What is happening to the investment bankers?

Investment Banking – one of the most dynamic environments – is changing even faster now. However, all is not well this time.

In many cases the changes are negatively impacting the professionals in the industry. While it will remain a lucrative career the compensation structure has changed. A part of the compensation in many publicly traded banks will be either in equity or will be deferred. Other restrictions in public banks such as greater compliance requirements will come into place. Moreover, political actions will continue for sometime around the industry - mostly punitive in nature. Alastair Darling's special tax on bonuses is one such example. In some cases the politicians will act vindictively to make a point for electoral gains. Moreover, due to massive budget deficits in US and UK - taxes are likely to remain high on high income bracket or even increase.

Therefore a large scale exodus of professionals to private firms and increase in importance of Switzerland and Hong Kong is likely. However, it will be tempered by the fact that USA and UK will continue to be largest sources of banking fees and the place where banks have very well developed and complex service delivery platforms.