No succour from investment bank fee data
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No succour from investment bank fee data

Bankers who dispute that we’re now in an era of lower fees – the new normal you keep hearing about – are in denial

At first glance, total fees paid to investment banks in 2011 don’t seem all that bad considering the turmoil of the past 12 months.

According to data released today by Thomson Reuters, global fees were $80.9 billion – down just 6% on last year. 

Look deeper and the news is far worse.

Total fees for Q4 2011 compared to the same period in 2010 are down 40%. And there is no bright spot – all of the main regions, including Asia, are down by around that amount.

Bankers who dispute that we’re now in an era of lower fees – the new normal you keep hearing about – are in denial.

Global fees peaked at $115 billion in 2007.

For the past four years, they have averaged around $80 billion. 

That shows just how much fee froth developed over the latter days of the leverage and credit bubble.

Most of the top 10 banks’ fees have held up reasonably well. Top-ranked JPMorgan saw its fees decline by just 2% year-on-year.

But the exceptions have suffered terrible years: 

Goldman Sachs falls one place to 4th but its fees declined by more than 11%
UBS dropped 15%
RBS declined 16%
Nomura’s fees plummeted a shocking 34%.


Any bright spots?

Well, fees from Russia were up 28% on the year. But bankers hoping that the big emerging market countries will pull them through should not hold their breath. 

Fees in China fell by 25%; in India by 33% and in Brazil by 30%.

And who is the most important client for banks? In terms of fees paid over the past three years, it’s another bailed-out business paying investment banks to remedy the mistakes its advisers helped it to make in the past.

Step forward AIG, which has paid an average of $319 million a year to its advisers since 2009.

Given the turmoiil many experts expect us to go through in 2012, there could be years of big fees ahead from the restructuring of other financial services companies.

But if that is the best that bank advisers can hope for, then we’re all in serious trouble.

*All boxed information is Euromoney emphasis

- Euromoney Skew Blog

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