The foreign bank that’s become a happy home to U.S. bankers and traders

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Known mostly for its presence in its home country, Australian investment bank Macquarie is quietly taking market share away from Wall Street rivals in areas in which they historically dominate: investment banking and trading, particularly in commodities.

Net income for the first half of the year was up 5% despite a small downtick in homegrown profit. The Aussie bank was buoyed by a massive 31% increase in income in the Americas, which has nearly overtaken Australia as Macquarie’s most profitable region, despite having roughly 40% fewer employees. Macquarie’s investment banking and trading businesses did most of the heavy lifting, delivering a combined net profit of nearly $800 million, up 95% year-on-year. Income from its investment bank, Macquarie Capital, was up 114%, driven particularly by higher M&A and debt capital market (DCM) fees in the U.S.

Interestingly, U.S. investment bankers and traders appeared to do more with less. Headcount in the Americas only grew by 4% over the past year, compared to increases of 5% in Asia, 6% in Australia and 14% in EMEA, which saw its income for the half-year decrease by 3% despite all the hiring. However, U.S. investment bankers and traders should be rewarded handsomely. Employment expenses within Macquarie’s investment banking and markets businesses were up 13% and 11%, respectively, year-on-year.

Part of what makes Macquarie so desirable is that it is allowed to operate outside of the authority of U.S. and European banking regulators. Unlike U.S. banks tied to the Volcker rule, Macquarie can still make trades with client money. In fact, the Aussie bank just hired two prop traders for its London desk last week. Macquarie also hasn’t faced any pressure to limit their exposure to the volatile commodities business, an area in which they are now considered a market leader. This unique leverage is now coming home to roost in the West. Macquarie is paying well in the U.S. while adding hundreds of bankers in EMEA.

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