Morgan Stanley takes share in investment banking boom
The firm’s old businesses shone in 2021, but what was once the ballast to stabilize their volatile earnings is now the growth story.
After the big strategic acquisitions of 2020, when Morgan Stanley spent $13 billion on E*Trade to add a new self-directed channel to wealth management and then $7 billion on Eaton Vance to bring greater fixed-income capabilities to investment management, the firm’s older businesses shone in 2021.
In the first nine months of the year, investment banking revenues were 60% higher than the same period in 2020, while advisory revenues more than doubled.
“All the debt and equity that companies raised last year was looking for growth in a period of greater stability, and that set up a tremendous year in M&A,” says Sharon Yeshaya, chief financial officer of Morgan Stanley.
“Our firm’s original DNA was M&A, and it is at the core of our integrated investment bank. M&A leads to greater capital markets activity, which in turn leads to higher volumes in sales and trading. The overall fee pool grew, and Morgan Stanley’s share of the pool also increased.”