How Wall Street Is Profiting From The Facebook IPO?

MAKE MONEY BLOG$~For the last few months big banks like Goldman Sachs and JPMorgan Chase have had to deal with scandals involving muppets and whales. The bankers needed some good news now more than ever and there is nothing Wall Street likes more than a big IPO.

The Facebook IPO has provided Wall Street with a windfall, one the bankers probably feel they have earned after getting investors to swallow Facebook shares at $38. In total more than 30 underwriting financial firms are splitting $175 million or so of fees. That could go up to $200 million. But some big banks will profit much more than others.Jamie Dimon, chief executive of JPMorgan Chase, just had one of the worst weeks of his banking career. His bank’s stock has plummeted after it disclosed about $2 billion of trading losses that appear to be getting worse by the day. But by muscling out Goldman Sachs to get a better underwriting position, JPMorgan will also get a rich fee.Morgan Stanley’s stock is down by 43% in the last year and it is trying to convince Moody’s not to drastically reduce the bank’s credit rating. But Morgan Stanley’s tech team led by Michael Grimes did a terrific job securing the lead underwriting position for the Facebook IPO and will be rewarded with between $40 million and $50 million of fees.

Nevertheless, Goldman Sachs will do just fine. The firm will get a decent enough level of fee income for being one of the Facebook IPO’s main underwriters. Through the IPO, Goldman also sold $1.09 billion of the Facebook stock it purchased both for itself and its clients in early 2011. AsBloomberg’s Christine Harper points out, that makes Goldman’s CEO, Lloyd Blankfein, look good.
source: forbes.com
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Posted in: Facebook,IPO,JPMorgan Chase,Wall Street