Investment bankers in Europe are off to the leanest start to a year in a decade as dwindling income from deal-making and trading presses firms to reduce costs.
Revenue from arranging mergers, loans and stock and bond offerings for clients in Europe, the Middle East and Africa fell 22 percent to $1.58 billion last month from the year-earlier period, according to data compiled by New York-based research firm Freeman & Co. That was the worst January since 2004, the data show. Comparable fees in the U.S. fell 19 percent in the period to $2.5 billion, the same level as 2011.
Banks in Europe are grappling with a stagnant economy, a rout in emerging markets that has crimped bond sales and regulatory pressure to shrink their operations. Fees in the region have been stagnant since the financial crisis and are at about half their 2007 peak, Freeman’s calculations show. That may force banks to cut jobs for a third consecutive year and reduce compensation for their employees.
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