The Asia crisis has put the dampers on much investment banking activity in places like Indonesia, Hong Kong, China and Thailand. Yet hiring is happening because so many have quit in 1997 and 1998. Watch for hiring to expand in the next three years.
Investment banks are facing declining margins on bread and butter business like underwriting of investment grade debt and increasing capital demands in hi-tech areas such as foreign exchange and derivatives. Treasury bond trading is fast becoming one of Wall Street's least profitable area. This is putting downward pressure on salaries in certain less profitable areas.
Sometimes you will find yourself working for an egotistical jerk in an investment bank. What do you do? First, don't take the job in the first place. If someone mistreats you in an interview, get up and walk out (funny... you may actually get offered the job). Second, be sure to communicate your needs very clearly when it matters when dealing with an ego-creep. It might just be that someone is so busy and overwhelmed that they get abusive. Laying it out in a nice way may help. Finally, if you find yourself in a truly pathological environment working with dysfunctional people, bail out. Life is too short and the money isn't worth it.
Pick the first firm you work for carefully. People who jump from firm to firm too much are less likely to get hired into a great job because your loyalty will be in doubt. One leading global investment bank has a practice of minimizing hiring from outside to avoid "career jumpers."
Investment banking is seeing entry from traditional banks as the Glass-Steagall Act which restricts commercial bank activity in underwriting equity and debt. The following U.S. banks, for example, have entered securities underwriting in a serious way: BankAmerica, JP Morgan, First Union, BT Alex Brown
Investment banking is generally transaction driven. In this environment a single individual with good client contact can make an enormous difference for a firm. This is part of the reason that star investment bankers ("rainmakers") take home high bonuses.