Investment banking revenues across Europe have hit a 14-year low in 2016
European investment banking (IB) revenues have plunged to a 14-year low, new figures show.
In total, IB turnover has come to $8.2bn (£6.2bn) so far this year, to 12 July, according to Dealogic. This is down 22 per cent on the same period in 2015 and is at its lowest year-to-date level since 2002.
The figures emerged as a Bank of England review, published today, found that UK banks are expecting mergers and acquisitions (M&A) activity to fall after Brexit, with companies delaying investment decisions.
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The Bank’s Credit Conditions Survey said: “In discussions carried out after the referendum, the major UK lenders thought there was likely to be a slowdown in demand for credit in the near term from both large corporates and SMEs, partly reflecting some investment decisions being delayed and mergers and acquisitions activity slowing.”
Chris Wheeler, an Atlantic Equities bank analyst, told City PM he was not surprised by the Dealogic figures for Europe.
“Revenues in general have been considerably weaker in 2016 around the investment banking space,” he said. “Clearly [the Brexit vote] has had a negative impact on M&A, in terms of just the uncertainty that goes with it.”
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Wheeler added: “The thing that I’m finding very bizarre is the fact that anything that happens in the UK seems to be spilling over into Europe almost instantly.”
He predicted a quiet third quarter and added that it “doesn’t feel like there’s going to be a pick-up”.
But, he said, growth in Europe and more certainty could improve conditions.