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) -- These are supposedly tough times for investment bankers. There is less money, fewer private jets in the fleet and you never know when the U.S. Attorney's office is listening in.

But one thing that hasn't changed is "gardening leave"--that time-honored tradition where investment bankers sit on their butts for three to six months after being spirited away from one Wall Street bank to another. The goal is to sideline dealmakers and prevent them from stealing business from their old shop.

But, alas, even that is getting too expensive.



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earnings call Thursday CEO Ralph Schlosstein and Chairman Roger Altman explained that bankers are never profitable the first year they work because -- in addition to the three to six months gardening leave -- it takes several months for the banker to get his mojo back. It could be months before a new hire structures a deal, announces it and then closes it.

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"By and large, the first year for almost everyone is a zero on the revenue side," Altman said.

That poses a challenge for firms like Evercore, which are under more pressure than ever to cut costs. The obvious way to do that is by slashing compensation. But how to do that when you've got to pay every new hire for a year without getting any returns?

One obvious way is to hire less.

"The reality is that every hire that we make costs a few cents a share in the - on the income statement of the period in which they're hired," Schlosstein said.

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Evercore has made just six senior hires this year, and Ken Jacobs, CEO of rival


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sounds even more cautious.

"We don't really need to add any additional head count to really take advantage of any upturn in the macroeconomic environment," Jacobs says.


Written by Dan Freed in New York


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