Report card on how banks fared in crisis

The summer break can't come soon enough on Wall Street. Reeling from the subprime fallout and the credit crunch, New York bankers are yearning for their country retreats in the Hamptons and the beach.

This year, more than any other, their end-of-term reports have given them plenty to take away and digest. Morgan Stanley managed to make a 60% fall in profits against last year and Goldman admitted to an 11% slide.

John Mack returned as boss of Morgan-Stanley nearly three years ago with a remit to close the profits gap with Goldman. From the look of these figures he's failed abjectly (and let's not forget the small matter of a £60 million rogue trader in his Canary Wharf team, disclosed this week). Despite the profit decline, Blankfein remains the teacher's pet. Considering this time last year, we were still enjoying bull-market conditions, an 11% decline is hardly deserving of the headmaster's slipper. His reputation remains intact.

But, standing in the corner with a long, pointed hat marked "D" was Dick Fuld, who managed to turn a $1.3 billion profit a year ago into a $2.8 billion loss. Fuld, who had earlier said he took full responsibility for his team's performance, rather cheekily then booted out his two deputies but stayed in place himself. Not to mention being forced to go cap in hand to new investors to raise $4 billion of bailout cash. Poor show, Fuld - you're lucky not to have had your marching orders.

So here are the Evening Standard's marks on Dick, Lloyd and John's performance:

TRADING

Dick: 1/10
Lloyd: 6/10
John: 3/10

THE pain on the trading floors continued for all the banks' fixed income departments, which are suffering most since the credit crisis started and have accounted for the bulk of losses. From this week's results, the recovery is some way off. Lehman fared worst with a $3.5 billion trading loss, $3 billion of which came from fixed income.

Morgan Stanley's trading book also made grisly reading. Its rogue trader in London cost $120 million while mortgage securities dealers lost $436 million and leveraged loans even more. Overall trading revenues slid 71%. Ouch. Perhaps more worryingly, Mack's commodities business also declined, which is some achievement given the skyhigh oil price.

At Goldman, meanwhile, Blankfein changed the management of his trading operation at the beginning of March. Star traders Mike Sherwood and Michael Evans relinquished day-to-day responsibility to the quartet of Ed Eisler and Pablo Salame in London, and David Heller and Harvey Schwarz in New York. The four rookies fared reasonably well compared to their oppos at the rival banks. Goldman's overall trading revenues fell by just a third to $2.3 billion. Goldman is one of the banks to take advantage of the rise in trading volatility since the start of the credit crunch, with its equity business flat against last year - not bad going given the state of the stock market.

Morgan Stanley's equity traders achieved damage limitation with an 11% fall while Lehman's equities business again came bottom of the class with a 64% slump.

INVESTMENT BANKING

Dick: 4/10
Lloyd: 7/10
John: 2/10

A MIXED bag. Mergers and acquisitions activity continues to stutter with the hibernation of private-equity buyers and a loss of confidence as companies hold back from doing deals.

Goldman fared best with a rise in advisory fees as the bank cashed in on the crisis by working on restructurings of knackered companies. Lloyd's crew also picked up a lot of work arranging and underwriting the rights issues of stricken rival banks in the US. That delivered a 72% rise in equity underwriting revenues. Their recent job organising Royal Bank of Scotland's record £12 billion fundraiser will pay off big time but came too late for the second quarter. Morgan Stanley's investment banking revenues slumped by a half, with big falls in advisory, one of its strong suits. Lehman, which has been building up its presence in investment banking, particularly in London, saw revenues fall by a fifth.