Investment banker admits: we overcharge

August 28, 2009

On the FT’s letters page, Robert Pickering tackles the familiar theme of bank profits and bonuses. The reason banks pay their employees so much, he argues, is because they make large profits. But why are their profits so large? 

The real marvel is that customers, both corporate and institutional, continue to be willing to pay so much for essentially commoditised services in a ferociously competitive marketplace served by multiple providers, thus generating these outsized profits.

What the FT fails to mention is that, until a year and a half ago, Pickering was chief executive of JPMorgan Cazenove, the London arm of the great House of Morgan. In other words, someone with intimate knowledge of the City of London’s inner workings is saying: we charge too much.

Pickering’s next job will presumably be in a different industry. I wonder what his successor has to say on the matter?

2 comments

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“if we don’t charge 2 and 20, no one will take us seriously” – lol

we need more “discount” advisory firms run by diploma mill mba.s, maybe then i too could finally be a banker

Posted by dvictr | Report as abusive

[...] marketplace served by multiple providers, thus generating these outsized profits.” Blogger Peter Thal Larsen suggests Pickering’s next job might not be in [...]

Maybe it’s just conspicuous consumption on the part of companies. If they can afford to pay for the big names, they gain Wall Street credibility. Finance, as practiced today, is nothing but a confidence game propped up by the taxpayer. Now we know what will happen if we start looking to closely at the details. Meltdown!

Posted by Neil D | Report as abusive

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