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Year in data 2015: Investment banking

European banks face defeat.

As 2015 drew to a close, the combined share of global investment banking fees earned by the top five US firms stood at 33%. By contrast the top five European banks commanded an aggregate 17.5% market share, only just above half that of their US rivals, according to data from Dealogic.

The gap between the leading Americans and Europeans, now at 15.5 percentage points, is the widest since the financial crisis. The gap in combined market share between the groups stood at just 10.4 percentage points as recently as 2012.

Animal spirits in the US are simply more robust. In a down year for overall fee volumes, the pay out from US issuers held steady at $28 billion for the first nine months of 2015, matching the total for the whole of 2014. But with the global fee pie shrinking, US revenue accounted for 50% of global investment banking revenue, its highest share for the period since 2002.

European investment banking revenue totalled less than half that, coming in at just $13 billion for the first nine months of 2015, down 27% year-on-year and the lowest first nine months since 2012. Europe accounted for just 23% of global investment banking revenue.

Other forces are at work here as well. European banks are still restructuring their businesses, with new chief executives at big competitors such as Barclays, Deutsche and Credit Suisse. These are now looking to de-emphasize FICC, where the Europeans were actually gaining secondary market share as recently as in the first half of 2015, and focusing instead more on capital light businesses such as M&A and ECM where the US banks have built a pronounced advantage. 

With a flat revenue outlook for 2016, the investment banking battleground will be fought over market share. The Europeans might find it tough to turn this battle around. 


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