Investment banking fees in Europe at lowest levels in six years

At one side of the spectrum, bonuses in the banking industry is expected to be at the all time high levels that we saw in 2009, on the other side, and contrary to the beliefs of recovery, things are far worse than what speculators, beating up the prices of bank shares, believe. Asia is nonetheless providing some cushion, and the US being in the most irrational and overbullish exuberance since probably the beginning of its history, bounced back as well.

Unfortunately, we don't get to see the comparison against 2006 or 2007 at the peak of the boom, but only against 2008.

Also note that the median forecast of 66 analysts is a 2.6% growth of 2011, revised upwards from last month when the figure was 2.5%. Isn't that extreme bullishness in spite of disastrous economic reality?

Dec. 21 (Bloomberg) -- Investment banking fees in Europe shrank to the lowest in six years in 2010 as companies aborted fundraisings and takeovers during the sovereign-debt crisis.

Income from arranging mergers, stock, bond and loan sales in Europe, the Middle East and Africa dropped about 10 percent from 2009 to $21.9 billion, estimates by New York-based research firm Freeman & Co. show. Fees in Asia jumped 18 percent to $17.8 billion, narrowing the gap with Europe to the lowest since at least 1998. At that rate, revenue from Asia may surpass Europe in 2011, according to Freeman.
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The value of completed takeovers involving western European companies fell 16 percent from 2009 to $532 billion in 2010, while the value of share sales more than halved to $51 billion, data compiled by Bloomberg show. Morgan Stanley was the top- ranked adviser on mergers announced in Europe in 2010, followed by JPMorgan Chase & Co., the data show. Goldman Sachs Group Inc. and Deutsche Bank AG were the top arrangers of stock offerings for Europe, the Middle East and Africa in the period.

Revenue from arranging mergers in Europe, the Middle East and Africa, the most lucrative business, declined 1 percent to $8.7 billion, the Freeman data show. Fees for arranging stock offerings posted a 33 percent drop to $4.2 billion, the steepest fall, and income from arranging leveraged loans shrank 21 percent, Freeman said.

Europe’s decline in fees in 2010 contrasts with gains in Asia and the U.S., the Freeman estimates show. That may make investment banks more likely to cut jobs in Europe than in other regions, or curb bonuses for bankers in London and Frankfurt.
[...]
Overall sales of corporate bonds in Europe fell 43 percent to 602.7 billion euros ($790 billion) this year, according to Bloomberg data. Fees from arranging investment-grade bond sales for European companies fell 27 percent to $4 billion, while income from sales of high-yield securities doubled to $1.6 billion, Freeman said.
[...]
Revenue in the Americas rebounded 23 percent to $41 billion, driven by a 52 percent increase in fees from mergers and a 76 percent rise in income from arranging high-yield bonds, the data show.

U.S. analysts expect the recovery to gain strength: the economy will expand by 2.6 percent in 2011, according to the median forecast of 66 economists in a Bloomberg News survey this month, up from a 2.5 percent prediction in November. 

Fees in Asia climbed 17 percent to $17.7 billion, led by a 66 percent increase in revenue from China, according to Freeman. China is encouraging state-owned companies to make international purchases as it seeks to secure energy and raw materials for its growing economy. The country accounted for 9 percent of the global value of deals announced so far this year, up from 5 percent in 2007, Bloomberg data show.