M&A slump will hit investment banks’ growth

Tim Wallace
Follow Tim
MERGER and acquisition activity is set to fall further next year, hitting investment banks further, according to a major business study published yesterday.

Only 40 per cent of the firms are looking to expand geographically compared with 60 per cent a year ago, reducing the number who may expand through acquisitions, Thomson Reuters’ survey of corporate decision makers found. And 44 per cent of European firms expect turmoil in the European finance industry to undermine the M&A market even further.

The study also showed firms are increasingly willing to switch their investment bank, valuing low fees over loyalty, again illustrating the weak economic environment. The gloomy outlook will put pressure on investment banks, many of whom are struggling with low volumes and are engaged in cost-cutting to shore up sliding profits.