“Large banks risk getting caught in “perpetual” cycle of bankruptcy like aerospace companies and carmakers unless they radically alter the way they do business, according to a leading industry consultant.
Alix Partners, one of the most influential advisers to senior banking executives, warns that global investment banks must tackle head-on issues such as bonuses and their addiction to the “steroids” of debt-fueled growth.
“Just look at the auto manufacturing and commercial aviation industries, where over the past two decades, changes in regulatory and operating environments combined to render formerly solid businesses into perpetual wards of the bankruptcy court,” said the consultants.
According to Alix, investment banks still pay their staff far too much, pointing out that the “overpayment effect” last year was $18bn (£11bn), or close to 30pc of the world’s top 15 banks’ combined pre-tax profits…”
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