* Global investment banking fees $15.5 bln in Q3
* JP Morgan tops fees league table
By Kylie MacLellan and Douwe Miedema
LONDON, Sept 28 Investment bankers are pinning
their hopes on more confident companies and investors to help
boost deal activity, after a slow year in which global
investment banking fee income fell to its lowest since early
Global investment banking fees totalled $15.5 billion in the
third quarter, down 3.8 percent on the year before, according to
data from Thomson Reuters and Freeman Consulting, as the euro
zone debt crisis unsettled markets.
Europe has been particularly hard hit by the slowdown in
deals, with investment banking fees in the region so far in 2012
falling to levels not seen in 10 years.
"We all will need to be accustomed to the new normal," said
Jake Donavan, head of corporate and client coverage for Europe,
Middle East and Africa at JPMorgan. "This is not just a
question of waiting for the economic boom times to return. We're
in a potentially protracted period of more subdued growth.
"We're having a fantastic year in terms of investment grade
debt and high yield (debt). M&A (mergers and acquisitions) is
more sluggish and equity is relatively quiet, although we are
seeing some green shoots."
Others also saw grounds for optimism as corporates are
sitting on plenty of cash.
"We're seeing a number of corporates considering moves,"
said Giuseppe Monarchi, co-head of the EMEA Mergers and
Acquisitions Group at Credit Suisse.
"The execution risk remains relatively high in many cases,
but perhaps also because of continued low interest rates and
fairly healthy debt markets, I think there is a window where
things can actually happen."
JPMorgan retained its top spot in the global investment
banking fee league table, earning $3.6 billion so far this year.
Bank of America Merrill Lynch was in second place,
bringing in $3 billion, followed by Goldman Sachs in
third on $2.7 billion, the data showed.
Globally, the drop in fees has been driven by a fall in
share sale activity, with income from equity capital markets
deals tumbling 31 percent to $9.6 billion so far this year, the
slowest period since 2003.
Equity generally offers a more risky investment than debt
securities - which offer better protection in case of bankruptcy
- so subdued volumes in equity capital markets are a sign that
investors are still cautious.
The third quarter has shown more promise and bankers said an
uptick in IPO activity in the last few weeks, helped by a rally
in stock markets, could signal a rebound in capital raisings in
the final three months of the year.
"There is still a challenging market environment even though
there is a lot more going on," said Adam Welham, head of
European equities syndicate at Barclays.
"Although there is a lot more confidence around Europe,
attention may quickly focus on growth, and what is happening in
China. These are potentially big worries and they may have a big
Debt financing is the only area which has seen an increase
in fees this year, up 14 percent on the first nine months of
2011, the data showed.
Yet M&A deals made up the biggest chunk of fees, raising
$5.3 billion or 34 percent of the total.
The planned merger of commodities trader Glencore
and mining group Xstrata, the year's biggest pending
deal in terms of total fees, could provide a further boost, with
banks expecting to collect a total of $114 million for their
advice if the deal is completed.