Investment Bank Fees Plummet

The LatAm investment banking fee pool has shrunk dramatically this year and further contraction looks inevitable in 2009. Total fees for M&A, ECM and DCM are down 46% so far this year, which is now all but closed for capital markets activity, Dealogic data shows. In the year to November 17, LatAm bankers made $1.069bn in fees from the three core activities, little over half the $1.979bn they had accumulated in the corresponding period of 2007, according to Dealogic. Credit Suisse dominates, with $226.33m in fees, or 21.16% market share, down 38% from last year’s $370.51m (18.72% share) bonanza. The top 5 claims almost 60% of the pool and includes UBS, Citi, Itau and JPMorgan, the same – along with Credit Suisse – as last year’s leading quintet. M&A is the bright spot, with the top 10 advisory shops seeing revenue grow compared to the corresponding period of 2007. Dealogic data reveals total revenue of $479m as of November 17, up from $442m in 2007. Credit Suisse bags the bulk of the M&A pool, with $105m, or a 21.88% share. Last year the top earner was Citi, with $114m in revenue, or a 25.86% share. Next year will almost certainly be worse, senior investment banks at the top firms tell LatinFinance. ECM and DCM will be closed at least for the next few months, and most bankers expect few transactions until the second half of 2009 or later. The outlook for M&A is more constructive, but this is unlikely to pick up the slack of other markets. Banks hope to compensate by diversifying into lucrative liability management and restructuring advisory, but more downsizing looks likely as they adjust to a much leaner revenue panorama.