Resource deals make up record slice of investment bank income
INVESTMENT banks are increasingly reliant on income from energy and natural resources deals, according to new data that shows the sector has provided 21 per cent of global investment banking (IB) revenue so far in 2012.
Research by data provider Dealogic shows how energy and natural resources deals are responsible for a record percentage of IB revenue on a year-to-date basis, well above the last decade’s 15 per cent average.
But although the sector has increased its share of total IB revenue, real earnings from energy and natural resources deals have fallen by a fifth on a year-on-year basis to $5bn.
Nevertheless, the sector has become more important for banks because the rest of the market has dropped at a faster rate.
Substantial deals this year include Brazilian oil giant Petrobas’ decision to issue $7bn of corporate bonds in February, American pipeline firm Kinder Morgan’s $13.3bn leveraged takeover of rival El Paso and the $11.8bn of loans that enabled US refiner Phillips 66 to demerge from parent firm ConocoPhillips.
On a country-by-country basis, the US leads the 2012 energy and natural resources fee rankings with a 50 per cent share of the market and $2.5bn in revenue.
Canada is in second with revenues of $736m, while China is a distant third with $290m of income.
For individual banks, Credit Suisse leads the sector revenue rankings with 7.6 per cent market share, followed by JP Morgan with 6.7 per cent and Citi with 6.3 per cent.