Ever since 2008, the timeline for a full recovery of investment banking has remained strikingly consistent: next year. Sure enough, executives are talking hopefully about 2013. But there has been a marked change of tone over the past year, given the sheer depth of the challenges facing the industry. There is a growing sense that headwinds will remain gale-force for the foreseeable future.
The eurozone crisis has undermined the business models of many European banks, while a deluge of regulation on both sides of the Atlantic is transforming all aspects of investment banking, from capital usage to trading operations. The ghosts of scandals past and present, from Libor to the ‘London whale’ trading losses, are haunting senior executives. For the first time, several investment banks have shut down entire business units.
