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Investment Banks Bet on IPOs

Material Science Bayer AG
Bayer is expected to float its subsidiary Material Science.
  • Why it matters

    Why it matters

    German investment banks have had a terrible start to the year. Now they hope that a boom in initial public offerings will turn the business year around.

  • Facts


    • The first quarter of 2015 was the worst in 15 years for the investment banking sector.
    • The bond business was primarily responsible for the decline.
    • But with a slew of IPOs in the offing investment bankers expect the rest of the year to be profitable.
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Since the beginning of the year, investment banks in Germany have delivered a classic false start. In the first quarter, their earnings sank to the lowest level since records began at the turn of the millennium.

In comparison to the super year of 2000, results have more than halved. Back then, the financial institutions raked in $923 million in the first three months. There is no chance of this happening during the first quarter of the current year.

According to calculations prepared exclusively for Handelsblatt by financial data provider Thomson Reuters, all the banks together took in only $411 million through fees for consulting services involving mergers and acquisitions, for the placement of new bonds as well as loans and stocks.

Up to now the worst first quarter had been in 2013, when banks took in significantly more with $569 million.

It was above all the bond business that was responsible for the decline at the beginning of 2015.

Financial institutions traditionally derive around two fifths of their revenues from the placement of securities. In the current year, fees in this area have fallen by a whopping 14 percent. Because of favorable market conditions, German companies financed too much in advance last year.

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