Investment banking

Fees in Free Fall

Skyscrapers stand in the financial district as commercial and residential property is seen on the city skyline in Frankfurt, Germany, on Thursday, Oct. 23, 2014. At noon in Frankfurt on Oct. 26, investors will learn which of the currency bloc's 130 biggest banks fell short in the European Central Bank's year-long examination of their asset strength and ability to withstand economic turbulence. Photographer: Martin Leissl/Bloomberg
Hard times for investment banks.
  • Why it matters

    Why it matters

    After a booming year for IPOs and stock issues in 2015, numbers are down sharply in Germany and abroad for 2016.

  • Facts


    • Germany saw a 97-percent decline in IPO business in the first half of 2016.
    • There has been an increased appetite for European stocks, especially in the United States.
    • There has also been a boom in mergers and acquisitions.
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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.

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