingly, a trader says, “The hours at TD are not that demanding. Trading is all about getting out what you put in, in terms of effort.” The contact adds, “I work above-average hours because I choose to do so.” Like the hours, the pay’s not that bad, either. “I have always been paid within or above the published compensation bands on Wall Street,” one experienced banker reports. However, he qualifies this by saying, “I have always been [a] highly ranked [analyst].”

Office space TD’s relaxed culture seems to carry over to the offices. “We need IT upgrades and remodeling of office space,” explains a VP in corporate finance. “These things have been put off since the 2000-2002 bear market.” Another VP notes that TD’s offices are “not as good as many boutiques, but much better than my old space at Lehman.” Another associate in the New York office laments the “old, cheap office space,” but “if that means my bonus can be higher, I’m all for it.” A second-year associate agrees, “The offices could use a little updating” but admits “they’re functional” and he, too, would “prefer a bigger bonus to a new cube.” Nevertheless, at least you’ll be comfortable in your clothes at work. The firm’s dress code is business casual every day, except when meeting clients. “It’s a definite plus,” notes one second-year VP. But another associate says, “We keep suits in our offices in case of impromptu client meetings.”

The dirt on diversity Some employees feel that TD Securities is still a work in progress when it comes to diversity issues. However, according to the firm, TD Securities’ 2004 analyst class is “evenly split between men and women.” And one employee notes, “There are not many other investment banks where you will find as many women occupying senior positions.” A male VP adds, “Women are promoted at TD very aggressively.” For minorities, there is a high level of respect throughout the firm. One minority banker notes, “I can only say that the firm treats all its staff with the utmost respect, regardless of race or ethnicity.” A VP echoes this view, saying, “Our firm is highly

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respectful of cultural and racial diversity. That said, we are exclusively North America-focused, so we tend to attract fewer employees that are very diverse – from different continents, speaking multiple languages, etc.” The contact adds, “We have no Asian business operations or emerging markets activities at the firm and most Asian people tend to be more junior and from China, Korea and India.” A credit analyst, however, says there are a “considerable amount of minorities, including myself.” According to TD, the firm is “committed to diversity,” illustrative by several initiatives in place that address underrepresented groups such as women, aboriginal people and persons with disabilities.


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Veronis Suhler Stevenson Partners LLC 350 Park Avenue New York, NY 10022 Phone: (212) 935-4990 www.vss.com

DEPARTMENTS Investment Banking Private Equity Research

THE STATS Chairman and Co-CEO: John J. Veronis President and Co-CEO: John S. Suhler Co-CEO: Jeffrey T. Stevenson Employer Type: Private company No. of Employees: 80 No. of Offices: 2

KEY COMPETITORS Allen & Company Boston Ventures Broadview International

UPPERS • If media banking’s your game, VSS is tough to beat

DOWNERS • Media focus means susceptible to downturns

EMPLOYMENT CONTACT www.vss.com/careers/index.html [email protected]

THE BUZZ


• “Best for media and telecom” • “Focused firm”

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Vault Guide to the Top 50 Banking Employers Veronis Suhler Stevenson Partners LLC

THE SCOOP Making money on media In 1981, publishing industry veterans John J. Veronis and John S. Suhler founded Veronis Suhler, a financial services firm catering solely to the media, communications and information industries. Veronis was best known for starting Psychology Today, while Suhler had been president of CBS Publishing Group, through which he oversaw various book publishing houses and well-known magazines such as Woman’s Day, Field & Stream and Road & Track. Today, Veronis Suhler Stevenson offers M&A and financing advisory, private equity investing and industry research (Jeffrey Stevenson joined the bank in 1982 and became a name partner in 2000). The firm has offices in New York and London. Like the successful careers of its founders, Veronis Suhler has been built upon a combination of financial know-how and industry expertise; the boutique’s bankers have been plucked from such firms as JPMorgan, Merrill Lynch, Time Warner, NBC and Times Mirror. Utilizing their industry knowledge, Veronis Suhler bankers work in teams concentrating on particular media segments, including broadcasting, newspaper publishing and the Internet. And the little bank gets a good number of deals; since its inception, Veronis Suhler has worked on more than 600 transactions.

Private dealings Veronis Suhler’s private equity investments are conducted through its VS&A Communications Partners subsidiaries, which oversee individual funds for investment exclusively in media, communications and information companies. The firm currently has two private equity funds in existence, the $330 million VS&A Communications Partners II, L.P. and the $1 billion VS&A Communications Partners III, L.P. The firm’s first fund, VS&A Communications Partners, L.P., was formed with $57 million of capital in 1987 and has since been liquidated; during its existence, the fund yielded an annual return (45 percent) high enough to put it among the top acquisition funds started in the late 1980s. In January 2004, Veronis Suhler raised $100 million for the firm’s first mezzanine fund, VSS Mezzanine Partners L.P., which will provide subordinated debt primarily to middle-market companies for use in acquisitions and recapitalizations. Recent Veronis Suhler deals of note include its work as a strategic advisor and private placement agent for XM Satellite Radio’s $475 million financing in January 2003, and its role as advisor on Touchstone Applied Science Associates’s $4 million sale of its instructional publishing company, Modern Learning Press, to Delta Education in 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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July 2003. In January 2004, Veronis Suhler used its private equity and M&A resources in advising PBI Media on its purchase of the Chemical Business Services of SRI Consulting and on its concurrently announced merger with Chemical Week Associates. Both PBI Media and Chemical Week Associates are companies in Veronis Suhler’s private equity portfolio.

Informing the information industry Veronis Suhler leverages its bankers’ financial and industry expertise for more than just advisory and investment work. Each year, the firm publishes two comprehensive industry research reports, “The Communications Industry Forecast” and “The Communications Industry Report.” “The Communications Industry Forecast” analyzes spending patterns and the major drivers impacting growth in the media and communications industry. “The Communications Industry Report” discusses the financial results of every public company in the media and communications industry. Both reports are edited by president and co-CEO John S. Suhler and contain analyses provided by the firm’s investment bankers. And to keep its own employees current on market happenings, Veronis Suhler supplies an internal publication, the Veronis Suhler Stevenson Market Report, which offers weekly industry updates.

What do you say, partner? In March 2003, Veronis Suhler expanded its partnership, promoting veteran bankers Gerry Benford, Scott Troeller and Marco Sodi to join name partners Veronis, Suhler and Jeffrey Stevenson. According to a statement released by the firm, the addition of the three partners “enhances VSS’s progress as an integrated merchant banking firm providing private capital and financial advisory services to the media industry and increases the opportunities and growth potential available to everyone at [Veronis Suhler].”

GETTING HIRED From banks and industry On the “careers” section of its web site, the firm posts open positions in various departments, including investment banking, private equity, marketing, research, finance and administration. Any open positions will be accompanied with an extensive list of requirements. In the past, professionals have been tapped for spots at VSS from major banks and from media firms such as Time Warner, Hachette Filipacchi and CBS. Candidates can e-mail employment questions to 534

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[email protected], or send a resume and cover letter, including salary history, to the Director of Human Resources at the Park Avenue address.


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Webster Financial Corporation Webster Plaza WFD730 Waterbury, CT 06702 Phone: (800) 325-2424 www.websteronline.com

DEPARTMENTS Business Banking Consumer & Small Business Mortgage Banking Trust & Investment Management Webster Insurance

KEY COMPETITORS Banknorth Citizens Financial Group FleetBoston Financial People’s Bank

UPPERS • Increasing its reach – on an acquisition spree as of late

DOWNERS THE STATS Chairman and CEO: James C. Smith Employer Type: Public company Symbol: WBS (NYSE) Revenue: $891.2 million (FYE 12/03) Net Income: $163.2 million No. of Employees: 2,719 No. of Offices: 119

• Not well known outside the Northeast

EMPLOYMENT CONTACT Visit the career section at the firm’s web site, www.websteronline.com

THE BUZZ


• “Small funds, small Northeastern bank” • “Do they do investment banking?”

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Vault Guide to the Top 50 Banking Employers Webster Financial Corporation

THE SCOOP Defining Webster Connecticut-based Webster Financial Corporation was founded in 1935 by Harold Webster Smith to assist people with home loans during the Great Depression. Today, the bank has more than $15 billion in assets and is a holding company operating through two main subsidiaries, Webster Bank and Webster Insurance. Webster is the fourth-largest New England-based bank, trailing FleetBoston Financial, Citizens Bank and Banknorth. Current CEO James C. Smith is the son of Harold Webster Smith and succeeded his father in 1987. Webster Bank has four divisions: consumer and small business, business banking, mortgage banking, and trust and investment management. Webster’s consumer and small business division includes the bank’s retail banking branches, which offer deposit, loan and basic investment services. Business banking concentrates on middle market companies seeking financial services, including cash management, lending and real estate financing. Mortgage banking delivers home financing products and services mainly to residents of Connecticut. Trust and investment management offers services to both businesses and individuals. The division manages over $2 billion in assets and includes Webster Investment Services, a broker dealer that offers mutual funds and annuities, and Webster Financial Advisors, which focuses on individuals with assets in the range of $1 million to $10 million. For clients with insurance needs, the Webster insurance subsidiary provides a full array of insurance products including property and casualty, life and workers’ compensation. Webster Insurance is the biggest insurance agency in Connecticut.

Going commercial In September 2003, Webster Bank, then a federal savings bank, filed an application with the Office of the Comptroller of the Currency to officially become a national bank. If approved, the move will allow Webster to make more commercial loans (as currently chartered, Webster cannot make commercial loans greater than 20 percent of its assets). As part of its proposed transformation, Webster also filed an application with the Federal Reserve System to become a financial holding company. “Over the past decade Webster has transformed itself from its thrift institution roots to be a full service commercial bank,” explained Webster CEO James Smith in a press release. “Now, as we complete that transformation, it is appropriate that we shift from a federal thrift charter to a national bank charter and become a financial holding company.”


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Shopping spree Webster has made more than 30 acquisitions in the last eight years, and the bank doesn’t look like it’ll be taking a breather anytime soon. In November 2003, Webster completed its $30 million purchase of Connecticut commercial bank North American Bank and Trust Company, adding almost $200 million in assets and eight branches in the Greater Waterbury region. Webster moved beyond Connecticut with a bang when it announced in October 2003 its $495 million acquisition of First Federal Bank of America, a savings and loan holding company with 19 branches in Massachusetts and seven in Rhode Island. Expected to close in the second quarter of 2004, the deal will be big enough to make the combined firm one of the 50 largest banks in the country with nearly $18 billion in assets. The First Federal branches will be Webster’s first outside of Connecticut. Webster had previously tried to expand into Rhode Island in 1999, but was outbid on potential purchases of some divested FleetBoston branches. In July 2003, Webster Insurance enhanced its capabilities in Connecticut with the acquisition of LJF Insurance Services, a full-service insurance provider with two offices in Fairfield County. The purchase followed the January 2003 addition of The Mathog & Moniello Companies, which provide commercial and property and casualty insurance products in East Haven. The deal makes Webster Insurance one of the top 10 bank-owned insurance agencies or brokers by revenue in the country. Also in January, Webster acquired insurance premium financing company Budget Installment Corp. Webster recently added to its trust and investment management division as well, announcing the acquisition of Phoenix National Trust Company, a provider of trust, custody and wealth management services, in December 2003. Webster’s future plans include expanding into Boston, New York and New Jersey, but one area the firm is leaving is Chicago. In March 2004, Webster sold off its 73 percent stake in investment bank Duff & Phelps to an investor group and a Duff & Phelps management team. Webster will continue to partner with Duff & Phelps to offer certain financial services. Explaining the rationale for the transaction, Webster CEO James Smith said, “Webster is intensely focused on building our retail and commercial banking, investment and insurance businesses in southern New England. While Duff & Phelps is a strong, respected and capable firm, we have determined that financial valuation and investment banking are not core businesses. We believe it makes more sense to provide our customers with Duff and Phelps’ valuable services through an alliance rather than through Webster’s majority ownership.” Webster had purchased its stake in Duff & Phelps in November 2000.

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GETTING HIRED Congenial regional Like many regional banks, Webster Financial has positioned itself as an employeefriendly place to work. The firm’s careers web site notes Webster’s “Six Commitments” to employees, which include building financial security, professional growth, the ability to contribute and be recognized, a healthy lifestyle environment, the opportunity to support the local community and an overall great working environment. Webster offers both full-time positions and internships, and explains that internships usually lead to employment for top performers. The company lists opportunities in finance/accounting, marketing, computer science and liberal arts, and provides a simple application page through the career site. According to Webster, the firm participates in several campus-based recruitment activities, including career fairs, open houses and online job postings. The firm’s interview process usually starts with an on-campus interview, and second-round interviews are granted to those individuals who appear to be a good fit for the culture and needs of the bank. On-site interviews are the final step in the process, and often include contact with members of Webster’s leadership team.


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TOP50 BANK EMPLO APPENDIX

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Alphabetical Listing of Companies A.G. Edwards & Sons . . . . . . . . . . . . . 428 ABN AMRO Holdings . . . . . . . . . . . . 412 Allen & Company, Inc.. . . . . . . . . . . . 356 AmSouth Bancorporation . . . . . . . . . . 433 Banc of America Securities . . . . . . . . 186 Bank of America . . . . . . . . . . . . . . . . . 196 Bank of New York, The . . . . . . . . . . . 348 Bank One . . . . . . . . . . . . . . . . . . . . . . 314 Barclays Capital . . . . . . . . . . . . . . . . . 228 BB&T Corporation . . . . . . . . . . . . . . . 439 Bear, Stearns & Co. . . . . . . . . . . . . . . 178 Blackstone Group, The . . . . . . . . . . . . . 58 BNP Paribas Group. . . . . . . . . . . . . . . 328 Brown Brothers Harriman . . . . . . . . . 342 Calyon Securities (USA) Inc. . . . . . . . 398 Chanin Capital Partners . . . . . . . . . . . 445 CIBC World Markets . . . . . . . . . . . . . 274 Citigroup . . . . . . . . . . . . . . . . . . . . . . . 118 Citigroup’s Global Corporate and Investment Bank . . . . . . . . . . . . . . . . . . 70 Comerica . . . . . . . . . . . . . . . . . . . . . . . 448 Commerce Bancorp . . . . . . . . . . . . . . 453 Credit Suisse First Boston . . . . . . . . . 132 Deutsche Bank . . . . . . . . . . . . . . . . . . 168 Dresdner Kleinwort Wasserstein . . . . 206 Fifth Third Bancorp . . . . . . . . . . . . . . 457 First Albany Companies . . . . . . . . . . . 461 First Horizon National Corporation . . 465 FleetBoston Financial . . . . . . . . . . . . . 300 Friedman, Billings, Ramsey Group . . 388 Gleacher Partners . . . . . . . . . . . . . . . . 338 Goldman Sachs . . . . . . . . . . . . . . . . . . . 32 Greenhill & Co. . . . . . . . . . . . . . . . . . 262 Harris Nesbitt/BMO Nesbitt Burns . . 418 Houlihan Lokey Howard & Zukin . . . 252 HSBC Holdings plc . . . . . . . . . . . . . . 234 Jefferies & Company, Inc. . . . . . . . . . 268 JPMorgan Chase . . . . . . . . . . . . . . . . . . 82

Keefe, Bruyette & Woods. . . . . . . . . . 402 KeyCorp . . . . . . . . . . . . . . . . . . . . . . . 470 Lazard . . . . . . . . . . . . . . . . . . . . . . . . . 146 Legg Mason . . . . . . . . . . . . . . . . . . . . 322 Lehman Brothers. . . . . . . . . . . . . . . . . 104 MBNA Corp.. . . . . . . . . . . . . . . . . . . . 422 Merrill Lynch . . . . . . . . . . . . . . . . . . . . 92 Morgan Keegan & Company . . . . . . . 476 Morgan Stanley. . . . . . . . . . . . . . . . . . . 46 National City Corporation . . . . . . . . . 480 Nomura Holdings . . . . . . . . . . . . . . . . 378 Peter J. Solomon Company . . . . . . . . 392 Piper Jaffray & Co. . . . . . . . . . . . . . . . 306 PNC Financial Services Group, The. . 486 Putnam Lovell NBF Securities Inc. . . 490 Raymond James Financial . . . . . . . . . 372 RBC Capital Markets . . . . . . . . . . . . . 332 Regions Financial Corporation . . . . . . 493 Robert W. Baird & Co. (Baird). . . . . . 406 Rothschild . . . . . . . . . . . . . . . . . . . . . . 212 Ryan Beck & Co. . . . . . . . . . . . . . . . . 497 Sandler O’Neill & Partners, L.P. . . . . 501 SG Cowen & Co., LLC . . . . . . . . . . . 292 SouthTrust Corporation . . . . . . . . . . . 504 Stephens Inc. . . . . . . . . . . . . . . . . . . . . 508 SunTrust Banks. . . . . . . . . . . . . . . . . . 513 Susquehanna International Group. . . . 522 TD Securities . . . . . . . . . . . . . . . . . . . 526 Thomas Weisel Partners . . . . . . . . . . . 218 U.S. Bancorp. . . . . . . . . . . . . . . . . . . . 360 UBS Investment Bank . . . . . . . . . . . . 156 Veronis Suhler Stevenson Partners LLC. 532 Wachovia. . . . . . . . . . . . . . . . . . . . . . . 242 Webster Financial Corporation . . . . . . 536 Wells Fargo & Company . . . . . . . . . . 282 William Blair & Company . . . . . . . . . 366 WR Hambrecht + Co. . . . . . . . . . . . . . 382


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Banking Glossary Annual report: A combination of financial statements, management discussion and analysis, and graphs and charts provided annually to investors; they’re required for companies traded publicly in the U.S. Asset management: Also known as investment management. Money managers at investment management firms and investment banks take money given to them by pension funds and individual investors and invest it. For wealthy individuals (private clients), the investment bank will set up an individual account and manage the account; for the less well-endowed, the bank will offer mutual funds. Asset managers are compensated primarily by taking a percentage each year from the total assets managed. (They may also charge an upfront load, or commission, of a few percent of the initial money invested.) Audit: An examination of transactions and financial statements made in accordance with generally accepted auditing standards. Auditor: A person who examines the information used by managers to prepare the financial statements and attests to the credibility of those statements. Bond spreads: The difference between the yield of a corporate bond and a U.S. Treasury security of similar time to maturity. Bulge bracket: The largest and most prestigious firms on Wall Street (including Goldman Sachs, Morgan Stanley, Merrill Lynch, Salomon Smith Barney and Credit Suisse First Boston). Buy-side: The clients of investment banks (mutual funds, pension funds) who buy the stocks, bonds and securities sold by the banks. (The investment banks that sell these products to investors are known as the sell-side.) Certified public accountant (CPA): In the United States, a person earns this designation through a combination of education, qualifying experience and by passing a national written examination. Chartered Financial Analyst (CFA): A designation given to professionals who complete a multi-part exam designed to test accounting and investment knowledge and professional ethics. Commercial bank: A bank that lends, rather than raises, money. For example, if a company wants $30 million to open a new production plant, it can approach a commercial bank for a loan. Commercial paper: Short-term corporate debt, typically maturing in nine months or less. Commitment letter: A document that outlines the terms of a loan a commercial bank gives a client. Commodities: Assets (usually agricultural products or metals) that are generally interchangeable with one another and therefore share a common price. For


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example, corn, wheat and rubber generally trade at one price on commodity markets worldwide. Common stock: Also called common equity, common stock represents an ownership interest in a company. (As opposed to preferred stock, see below.) The vast majority of stock traded in the markets today is common, as common stock enables investors to vote on company matters. An individual who owns at least 51 percent of a company’s shares controls the company’s decisions and can appoint anyone he/she wishes to the board of directors or to the management team. Comparable company analysis (Comps): The primary tool of the corporate finance analyst. Comps include a list of financial data, valuation data and ratio data on a set of companies in an industry. Comps are used to value private companies or better understand a how the market values an industry or particular player in the industry. Consumer Price Index (CPI): The CPI measures the percentage increase in a standard basket of goods and services. The CPI is a measure of inflation for consumers. Convertible bonds: Bonds that can be converted into a specified number of shares of stock. Derivatives: An asset whose value is derived from the price of another asset. Examples include call options, put options, futures and interest-rate swaps. Discount rate: A widely followed short-term interest rate set by the Federal Reserve to cause market interest rates to rise or fall, thereby spurring the U.S. economy to grow more quickly or less quickly. More specifically, the discount rate is the rate at which federal banks lend money to each other on overnight loans. Today, the discount rate can be directly moved by the Fed, but largely maintains a symbolic role. Dividend: A payment by a company to shareholders of its stock, usually as a way to distribute profits. Equity: In short, stock. Equity means ownership in a company that is usually represented by stock. ERISA: Employee Retirement Income Security Act of 1974. The federal law that sets most pension plan requirements. The Fed: The Federal Reserve, which gently (or sometimes roughly), manages the country’s economy by setting interest rates. Federal funds rate: The rate domestic banks charge one another on overnight loans to meet Federal Reserve requirements. This rate tracks very closely to the discount rate, but is usually slightly higher. Financial Accounting Standards Board (FASB): A private-sector body that determines generally accepted accounting principles in the United States. Financial accounting: The field of accounting that serves external decision makers, such as stockholders, suppliers, banks and government agencies.

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Fixed income: Bonds and other securities that earn a fixed rate of return. Bonds are typically issued by governments, corporations and municipalities. Generally Accepted Accounting Principles (GAAP): The broad concepts or guidelines and detailed practices in accounting, including all conventions, rules and procedures that make up accepted accounting practices. Glass-Steagall Act: Part of the legislation passed in 1933 during the Great Depression designed to help prevent future bank failure – the establishment of the F.D.I.C. was also part of this movement. The Glass-Steagall Act split America’s investment-banking (issuing and trading securities) operations from commercial banking (lending). For example, J.P. Morgan was forced to spin off its securities unit as Morgan Stanley. The act was gradually weakened throughout the 1990s. In 1999 Glass-Steagall was effectively repealed by the Graham-Leach-Bliley Act. Graham-Leach-Bliley Act: Also known as the Financial Services Modernization Act of 1999. Essentially repealed many of the restrictions of the Glass-Steagall Act and made possible the current trend of consolidation in the financial services industry. Allows commercial banks, investment banks and insurance companies to affiliate under a holding company structure. Growth stock: Industry leaders that investors and analysts believe will continue to prosper and exceed expectations. These companies have above average revenue and earnings growth and their stocks trade at high price-to-earnings and price-to-book ratios. Technology and telecommunications companies such as Microsoft and Cisco are good examples of traditional growth stocks. Hedge: To balance a position in the market in order to reduce risk. Hedges work like insurance: a small position pays off large amounts with a slight move in the market. Hedge fund: An investment partnership, similar to a mutual fund, made up of wealthy investors. In comparison to most investment vehicles, hedge funds are loosely regulated, allowing them to take more risks with their investments. High-grade corporate bond: A corporate bond with a rating above BB. Also called investment grade debt. High-yield debt (a.k.a. Junk bonds): Corporate bonds that pay high interest rates (to compensate investors for high risk of default). Credit rating agencies such as Standard & Poor’s rate a company’s (or a municipality’s) bonds based on default risk. Junk bonds rate below BB. Initial public offering (IPO): The dream of every entrepreneur, the IPO marks the first time a company issues stock to the public. Going public means more than raising money for the company: By agreeing to take on public shareholders, a company enters a whole world of required SEC filings and quarterly revenue and earnings reports, not to mention possible shareholder lawsuits. Institutional clients or investors: Large investors, such as pension funds or municipalities (as opposed to retail investors or individual investors). Lead manager: The primary investment bank managing a securities offering. (An investment bank may share this responsibility with one or more comanagers.)


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League tables: Tables that rank investment banks based on underwriting volume in numerous categories, such as stocks, bonds, high yield debt, convertible debt, etc. High rankings in league tables are key selling points used by investment banks when trying to land a client. Leveraged buyout (LBO): The buyout of a company with borrowed money, often using that company’s own assets as collateral. LBOs were the order of the day in the heady 1980s, when successful LBO firms such as Kohlberg Kravis Roberts made a practice of buying up companies, restructuring them and then reselling them or taking them public at a significant profit. The Long Bond: The 30-year U.S. Treasury bond. Treasury bonds are used as the starting point for pricing many other bonds, because Treasury bonds are assumed to have zero credit risk taking into account factors such as inflation. For example, a company will issue a bond that trades “40 over Treasuries.” The “40” refers to 40 basis points (100 basis points = 1 percentage point). Making markets: A function performed by investment banks to provide liquidity for their clients in a particular security, often for a security that the investment bank has underwritten. (In others words, the investment bank stands willing to buy the security, if necessary, when the investor later decides to sell it.) Market capitalization (market cap): The total value of a company in the stock market (total shares outstanding multiplied by price per share). Merchant banking: The department within an investment bank that invests the firm’s own money in other companies. Analogous to a venture capital arm. Money market securities: This term is generally used to represent the market for securities maturing within one year. These include short-term CDs, repurchase agreements and commercial paper (low-risk corporate issues), among others. These are low risk, short-term securities that have yields similar to Treasuries. Mortgage-backed bonds: Bonds collateralized by a pool of mortgages. Interest and principal payments are based on the individual homeowners making their mortgage payments. The more diverse the pool of mortgages backing the bond, the less risky they are. Municipal bonds (Munis): Bonds issued by local and state governments, a.k.a. municipalities. Municipal bonds are structured as tax-free for the investor, which means investors in munis earn interest payments without having to pay federal taxes. Sometimes investors are exempt from state and local taxes, too. Consequently, municipalities can pay lower interest rates on muni bonds than other bonds of similar risk. Mutual fund: An investment vehicle that collects funds from investors (both individual and institutional) and invests in a variety of securities, including stocks and bonds. Mutual funds make money by charging a percentage of assets in the fund. P/E ratio: The price-to-earnings ratio. This is the ratio of a company’s stock price to its earnings-per-share. The higher the P/E ratio, the more expensive a stock is (and the faster investors believe the company will grow). Stocks in fastgrowing industries tend to have higher P/E ratios. Passive investor: Relies on diversification to match the performance of a stock market index (e.g., the S&P 500 Index or the the Wilshire 4500 Completion 548

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Index). Because a passive portfolio strategy involves matching an index, this strategy is commonly referred to as indexing. Pit traders: Traders who are positioned on the floor of stock and commodity exchanges (as opposed to floor traders, situated in investment bank offices). Pitchbook: The book of exhibits, graphs and initial recommendations presented by bankers to prospective clients when trying to land an engagement. Prime rate: The base rate U.S. banks use to price loans for their best customers. Private accountants. Accountants who work for businesses, as well as government agencies, and other non-profit organizations. Producer Price Index: The PPI measures the percentage increase in a standard basket of goods and services. PPI is a measure of inflation for producers and manufacturers. Proprietary trading: Trading of the firm’s own assets (as opposed to trading client assets). Prospectus: A report issued by a company (filed with and approved by the SEC) that wishes to sell securities to investors. Distributed to prospective investors, the prospectus discloses the company’s financial position, business description and risk factors. Public accountants. Accountants who offer services to the general public on a fee basis including auditing, tax work and management consulting. Request for proposal (RFP): Statement issued by institutions (i.e., pension funds or corporate retirement plans) when they are looking to hire a new investment manager. They typical detail the style of money management required and the types of credentials needed. Retail clients: Individual investors (as opposed to institutional clients). Return on equity: The ratio of a firm’s profits to the value of its equity. Return on equity, or ROE, is a commonly used measure of how well an investment bank is doing, because it measures how efficiently and profitably the firm is using its capital. Roadshow: The series of presentations to investors that a company undergoing an IPO usually gives in the weeks preceding the offering. Here’s how it works: The company and its investment bank will travel to major cities throughout the country. In each city, the company’s top executives make a presentation to analysts, mutual fund managers and other attendees and also answer questions. S-1: A type of legal document filed with the SEC for a private company aiming to go public. The S-1 is almost identical to the prospectus sent to potential investors. The SEC must approve the S-1 before the stock can be sold to investors. S-2: A type of legal document filed with the SEC for a public company looking to sell additional shares in the market. The S-2 is almost identical to the prospectus sent to potential investors. The SEC must approve the S-2 before the stock is sold.


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Sales memo: Short reports written by the corporate finance bankers and distributed to the bank’s salespeople. The sales memo provides salespeople with points to emphasize when hawking the stocks and bonds the firm is underwriting. Securities and Exchange Commission (SEC): A federal agency that, like the Glass-Steagall Act, was established as a result of the stock market crash of 1929 and the ensuing depression. The SEC monitors disclosure of financial information to stockholders and protects against fraud. Publicly traded securities must be approved by the SEC prior to trading. Short-term debt: A bond that matures in nine months or less. Also called commercial paper. Specialty firm: An investment management firm that focus on one type of style, product or client type. Syndicate: A group of investment banks that together will underwrite a particular stock or debt offering. Usually the lead manager will underwrite the bulk of a deal, while other members of the syndicate will each underwrite a small portion. T-Bill Yields: The yield or internal rate of return an investor would receive at any given moment on a 90-120 government treasury bill. Tax-exempt bonds: Municipal bonds (also known as munis). Munis are free from federal taxes and, sometimes, state and local taxes. 10K: An annual report filed by a publicly traded company with the SEC. Includes financial information, company information, risk factors, etc. 10Q: Similar to a 10K, but filed quarterly. Treasury securities: Securities issued by the U.S. government. These are divided into Treasury Bills (maturity of up to two years), Treasury Notes (from two years to 10 years maturity), and Treasury Bonds (10 years to 30 years). As they are government guaranteed, treasuries are often considered risk-free. In fact, while U.S. Treasuries have no default risk, they do have interest rate risk; if rates increase, then the price of U.S. Treasuries will decrease. Underwrite: The function performed by investment banks when they help companies issue securities to investors. Technically, the investment bank buys the securities from the company and immediately resells the securities to investors for a slightly higher price, making money on the spread. Value stock: Well-established, high dividend paying companies with low price to earnings and price to book ratios. Essentially, they are “diamonds in the rough” that typically have undervalued assets and earnings potential. Classic value stocks include oil companies like ExxonMobil and banks such as BankAmerica or J.P. Morgan Chase. Yield: The annual return on investment. A high yield bond, for example, pays a high rate of interest.

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Recommended Reading Suggested Texts Brandt, Richard and Weisel, Thomas. Capital Instincts: Life as an Entrepreneur, Financier, and Athlete. Hoboken, NJ: John Wiley & Sons, 2003 Burrough, Bryan and Helyar, John. Barbarians at the Gate: The Fall of RJR Nabisco. New York: Harper & Row, 1990. Chernow, Ron, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance. New York: Atlantic Monthly Press, 1990. Endlich, Lisa. Goldman Sachs: The Culture of Success. New York: Alfred A. Knopf, 1999. Gordon, John Steele, The Great Game: The Emergence of Wall Street As a World Power. 1653-2000. New York: Scribner, 1999. Josephson, Matthew, The Robber Barons. New York: Harcourt, Brace, and Company, 1962. Lewis, Michael. Liar’s Poker. New York: Norton, 1989. Lewis, Michael. The Money Culture. New York: W. W. Norton, 1991. Lowenstein, Roger. When Genius Failed: The Rise and Fall of Long-Term Capital Management. New York: Random House, 2000 Rolfe, John and Traub, Peter. Monkey Business: Swinging Through the Wall Street Jungle. New York: Warner Books, 2000. Stewart, James Brewer. Den of Thieves. New York: Simon and Schuster, 1991.

Suggested Periodicals • American Banker

• Fortune

• Business Week

• Institutional Investor

• The Deal

• Investment Dealers’ Digest

• The Economist

• Investor’s Business Daily

• Forbes

• The Wall Street Journal


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About the Author Derek Loosvelt Derek Loosvelt is a graduate of the Wharton School at the University of Pennsylvania. He’s a Brooklyn-based writer and editor and has worked for Brill’s Content and Inside.com. Previously, he worked in investment banking at CIBC and Duff & Phelps.


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