M&A Earnings Drop to 8-Year Low

Earnings from merger and acquisitions and debt and equity capital markets have dropped to an 8-year low, falling to levels not seen since the collapse of Lehman Brothers.

Banks generated just $50.1 billion in fees in the year to date, 16 percent lower than the first nine months in 2011.

According to data from Thomson Reuters, the second quarter of 2012 was also the slowest quarter for investment banking since the first quarter of 2009, while European income for the first nine months fell to their lowest levels since 2002.

Earnings from merger and acquisitions and debt and equity capital markets have dropped to an 8-year low, falling to levels not seen since the collapse of Lehman Brothers.

Banks generated just $50.1 billion in fees in the year to date, 16 percent lower than the first nine months in 2011.

According to data from Thomson Reuters, the second quarter of 2012 was also the slowest quarter for investment banking since the first quarter of 2009, while European income for the first nine months fell to their lowest levels since 2002.

Global M&A income dropped 18.5 percent for the first three quarters year-on-year, and dropped 23 percent from the previous quarter, said Mergermarket.

In particular, European M&A was the hardest hit – its third quarter results was the lowest in three years and down 49.4 percent from the second quarter of 2012.

Related News: European Companies More Averse To M&As in 2012 – Survey 

M&A activity fared slightly better in the Asia-Pacific region, with a total of $238.6 billion worth of deals announced so far in 2012. However, that amount is still 16 percent lower than the previous year.

While Goldman Sachs tops the M&A advisory league table, JPM remains at the top of the league by investment banking fees.

Despite the poor results, bankers interviewed by the Financial Times expressed optimism for a rebound in the fourth quarter, pointing to the potential tie-up between EADS and BAE, as well as the decision by the European Central Bank to support bond markets.

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Henrik Aslaksen, global head of M&A at Deutsche Bank, told the FT:

[quote] Clients have adjusted to living in an uncertain world, and sensible CEOs with a long-term strategy will use M&A as part of their strategic toolbox to reshape their portfolios regardless of the environment. [/quote]

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