Investment banks exist to make greater amounts of money than lending money to consumers and one method to examine them is how are they allocating their people. According to an article by Peter Hobson of Reuters, the consultancy company called Coalition tracks the information of the world’s largest investment banks.
In the world, there is a shift to be greener, which is good for the world. The investment banks have responded and there are more bankers for natural gas, power and carbon permits. The shift has come at the expense of oil.
The world’s 12 largest investment banks earned a combined $2.5 billion from power, natural gas and metals which is 5 times the $450 million they earned from oil fees. The head count in oil is down 20%, while the head count at power and natural gas is up 20%.
Investment banks regularly chop and change teams depending on which markets are the most profitable and some consultants say the change has more to do with the poor returns of the oil market rather than a shift to greener economy. This had to do with lack of demand of oil and trading losses as the price of oil went from $86.74 a barrel in October to below $50 at the end of December. The price has recovered to $60 a barrel which has helped boost revenues.
Linking to dividend paying stocks, in the world on the largest investment banks, the idea is to return a higher profit than can be returned from consumer lending at slightly higher risk. The banks listen to the market, not to politicians. If the market says go green, they build up their staffs to be able to allocate money to doing such. When the US declares cannabis legal, there will be teams involved in that segment of the economy. Watching the allocation of people by investment banks is where the competition takes place to gain the fees needed to run the division.
There are more questions than answers, till the next time – to raising questions.