It's all very well for American investment bankers to boast about their capabilities in "one-stop shopping". But lending eats into their capital and worries risk managers. Now that they're making loans in Europe and Latin America too, the pressure on capital will increase. So will their costs.
Investment bankers admit they made a mistake not getting into the loan business earlier. Participating in syndicated loans often doesn't pay. However, it does allow banks to claim they offer every kind of financing.
"It was important to get into the primary side of bank debt, because it was the one piece of the arsenal we were missing," says Ed Forst, managing director in the loan business at Goldman Sachs. "Without any preference on our part we give the client unbiased, unvarnished advice."
At Lehman Brothers, Christopher Ryan, head of loan syndication and trading, enthuses: "One-stop shopping is a fabulous marketing strategy. It...
