Mirroring much of the financial industry, 2015 was not a great year for the investment banking sector. According to a recent report from business and finance research firm Thomson Reuters, investment bankers worldwide saw their profits and compensation drop last year.
As the Thomson Reuters report highlights: “Fees for global Investment Banking services, from M&A advisory to capital markets underwriting, totaled US$86.9 billion during 2015, an 8% decrease over last year at this time and the slowest annual period since 2013. Fees during the fourth quarter of 2015 totaled US$19.6 billion, a slight uptick compared to the third quarter of this year, which marked the slowest quarter for Investment Banking fees since the third quarter of 2013. Fees from the Americas fell 3% compared to a year ago, while fees from Europe declined 16%. Asia Pacific Investment Banking fees fell 12% compared to a year ago.”
Historically, the Chinese market has been relatively isolated from international investors, but much is changing there now, making China virtually impossible for the diversified investor to ignore. Earlier this year, CNBC pointed to signs that Chinese regulators may start easing up on their scrutiny of companies after months of clamping down on tech firms. That Read More
Details from 2015 Global Investment Banking Review
Finance industry titan JP Morgan had the best year among global investment banking firms in 2015, bringing in $5.98 billion in fees, representing just under 7% of IB firm fees. Goldman Sachs was just a hair behind JPM with US$5.94 billion in fees in 2015 for second place and increased their share of total industry fees by almost a full percentage point.
The ranking of the top 10 investment banks, however, remained almost unchanged, with the only difference being Bank of America Merrill Lynch dropping to third place from second place in 2014. Of interest, the top five firms enjoyed a combined total fee share increase of 1.1 percentage points, and the fifth through tenth ranked firms saw a total fee share decline of 1.3 percentage points.
In 2015, investment banking fees produced by financial sponsors and their portfolio companies reached $12.2 billion, a decline of 21% relative to 2014. The TR report highlights that fees produced from leveraged buyouts represented 36% of financial sponsor-related fees, while ECM exits accounted for 16% and M&A exits were 17% of total fees.
In specific, Blackstone Group and holding firms produced $560 million in investment banking fees this year, a notable drop 35% relative to 2014. Goldman Sachs enjoyed an industry-leading 7.2% of sponsor-related fees over the year.
Equity capital markets underwriting fees only came to $20.6 billion last year (a decline of 13% from 2014), mainly due to whopping 29% drop off in fees from IPOs. Fees from debt capital markets underwriting came to around $26.0 billion during the period, a decline of 18% relative to 2014. However, fees from completed M&A moved up 8% relative to last year and represented more than 30% of the total global fee pool. Also of note, syndicated loan fees were down 9% compared to last year.
Investment banking activity in the financials, healthcare and energy & power sectors represented 50% of the global fee pool for the full year 2015. The TR report highlights that JPMorgan was atop the fee rankings in five sectors, enjoying an 11.3% share in the telecom sector.
Of note, deal-making fees in the healthcare sector were up an impressive 36% relative to 2014, with JPMorgan seeing 10.3% of all fees seen in the healthcare sector. Last but not least, the fees from energy & power companies, government & agencies and real estate sectors saw robust double-digit percentage increases last year.