IPO slump causes drop in bank fees

INVESTMENT banking fees fell six per cent in 2011 to levels seen in 2009 as a fall-off in equity market activity and stalled M&A markets hurt their businesses over the year, new data yesterday showed.

A 25 per cent drop in equity market fees and flat M&A fees pushed total global investment banking revenues down to $81bn (£52bn) last year, data provider Thomson Reuters said.

Dealmaking ground to a halt as the year progressed, with fourth quarter fees falling eight per cent compared to the third quarter, to $16bn, the worst performance since the start of 2009 in the depths of the financial crisis.

Dealogic, another data provider, said it calculated investment banks’ revenues at $42.1bn in the first half of 2011, the best half-year level seen since 2007, but that revenues dropped to just $13.9bn by the fourth quarter.

Both data providers said JP Morgan topped the ranking of global investment banks, with the largest market share by fees. Thomson Reuters said it achieved 6.8 per cent market share, or $5.5bn of all global fees. Bank of America Merrill Lynch made the second-highest fees at $4.9bn.

M&A advisory work generated most fees for banks at $30.1bn, just 1.8 per cent up on 2010, Thomson Reuters said. Banks made $18.2bn from equity market fees, while loan fees rose 34 per cent year on year to $15.8bn.