The financial meltdown was supposed to spell the end of investment banks as we knew them.
Lehman Brothers, Merrill Lynch and Bear Stearns went belly up, their carcasses acquired by other companies. Goldman Sachs and Morgan Stanley technically turned into commercial banks.
But investment banking hasn’t gone away and is even growing in some cases, Breakingviews.com reported.
One company’s demise has meant another’s gains. For example, the U.K.’s Barclays Capital bought Lehman’s U.S. arm, and Japan’s Nomura acquired its franchises in Europe and Asia.
The latest entrant in the field is Wells Fargo, which is using its acquisition of Wachovia to enter the investment banking sector.
Wells Fargo CEO John Stumpf apparently thinks the move will be quite a winner.
“We have an enormous opportunity to become one of the top customer-focused investment banks,” Stumpf said in a statement Monday.
But that won’t be easy. Wachovia had dropped to No. 15 in global investment banking revenue from No. 12 a year ago, according to research firm Dealogic, Breakingviews reported.
In addition, Wells Fargo and others looking to boost their investment banking operations will have to spend big money on bankers, as they compete with each other for talent. That will make it more difficult to earn profits.
Superstar bank analyst Dick Bove said Wells Fargo is trying to take advantage of Wachovia’s role underwriting Treasuries.
“There was no question that the underwriting business was making money," he told TheStreet.com.
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