Investment bank revenues fall as reliance on debt sales grows
INVESTMENT banks are becoming increasingly reliant on revenue from debt capital markets (DCM) as other sources of income fall, according to new research by data provider Dealogic.
The Dealogic figures show that DCM revenue accounts for 36 per cent of global investment bank income so far in 2012, the highest share since 1998 on a like-for-like basis.
Over the last 10 years the average DCM share of investment banking revenue has been just 26 per cent.
The change suggests that companies are increasingly choosing to raise funds by selling debt rather than issuing equity.
US issuers lead the DCM revenue ranking with $3bn (£1.86bn) so far in 2012, accounting for 40 per cent of total global revenue.
For the first time the UK is in second place, generating DCM revenues of $453m in the year to date, up three per cent on 2011.
Despite this increase in share, total DCM revenue is down four per cent year-on-year to $7.5bn.
JPMorgan leads the global DCM revenue rankings, dealing with $619m so far in 2012, followed by Bank of America Merrill Lynch ($516m) and Citi ($469m).
Total global investment banking revenue – including all fees from DCM, equity capital markets, loans and M&A activity – has reached $21.2bn so far in 2012, down a quarter on the same point last year.
This is well below the pre-crash peak of $33.6bn recorded in 2007.