Coruscation

The traumatic upheaval that has roiled Wall Street during the past two years has produced - surprisingly quickly - a widely acknowledged new pecking order in the world of high finance: Goldman Sachs, in trading, and JPMorgan Chase, in banking, have become the undisputed industry leaders, with a hand in nearly every deal or trade. Clients can try to avoid these two, but only at their own peril.

The likes of Morgan Stanley, Barclays and Bank of America/Merrill Lynch - wounded but not fatally - continue to seek a firm footing on which to operate, while the so-called "zombie banks", such as Citigroup and Wells Fargo, remain on life support. Boutiques, such as Lazard, Greenhill, Rothschild, Evercore and Jefferies, that primarily provide advice to clients - and little capital - have been hiring broadly and have seen a resurgence of activity in their restructuring businesses, where a wave of recapitalisation and "amend and extend" deals have allowed many overleveraged companies to avoid bankruptcy filings. For the boutiques, the question remains whether, any time soon, there will be enough non-restructuring advisory business - formerly known as M&A - to justify all the new hiring.

But none of this is particularly surprising in the wake of the worst crisis to hit banking since the Great Depression produced the Glass-Steagall Act and the separation of investment banking from commercial banking.

What does seem to be spooking Wall Street these days, though, is the traction that some private equity firms, such as KKR and Apollo Advisors, and hedge funds, such as Citadel Investment Group, appear to be "backward integrating" into investment banking by building up their businesses that compete with Wall Street in the lucrative underwriting of debt and equity securities.