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Investment banks in fee surge over 2009

INVESTMENT banking revenues surged in 2009 after a boost from the global equity market rally, high trading volumes and a jump in capital markets fund raising activity, new data from International Financial Services London (IFSL) has shown.

The world’s investment banks raked in $66bn (£42.3bn) in fees last year, a 12 per cent increase on 2008, when firms were crippled by heavy writedowns and a collapse in market activity in the financial crisis.

Income was split evenly between equity underwriting fees, fixed income underwriting and mergers and acquisitions advisory work, IFSL said, marking a significant drop in the contribution of M&A to investment banks’ revenues since the onset of the financial crisis.

IFSL senior economist Marko Maslakovic said: “Although the situation has improved over the past year, liquidity in financial markets remains strained. With around half of bad loans written off since the start of the credit crisis, the global banking system is expected to raise more capital, as well as deal with government bailout repayments and challenging market conditions in the coming years.”

The organisation also said the assets of the world’s 1,000 largest banks grew by 6.8 per cent to a record $96.4 trillion over the 2008/9 financial year, primarily as a result of recapitalisation.

Asian banks have proved a key driver of revenue for the sector in recent years, swelling their share of the investment banking market to 21 per cent in 2009 from 14 per cent a decade ago. Europe’s share has remained stable at almost a third, while the US banking giants have lost a considerable amount of ground, accounting for just 46 per cent of investment banking revenue in 2009 compared to 56 per cent a decade earlier.