If the mighty J Pierpont Morgan were reincarnated in New York today, who might he be? Jamie Dimon, the man who is now chief executive of JPMorgan, the bank that shares the great man’s name? Or might Morgan prefer to return as Stephen Schwarzman or Leon Black, respectively the heads of Blackstone and Apollo, two gigantic private equity firms?
I would bet that his second coming would be as Mr Schwarzman or Mr Black. Never mind the fact that these “alternative asset” managers – as they prefer to call themselves now – are more entrepreneurial and swashbuckling these days than bank CEOs. And ignore the $100m plus annual salaries recently commanded by both Mr Schwarzman and Mr Black, which make Mr Dimon’s recent $20m pay deal seem almost modest.
What is really striking is the volume of non-bank financing that is quietly being supplied to western economies with minimal regulatory scrutiny – a trend on which my colleague Henny Sender has reported extensively. The “non-bankers” who provide it now matter as much as the bankers, and they appear to be having more fun. Results released in the past two weeks by asset management groups illustrate the point. Last decade, Goldman Sachs’ return on equity peaked at 40 per cent. Last year it was just 11 per cent. Meanwhile, KKR’s return on equity was 27.4 per cent in 2013 - a margin that the banks can only dream of.