Wall Street banks are obsessed with being the best, but a Bloomberg Surveillance segment explains why being “the best” and being number one might not be one in the same.
When asked about the costs of moving up the league tables, Brad Hintz, a bank analyst at Sanford C. Bernstein & Co. used a conversation he once had at Morgan Stanley to illustrate why no bank on Wall Street really wants be at the top.
Here’s the transcription of what Hintz said (emphasis added):
“I walked into a Morgan Stanley CEO Dick Fisher’s office, and John Mack was with him. Mack and Fisher were arguing about dead capital markets. And Fisher was worried about declining market share.
Mack says, ‘Dick, if you want me to sell $US5 bills for $US4.95, I can get a long line down sixth avenue.’ Now what he’s saying is, you can buy market share. But what it’s going to do, is you’re in essence giving away money to do it. So some market share is good, some market share is unnecessary and expensive.”
It’s a pretty simple concept, quality over quantity.
Not always easy to explain that to shareholders, though.
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