Thriving with opportunity

Managing Director of J.P. Morgan, Michael Davie talks about what record profits means for graduates
Investment banking
Doing the job

"So what made you want to go in to banking?" This is one of my stock questions. If I'm more interested than usual in the answer it's because Michael Davie previously had a long career at a leading technology firm. What prompts someone to make that switch?

"Can I be completely honest?" He asks.

"Please do." I'm expecting him to say something like "I needed a new challenge."

"A simple conversation over dinner."

I ask for clarification.

"They used to have a tradition where I used to work that once you'd been there ten years they gave you a brass carriage clock with your name on it. My department gathered around and I had a round of applause and they handed me my carriage clock. That's when I thought: 'I need to get out.' I was in the process of applying to be a management consultant when I met a friend of a friend for dinner. She said 'why don't you apply to be in investment banking?' So I did. I had no idea what it really involved at the time."

Michael joined the sales division, then moved to management on the trading side before taking up his current role. "I analyse our global sales activity and try to make sure we're doing the right things in the right areas. This involves looking across the whole of J.P. Morgan. If there is an area where we are performing well then I look at whether we can replicate that elsewhere. I also look at the changes being imposed on the bank from outside, which include possible new regulation. And I examine what our competitors are doing."

How has the business changed since he started?

"The scale of what we do is of a different magnitude to what it was back then. I remember when a team of traders on a desk used to make $100 million; now it's not uncommon for any one of those traders, or a handful of deals, to make $100 million."

Does this put more pressure on the shoulders of young analysts?

"Pressure or opportunity. When David Beckham takes a free kick for England I would think that's pressure, while he probably sees it as an opportunity. But from a management perspective it's something we're very careful about. We like to get our analysts into the front line as quickly as possible. Obviously we don't expect them to have P&L [profit and loss] swings of millions of dollars within a few months. It's all part of the learning experience for an analyst when they don't get it quite right but, when they do well, they leave at the end of the day on cloud nine. Giving them real responsibility like this, without betting the bank on them or making them feel over pressured, presents them with a wealth of opportunity to further their careers."

The bank has been posting good earnings. Two weeks ago J.P. Morgan reported their highest quarterly profits since 2007. The $3.6 billion in net income over the three months up to September compares to $527 million last year. Some of their major competitors are still recording losses. How has the bank managed to survive the crisis?

"I think it's because a lot of the disciplines were largely in place before the storm hit. Obviously it has paid off - most recently across the board. Whereas through the crisis our sales and trading businesses did very well, latterly the origination and primary businesses, (debt and equity related), are doing fantastically well. In the eye of the credit crisis storm capital markets were largely closed, but this year they have re-opened with a vengeance and have been extremely busy. As J.P. Morgan is a leading provider in this area it has meant very good business for us."

Why is it a good time for graduates to go into investment banking?

"For a few reasons. Banking is always a dynamic and thriving business. The industry is going through significant change, but many of the best careers are built and launched during the toughest markets, which often brings new opportunities and challenges. You could take the view that change is going to reduce the scope of opportunity within banks. I disagree. I think there will always be a need for people who can solve risk related problems. That's what we're about in investment banking; and with the training, guidance and breadth of experience we offer at J.P. Morgan, we ensure our analysts have the opportunity to make an impact from their first day with us."

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