Bulge Bracket and Boutique Advisory Banks (A Conceptual Study)

Abstract

Investment Banking (IB) has an aura around itself. Be it ‘The Art of War’, ‘Corporate Raiders’, or the language of ‘combat and victory’, the Wall Street seems to have a special fondness for battle metaphors (Deloitte, 2014). One such intriguing battle is an ongoing contest between the bulge bracket and boutique advisories, played out in the field of investment banking. The bulge bracket banks have always been at the forefront of the launching of any new financial product, with the boutique advisory a comparative smaller bank that focuses on a ‘few specific services’ that the ‘full service’ bulge bracket banks can provide (Choudhary, 2016). Among the bulge brackets, JPMorgan Chase & Co. reported a total revenue increase of 82.42% in the first quarter of 2021, year on year. With a net margin of 38.03%, the company achieved higher profitability than its competitors (csimarket.com, retrieved on 10.05.21). It was also ranked 17th by total revenue on the Fortune 500 rankings of the largest United States corporations (fortune.com, retrieved on 10.05.21). As of Jan. 2020, the biggest boutique banking firm (basis of market capitalisation) in the U.S. was Lazard Ltd., (bloombergquint.com, retrieved on 15.05.21). It is also the world’s largest independent advisory (lazard.com, retrieved on 15.05.21), operating from 43 cities across 27 countries in North, Central and South America, Europe, Australia, Asia, and the Middle East. This paper revisits the worlds of both bulge brackets and boutique advisories and ends up comparing the two – one from each category.

Keywords: Investment Banking, Bulge Brackets, Boutique Advisory, JPMorgan Chase & Co., Lazard Ltd., Morgan Stanley (India), Rothschild & Co.

JEL Classification: G2, G21, G23, G24