A week from today, Vault will release its annual Vault Banking 50, a ranking of the best investment banks to work for in North America. The rankings are based on our annual Banking Survey, which was administered this past spring to some 3,500 banking professionals at all levels in various investment banking units. And so, as the date approaches to reveal which bank is considered the best to work for, I thought it a good time to look back at last year's rankings and a few key events that have transpired in the industry since we last ranked the top banks on Wall Street.
Last year, J.P. Morgan Investment Bank took the top spot in the Vault Banking 50. Its employees uniformly praised the bank for its congenial culture and kind treatment of employees. The bank's prestige was also at an all-time high, as Jamie Dimon and Company enjoyed the label of the "bank that best navigated the financial crisis."
A notch behind J.P. Morgan was Goldman Sachs, which had been suffering from tons of bad press in the wake of a few scandals that wouldn't go away, especially the Fabrice Tourre CDO scandal that led to some very high profile hearings on Capitol Hill. Goldman, while surely deserving of much negative press, perhaps incurred more than its fair share, as it had become the media's punching bag when it came to all things Wall Street-related. Even so, Goldman seemed to be managing the press well, and business was still relatively booming.
Trailing just behind J.P. Morgan and Goldman Sachs was Morgan Stanley, which ranked third last year. At the time, Morgan Stanley had been going through some compensation issues and had been cutting costs (and jobs), although it was still landing high profile deals and had been staying largely clear of any significant scandalous news. Rounding out the top five was Credit Suisse and Houlihan Lokey, respectively.
So, next week at this time, we'll know if J.P. Morgan managed to hold on to the top spot, or if another bank leaped ahead to be named the best to work for. The top contenders to unseat J.P. Morgan appear to be Goldman and Morgan Stanley, although it's certainly possible that a smaller bank, perhaps even Houlihan Lokey or one of the so-called boutiques (Greenhill, Evercore, or Perella Weinberg, which last year ranked sixth, seventh, and eighth, respectively) could take No. 1.
As far as major events that might affect the rankings, several scandals again hit Wall Street this year that could play a role in who comes out on top. This past March, Greg Smith, a VP at Goldman Sachs, very publicly—in a New York Times op-ed—resigned from the firm, while writing that Goldman executives refer to clients as "muppets" and "callously talk about ripping off clients." In June, near the very end of our survey period, it was J.P. Morgan's turn to take the hot seat, as one of its traders, now known widely as the London Whale, took a position in an index of credit default swaps that went south, very south, to the tune of some $6 billion. Other scandalous news included the Barclays interest rate fixing scandal, Nomura's insider trading scandal, and HSBC turning a blind eye to transactions by terrorists and drug dealers.
In any case, it's been another busy year on Wall Street in the scandal department, which will possibly affect the business outlook and prestige part of the Vault Banking 50 Ranking—the ranking is based on a weighted formula that takes into account survey results in prestige and various quality of life categories, including work/life balance, business outlook, and compensation.
Speaking of compensation, it's been another tough year for bankers, as banks continue to receive pressure to reduce comp as a percentage of revenues. The Occupy Wall Street movement, which was at its height in the fourth quarter of 2011 and first quarter of 2012, certainly added to this pressure. And banks continued the trend, encouraged by legislators, to pay their employees in a higher percentages of stock versus cash. Which, of course, most bankers are not too happy about. And perhaps more than any other bank, Morgan Stanley has been severely reining in comp, to the chagrin of its employees. But across the board, in nearly every large, public Wall Street bank, comp has continued to be a major issue. Gone are the days of 2005 and 2006 when multimillion dollar cash bonuses were the rule, not the exception. Which leads to the question: Will bankers rate their firms lower in the area of compensation as a result?
One positive trend that's surfaced in the past year has been the increased emphasis on work/life balance. Although banking remains an all-encompassing occupation, both at the lower and higher levels, there seems to be much more flexibility when it comes to telecommuting, flexible scheduling, and understanding of personal-life commitments. This doesn't mean that bankers' hours have diminished, but Wall Street insiders are appreciative to have some flexibility when it comes to when and where they can put in their near-100-hour workweek. Work/life balance is a topic that some of the smaller investment banks have been addressing for years, but only recently have the largest banks on Wall Street given thought to it.
And so, it will surely be interesting to see which firm ranked as the best investment to work for in North America this year. So don't forget to check back next week when we reveal the winner.
Findings From Vault's 2012 Banking Survey
Take the WSSAT (Wall Street Scandal Aptitude Test)
Bulge Bracket or Boutique IB?
Does Work/Life Balance Exist on Wall Street?