Bad time to be a banker

Bad time to be a banker

It’s time to hide.

If you are a banker, it’s time to disappear. Chances are that those cosy little joints that swept open their doors to bankers just a year ago will declare that the bar is shut and it’s happy hours no more.

Steadily, the wreckage in the global banking industry is piling up. In the last few days, bankers all over the world have been busy wiping the sweat off their brows — the nervous kind of perspiration that usually accompanies first-time job seekers in the world of investment banking who don’t know their fate, not the kind that seasoned ones such as Richard Fuld ever thought they would break into after 40 years at some Wall Street gig.

Fuld, who heads Lehman Brothers, has probably had to spend the last few weeks calling every favour in the book to make sure investors don’t cut furiously loose from his stock, like they did with Bear Stearns, that led to a near-run on the bank and caused the US Federal Reserve to step in.

Fuld, in fact, in April said the “worst is behind us". It seems, in June, some two months later, he’s had to declare nearly $2.8 billion of losses in the second quarter after getting rid of $130 billion of assets and — hold your breath — needed another $6 billion to put the working parts back in.

Lehman Brothers, in some ways in the same predicament as Bear Stearns but not nearly there, had nowhere to go in a tight credit market and had to call in the equity punters in the hope the markets, with their short memories, will somehow overlook the previous trumpeting that not all is bad.

Signs are, bad news is up ahead and will sock investors in the face as they turn the bend.

These large calls for capital, and Lehman Brothers isn’t the only one seeking lots of money, is terrible news for the markets. While Lehman mopped up the money it needed, it seems Barclay’s wouldn’t mind some dosh — a few billion dollars will do for now — and everyone, ranging from Citigroup to Royal Bank of Scotland and HBOS, has already sponged up more funds — some private, some public.

And now, Meredith Whitney, the recently crowned “I was so right" banking analyst at Oppenheimer who predicted the fall from grace of the hallowed investment banks, recently declared that Citigroup, UBS and Merrill Lynch, the big boys on the street, may take further write-downs on bond insurance, in what she called collateral damage.

Investors who have been writing out those cheques assuming this is the final shoring up after taking write-downs, may discover they whipped out their pens too soon. There is more bottom-fishing to be had.

Perhaps, even investment bankers who claim to run the show don’t know how much.

Anjana Menon is national editor (corporate) at Mint. Comments are welcome at ­