Has Macquarie lost its magic?
27 May 2008
Is the world’s love affair with Macquarie Group about to come to a bitter and twisted end?
The pin-up boy of Aussie finance, which is currently on a hiring spree in the US and Europe, seems to be taking on the role of spoiled brat as its profits and share price tumble, and worries grow as to whether its 'millionaire factory' banking model is fair dinkum after all.
Macquarie announced its results last week, with new chief executive Nicholas Moore warning that its 16-year run of profit growth is about to hit the buffers.
With most of its eggs in the infrastructure basket, the bank is facing fierce competition for infrastructure assets and higher financing costs. Eyebrows have also been raised over its tendency to take from one area of the business to pay dividends in another.
The difficulties could hit Mac bankers firm in the pocket as the firm’s bonus pool starts to shrink. Moore, for example, must make do with a mere AU$24.8m this year, down from AU$32.9m in 2007.
Is Big Mac about to be fried? Let us know below.
GF







Jason, I'm not convinced. Sure the current economic climate does the MQG model no favours, but unless you believe that credit will always be tight from now till eternity or that inflation will always be high from now till enternity, then I don't think you can say the model is dead.
Like any company facing change, MQG will have to adopt. I can't see why they would roll and die rather than work at inventing new business models. Everything that is new eventually becomes old as the pack catches up, that's life - but the firms that can adopt to change are those that survive and prosper. Nothing in MQG's history suggests that they won't be able to do it this time if they need too.
countrybpy 31 May 2008
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