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Wall Street is bracing itself for a rising tide of red ink and pink slips, as this is shaping up to be one of the worst quarters for investment banking fee income since the depths of the financial crisis in 2009.

With the first quarter coming to a close, Wall Street is bracing itself for a rising tide of red ink and pink slips, as this is shaping up to be one of the worst quarters for investment banking fee income since the depths of the financial crisis in 2009.

According to Dealogic’s Strategy Review, global investment banking revenue dropped by over 26% in the first quarter of 2016 compared with the same period in last year. Fee revenue was down across the board, for underwriting activity and M&A transactions, in every geographic region except Asia (ex-Japan).

The sharpest drop came in fees from Equity Capital Markets, where year-to-date revenues plummeted by 55%, almost as severe as the percentage drop recorded in the wake of the dot com crash in 2001. And in the equity markets, the poorest performing segment was the IPO market, where global volumes fell to $10.6 billion from 151 deals – a quarterly drop of a whopping 74%.

Debt market fee revenue didn’t hold up much better either, particularly in the junk bond segment, which recorded a quarterly revenue drop of 70% compared with the first quarter last year. The 13% drop in the investment grade segment was milder only because of the $46 billion jumbo issuance to finance the Anheuser-Busch InBev merger.

Investment banking revenues fell in almost every region worldwide. Fees from developing markets in Middle East/Africa and Latin America were hit the hardest, where first quarter fees tumbled 49% and 41%, respectively, compared with last year. This was the lowest level of IB revenues recorded for Africa and the Middle East since 2002. The drop in the U.S. was slightly less severe, with first quarter IB revenues off a mere 30%. The only major market to buck the trend was China, where investment bankers still enjoyed some effervescence from the great Chinese credit bubble, which managed to increase IB revenues by 5% for the quarter, mostly due to a wave of new debt issuance.

It shouldn’t be at all surprising that concomitant with the drop in revenue, major investment banks have been accelerating the pace of layoff announcements. In the last week the tumbrils have continued to roll at Credit Suisse, Nomura, and Goldman Sachs, with anticipated headcount reductions now as high as 20% in some of the poorer performing U.S. investment banking operations. As we’ve written before, major financial keep institutions keep responding to the ups and downs of the business cycle in the same predictable fashion, foregoing the opportunity to develop any real forward-looking strategy or adaption to our rapidly changing business and financial environment.

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