Friday, December 28, 2012

Investment banks face hard times

Already struggling at home with weak revenues and tough new capital and leverage requirements, investment banks are now also facing a slump in their once most promising business - emerging markets.

Fees are plummeting because of a sharp decline in first-time share listings and mergers across such economies.  Given the shaky economic outlook and weak equity valuations it is hardly surprising that global deal-making volumes are taking a hit. But the slump in emerging markets, an area banks had most hoped would drive growth, is especially precipitous.

Western banks conducted over half of all equity financing deals in emerging markets last year, compared with just 22 percent back in 2005, James Sproule, head of capital markets research at Accenture in London, has said.  The big money came from…

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