Banks are no strangers to hard times, with regulations, zero interest rates, cost pressures and all. But now it’s getting tougher in the very area that they previously relied on to deliver strong profits: investment banking.
In the first half of the year, investment banks earned less in Germany than ever before. Banks specializing in mergers and acquisitions, share and bond placements took in $684.5 million, 40 percent less than in the first half of 2015, according to a study by Thomson Reuters carried out for Handelsblatt.
This shortfall is mainly due to fears surrounding the British referendum and its possible exit from the European Union. Investors’ uncertainty, coupled with significant fluctuations on the market, led to fewer IPOs and capital increases.
“In terms of the mood, the second quarter was better than the first but a lot of companies postponed their IPOs because of the referendum,” said Josef Ritter, who heads Deutsche Bank’s stock issuing business in Europe. A glimmer of hope for the M&A business came as Bayer signaled its plan to take over Monsanto.
In terms of commission revenue, Morgan Stanley knocked Deutsche Bank from the top of the ratings list, earning $55.6 million, ahead of $49.8 million at Germany’s largest bank. Barclays Bank trailed in third with earnings of $40.8 million.