Every once in a while, a mid-tier bank gears up for a major hiring spree to take on the likes of Morgan Stanley and Goldman Sachs in the hope of winning marquee advisory and capital markets mandates. Whenever I read these stories, my reaction isn’t to study the bank’s strategy, but rather to look up who’s running investment banking there. Nine times out of ten, that tells me everything I need to know. Because in this business, the most critical driver of hiring success — more than pay, platform or product suite — is leadership.
In investment banking, talent is everything. Well, almost. Capital and risk appetite matter a lot, too — sometimes most of all, especially for upstarts but that’s for another article.
Deals don’t close themselves, clients don’t stay loyal for the logo, and franchises don’t grow by accident. The sharp end of the business hinges on a firm’s ability to attract and retain high-calibre bankers. And yet, many banks consistently fall short despite ample funding and ambition, because their leadership acts as a repellent rather than a magnet.
The irony is that compensation rarely explains the shortfall. Plenty of banks in the investment banking equivalent of the Championship and League One — the second and third tiers respectively of English professional football below the Premier League — throw around bumper packages with big guarantees, often outbidding their larger rivals.
But writing cheques only goes so far. If the senior leadership is viewed as insecure, abrasive or simply irrelevant in the broader financial community, even the fattest offer will struggle to lure real talent. And if the boss has a reputation for hoarding credit or undermining reports, fuhgeddaboudit — no top banker is going to risk their career on that gamble.
I heard once about an investment banking leader who was struggling to hire — not because of pay, platform, or deal flow, but because he was known for frequenting adult-themed clubs.
Now, what people do in their personal time is (mostly) their business, as long as it’s legal. But when that proclivity becomes common knowledge, it’s a flaming red flag.
In fact, many years ago I was once approached by a senior banker at a rival firm who had a dicey reputation (not for going to strip clubs but it was still pretty bad), and I declined even to engage for that reason. No serious banker wants to risk being associated with that kind of situation. It’s not about morality, but about judgement and optics.
Star hires who join solely for the money rarely stick around, especially if the culture is toxic or the leadership flaky. No bonus is big enough to compensate for a dysfunctional environment
There is a kind of unspoken filter through which lateral hires assess new opportunities. A respected leader — someone with genuine deal gravitas and internal clout — signals that the bank is serious, that talent is valued, and that success won’t be penalised. But when the top brass lacks stature or is seen to be playing politics or is known as a meathead, it sets off alarm bells. The best people don’t need the grief.
That’s how banks end up in a vicious cycle. I’ve seen this happen time and again, particularly when certain European institutions decide they want to (re)gain global market share. Unable to attract the best, they overpay for the rest or, worse, settle for mediocrity. Fragile egos at the top compound the problem.
A surprisingly common behaviour among underpowered leaders is to hire a safe pair of hands who won’t challenge the status quo or, heaven forbid, outshine the boss. A bank has no chance of competing for top spots on top deals if its roster of senior bankers is populated with solid but unthreatening types. You need alphas, not betas.
Of course, these dynamics don’t stay hidden for long. Internally, teams disengage. Externally, clients notice the lack of firepower. Over time, the franchise loses momentum as there are fewer mandates, weaker pipelines, and a growing sense that the bank is just treading water. If left unaddressed, the downward spiral becomes self-reinforcing.
Desperate banks sometimes respond by opening the cheque book even wider, trying to buy credibility one expensive hire at a time. But this can backfire. Overpaying distorts internal pay scales, saps morale among incumbent staff, and invites cynicism. Star hires who join solely for the money rarely stick around, especially if the culture is toxic or the leadership flaky. No bonus is big enough to compensate for a dysfunctional environment.
The solution, while conceptually simple, is institutionally difficult. Banks need leaders who aren’t threatened by excellence. They must be able to champion talent, both within the organisation and across the market. A strong leader creates an ecosystem where success is amplified, not stifled. That means hiring stars, not clones. It means sharing credit, not hoarding it. And it means putting the institution’s reputation ahead of personal turf wars.
This may sound obvious, but it is hard in practice. Sacred cows don’t like being slaughtered any more than the regular ones do.
Firms that understand this cultivate leadership early, promote on merit, and act decisively when leadership shortcomings become a drag on hiring. Sometimes that means making uncomfortable changes at the top, replacing even long-standing figures if they’ve become a bottleneck for growth. It means a willingness to remove the rent-seeking apparatchiks from the payroll.
It is by now a cliché to say that a bank that fails to attract top talent not only falls behind in league tables but also risks fading and decaying into irrelevance. And while throwing money at the problem might buy time, it doesn’t buy loyalty or momentum. The real competitive edge comes from building a place where the best want to work and that begins with its leadership.
So, the next time you read about a bank that wants to make the big leagues, don’t look at the strategic rationale or the compensation packages they’re reported to be throwing around. Look at who’s in charge. Because in investment banking, the true test of a firm’s future success depends on not just the money that the the talent is willing to follow, but the people in charge of it.