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Financial market turmoil triggered by excessive buildup of investment bank balance sheets has caused valuations of investment banks to decline dramatically in the period from June 2008 to March 2009. This has been associated with substantial reductions in bonuses and large-scale layoffs.

Still hiring. Investment banks are still interview analysts and associates for the class of 2009 despite their layoffs. Some firms are stronger than others and as a result, the hiring that takes place in 2009 will be spotty.

Boutiques are hot. Because firms that took federal TARP money are constrained on paying bonuses, there is increasing hiring in the boutique firms. Places like Moelis & Company, GCA-Savvian, Lincoln International, Greenhill and Lazard are hiring. These firms are unconstrained in what they can pay their bankers and are likely to experience substantial growth in the years ahead.

Boutique Investment Bank Guide

Certain global firms that did not take TARP money are doing relatively well. These include Deutsche Bank and Barclays Capital which has absorbed Lehman and has kept on hiring in 2009. Credit Suisse appears on the upswing after seeing many strong bankers leave over the last decade.

In fixed income there are areas of high interest, including credit research and investment grade bond origination.

Areas that have shrunk and are not likely to grow again include structured credit, particularly CDS; mortgage-backed securities and proprietary trading.

Restructuring practices are red hot. Firms like Blackstone, Greenhill, Lazard and Perella Weinberg have booming restructuring and bankruptcy practices. New bankers are being hired into these areas in substantial numbers.

Restructuring Banker Guide

Certain industry areas remain robust. Examples of areas where investment banking activity is strong in 2009 include parts of technology, healthcare and consumer products. Healthcare, for example, has seen some of the largest deals in history take place including the merger of Pfizer and Wyeth and the acquisition of Genentech by Roche.