Budget investment banking

1 June 2016 By Dominic Elliott

The industry’s value destruction mirrors that of airlines, which a major study found made no economic profit over a 13-year period. Low-cost alternatives in aviation eventually shook up staid business models. Banks are different, but the no-frills approach offers useful pointers.

This content is for Subscribers only

To access full Breakingviews.com content you must be a subscriber. Please use the following link to request a trial.

Context News

The airline industry on average failed to generate any economic profit between 1996 and 2009, according to analysis by McKinsey on behalf of the International Air Transport Association.

IATA said that providers of equity capital to the airline industry “on average, see no return at all for providing their capital and taking risk.”

The investment banking industry made an average return on equity of just 6 percent last year, according to a report by Boston Consulting Group published on May 17. Most analysts and consultants put the industry’s cost of equity at between 10 percent and 12 percent.

Email a friend

Please complete the form below.

Required fields *