These are certainly not usual days for employees at any of the investment banks. In every nook and corner of the office small groups of people are busy discussing: who is next after Lehman? Normally the very same people strive for breathing from the plethora of work that never seems to end. But suddenly after the demise of Lehman the entire tempo seems to have been lost. Because they are faced with a question much more critical than meeting the immediate targets: will the subprime market crisis engulf the entire investment banking industry?
The other day one of my colleagues (from one of the top European banks) was remembering how in the year 2000 when Lehman Brothers offered a package of 1crore per annum to one of the IIM graduates created a stir so much so that The Economic Times came out with a full fledged article on the entire day’s schedule of that student after he joined the company. Now the news of the very same company going bankrupt seems to be sending jitters down the spine. For those not associated with this industry, Lehman was not just the fourth largest Investment banking company but a dream of every single student opting for a Finance major. As all the industry experts would tend to agree Lehman was easily the best paymaster in its league and to a good extent can also be credited for the exponential rise of salaries the middle class India has seen in the past decade. According to an Assistant Vice President of one of the European investment banks “We have received resumes from the ex-Lehman employees but the problem is their current salaries are at least a quarter higher than the industry standards. Hence to get absorbed back into the industry they will have to take a salary cut not because the companies would try taking advantage of their situation but because the average salary across that company for that position would itself be lower.” And this is not the end of the saga of Lehman’s might. The BSE index which was more or less range bound in last few months was forced a rapid downward movement. Lehman had made huge investments in the real sector and not surprisingly these stocks tumbled on the news of Lehman’s bankruptcy. The stocks of IT companies, handling massive business accounts of Lehman, wore a gloomy look and some of the companies quickly reacted by even downsizing their current strength.
On a whole Lehman had far reaching prominence in the sectors other than banking alone. So if you are wondering what Lehman has got to do with a layman, think again? The Lehman bankruptcy, easily the biggest in the US history, has put the entire panel of Federal Reserve on the block. It has triggered the panic button and is expected to have significant impact on the US Presidential elections as well.
Well the big question that remains to be answered: have we reached the nadir or is there another fellow (read Morgan Stanley) waiting to be exposed? The Fed and the other Central banks have already got into the act of rescuing. We would get an answer in the next few days but one thing we can be sure of is that investment banking as a profession would not sound that lucrative for some time to come. And I guess even Farhan Akhtar would not have been shown as an investment banker had ‘Rock On’ been made after the Lehman episode.
The other day one of my colleagues (from one of the top European banks) was remembering how in the year 2000 when Lehman Brothers offered a package of 1crore per annum to one of the IIM graduates created a stir so much so that The Economic Times came out with a full fledged article on the entire day’s schedule of that student after he joined the company. Now the news of the very same company going bankrupt seems to be sending jitters down the spine. For those not associated with this industry, Lehman was not just the fourth largest Investment banking company but a dream of every single student opting for a Finance major. As all the industry experts would tend to agree Lehman was easily the best paymaster in its league and to a good extent can also be credited for the exponential rise of salaries the middle class India has seen in the past decade. According to an Assistant Vice President of one of the European investment banks “We have received resumes from the ex-Lehman employees but the problem is their current salaries are at least a quarter higher than the industry standards. Hence to get absorbed back into the industry they will have to take a salary cut not because the companies would try taking advantage of their situation but because the average salary across that company for that position would itself be lower.” And this is not the end of the saga of Lehman’s might. The BSE index which was more or less range bound in last few months was forced a rapid downward movement. Lehman had made huge investments in the real sector and not surprisingly these stocks tumbled on the news of Lehman’s bankruptcy. The stocks of IT companies, handling massive business accounts of Lehman, wore a gloomy look and some of the companies quickly reacted by even downsizing their current strength.
On a whole Lehman had far reaching prominence in the sectors other than banking alone. So if you are wondering what Lehman has got to do with a layman, think again? The Lehman bankruptcy, easily the biggest in the US history, has put the entire panel of Federal Reserve on the block. It has triggered the panic button and is expected to have significant impact on the US Presidential elections as well.
Well the big question that remains to be answered: have we reached the nadir or is there another fellow (read Morgan Stanley) waiting to be exposed? The Fed and the other Central banks have already got into the act of rescuing. We would get an answer in the next few days but one thing we can be sure of is that investment banking as a profession would not sound that lucrative for some time to come. And I guess even Farhan Akhtar would not have been shown as an investment banker had ‘Rock On’ been made after the Lehman episode.
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