Macquarie bankers banned from taking clients to Mimi’s

“There’s a sense that things are slowing down revenue wise and this is just the start of tighter of rules on spending,” one division head at a bank told The Australian Financial Review.

“Some of us have seen big drops in bonuses and others have only seen theirs drop by 10 per cent or so … but you only need to look at how far profits have fallen in some [local arms of investment banks] to know that things are going to look very different next year.”

Another banker was more sanguine on the outlook. “We are all being pragmatic on compensation this year, so this was not a huge surprise,” the banker told the Financial Review of Macquarie’s Mimi’s ban.

The decision comes as Wall Street banks pull on as many levers as possible to slash expenses and placate their shareholders at a time when costs are rising and the economic outlook – and prospects for deal flow – is looking less certain.

Greater scrutiny of discretionary spending is one of the easier ways to cut costs. The penny-pinching will be accompanied by a weaker bonus pool in the coming months, and possibly more lay-offs, bankers have said.

Lay-offs in Australia have, and will continue to be, minimal compared to the US and Europe because investment banking teams in Australia are intentionally lean.

Elevated expenses

Expenses in the country, however, remain elevated because banks agreed to pay their junior bankers thousands of dollars more in base salaries.

Analysts and associates saw significant base pay jumps of between $10,000 to $15,000 in 2021 when they were inundated with record deal flows, bankers said.

Senior dealmakers also strained the expenses’ column when they negotiated guaranteed bonuses ahead of moving to new banks throughout 2021 and 2022.

But as the deal flow slows and fee pool dries up, investment banks need to change their tune. Seasoned dealmakers recall a UBS edict in 2012 under then-boss Matthew Grounds who banned his bankers from hosting corporate lunches at Neil Perry’s power eatery, Rockpool.

A Macquarie executive said that the rationale for the Mimi’s ban also related to its location on the beachfront in Coogee – about 8 kilometres from the CBD – when there were plenty of options closer to the office.

The elegant restaurant with views of the beach and Wedding Cake Island is famed for its influencer and suit-packed dining room, and signature dishes like a $298 wagyu rib-eye or $149 caviar pie.

It has become a restaurant of choice for bankers and executives keen to impress their clients and win their business. It is also the ideal kind of restaurant for clients looking to celebrate wrapping up a big deal with its bankers, people said.

“I love these moments in the cycle because the big investment banks make all these dumb decisions based off headquarters,” another banker at a rival firm said.

“It is usually just cut headcount, but now you’ve got even bigger teams on bigger base salaries, and that is not something that can be easily cut.”