Those wanting to point at something that sums up the challenges facing the investment banking industry have been presented with two excellent candidates this week. The first was obvious: Credit Suisse's horrific results; the second far less so.
Goldman Sachs has named Jim Esposito, previously the US bank's co-head of global financing, as the chief strategy officer of its securities division. He's just one man and it is just one job move. And yet this feels like a bit of moment.
To understand why, you have to realise that the crude caricature of "casino" banks, which was always overly simplistic, is now becoming increasingly anachronistic. Esposito's appointment might be one of the final nails in its coffin.
Investment banks comprise two broad parts. One side provides advice to clients (on things like floating a company on the stock market, raising debt or buying a rival). The other side trades securities (equities, bonds, currencies, derivatives and whatnot).
Investment banks used to be dominated by the advisory side. But through the 1990s and into the 2000s the trading side began to grow. Eventually the main Wall Street and City banks became massive trading operations with little advisory arms tacked on the side.
Then came the credit crunch in 2008. It didn't dent trading profits straight away – in fact 2009 was a vintage year on Wall Street and in the City. But that proved to be a high water mark. Since then revenues from trading – especially in fixed income, commodities and currencies (collectively known as FICC and pronounced "fick") – have ebbed away.
Talk to bankers about this and they will say that the challenges facing the business are both cyclical and structural. That's because they're trying to sound clever. What they mean is that the trading arms of investment banks are being slammed from all sides. For starters, it's hard for banks to make money when interest rates are low, as they have been for more than seven years now. That's the cyclical side – at some point, interest rates will start going up, the cycle will turn and things will get better.
But banks won't benefit when they do. That's because of the structural issues that they face. These include the trend towards more electronic trading, which has driven down the margins that investment banks make, and, far more importantly, new regulations, which have made the whole enterprise far less profitable.
Chief among these are the rules that ban banks from making bets with their own money – so-called proprietary trading – and those that increase the amount of capital that banks have to set aside in case their trades turn sour.
The upshot of all this: in 2015, revenues from fixed income trading – which had long been Wall Street's most lucrative business line – fell for the third year running. They're now down between a quarter and a fifth at the five biggest banks in the US since 2012.
Morgan Stanley, for example, made $550m from fixed-income trading in the fourth quarter last year, down from $599m the year before. The third quarter had been even worse – with revenues down 42pc from the year before – prompting the bank to cut the number of staff in its FICC division by a quarter.
The situation is, if anything, even worse for European banks. Just cast your gaze over the smouldering wreck of Credit Suisse's full-year results for 2015, which came out on Thursday.
The Swiss bank unveiled its first annual loss since 2008 and a common equity tier one ratio – used to assess balance sheet strength – that was nearly a full percentage point lower than analysts had expected. Such ugliness drove the bank's shares down to their lowest point for nearly a quarter of a century.
Tidjane Thiam, the bank's still relatively new chief executive, said the end of last year was "characterised by volatile market conditions, pressures on market liquidity, a sharp decline in oil prices, widening credit spreads, continued uncertainty linked to asynchronous monetary policies, and large fund redemptions by market participants affecting asset prices". In other words: eek, ouch and arrgghh.
Goldman Sachs has, as it usually does, fared better than its rivals. But it knows which way the wind is blowing. Those cyclical problems may fade but the structural ones sure won't.
Which brings us to Mr Esposito's new job, about which there are three things to note. Firstly, this is a man on the rise at Goldman Sachs – he was one of just three people to be newly appointed to the US bank's management committee in December. Secondly, he is jumping from one side of the business (investment banking) to the other (trading). And thirdly, he's been appointed to a new position.
Goldman Sachs clearly thinks its securities division (which is what it calls trading) needs a new head of strategy because the old strategy was not working. It is not satisfied with battling to carve out a larger piece of a shrinking pie.
And by bringing Esposito over from the investment banking side of the business, Goldman is indicating where it thinks the answer lies: with its clients. This sounds obvious, but it is actually quite a profound shift. Trading floors have typically been staffed by uber-brains hiding behind their banks of Bloomberg screens and poring over spreadsheets.
Esposito's background is in working with clients to help them arrange financing in the capital markets (either by issuing bonds or raising equity). His appointment suggests that the trading side of the business will be asked to adopt a more client-focused approach.
And where Goldman Sachs leads, the rest of the street tends to follow. At the very least, Esposito's appointment is a recognition that something needs to change.