Consolidation, as well as the dominance of jumbo deals 2008 was not short of record-breaking transactions helped the top 10 ECM banks consolidate their market share at the expense of smaller competitors and local champions. The market share of the top 10 ECM banks rose almost 13 percentage points, from 56.5% to 69.2%.
The one to watch, however, will be in next years tables when Merrill Lynch and Bank of Americas results combine. Had the two completed their merger in 2008, the combined firm would have risen straight to the top in all the global and US ECM rankings.
JPMorgan was the leading bank in equity capital markets for the second year in a row, according to the 2008 league tables compiled by Dealogic. Competitors, who only a few years ago derided the banks equities franchise as "weak" are now being forced to eat their words as JPMorgan, which has boosted its ECM franchise in recent years through its joint venture with Cazenove in the UK and its acquisition of Bear Stearns in the US, also led the pack in terms of revenues by a wide margin. Estimates from Dealogic place JPMorgans ECM revenues at $1.6 billion, giving it a market share of 11.4%, more than two percentage points ahead of its closest competitor, Goldman Sachs, the biggest climber in 2008.
"In the last 12 months capital and liquidity have dominated the strategic agenda of corporates and financial institutions and we have been consistently there for our clients, delivering timely and well-executed deals, while also managing our own risk," says Viswas Raghavan, head of international capital markets at JPMorgan.
"These deep client relationships, sound market judgement and strong balance sheet have been further enhanced by our joint venture with JPMorgan Cazenove and our acquisition of Bear Stearns together the depth of our investor access and the strength of our experience from deal flow have led us to become the global standard bearer in the equity and structured equity markets."
Goldman Sachs, which rose four places in the revenues league table and three in the volume table in 2008 to wind up at second in both, made waves in the first half of the year, leading deals for troubled financials such as Washington Mutual, National City, Wachovia and RBS.
"One of the things weve always tried to do is to relatively outperform in tougher markets," says Matthew Westerman, global head of equity capital markets at Goldman Sachs. "The relative strength of our franchise throughout this crisis has helped us to do reasonably well even as overall volumes in the market have suffered. We also feel that we have succeeded in addressing areas we needed to such as emerging markets and that we are now strong across all regions."
Although it managed to place only fifth globally, in EMEA Morgan Stanley clearly led the pack in 2008, topping the league tables in every ECM category. ECM revenues earned in the EMEA region equalled those earned in the Americas at Morgan Stanley and the firm made as much as two-thirds of its ECM revenues outside of the US, thanks to a leading role on big deals such as the rights issues of SG, UBS, HBOS and Crédit Agricole, and a strong showing in the Middle East and North Africa, where the bank has invested significantly in boosting its presence. Morgan Stanley led significant deals in the region such as a $3.5 billion rights issue from Riyad Bank in Saudi Arabia and the $849 million IPO of Safaricom, a pioneering international equity offering from Kenya.
UBS had a tough year and fell from second place in 2007 to fifth in 2008 in the global revenue league tables. Although it managed to retain its crown in Asia, it fell to eighth in EMEA, a poor showing for the bank, which arguably has the regions leading secondary market franchise.
After a disappointing make-or-break fourth quarter, the total volume of equity capital markets issuance raised globally in 2008 fell 33%, led by a collapse in IPO and equity-linked issuance. According to Dealogic, global ECM issuance fell to $634.4 billion in 2008 from $943.7 billion in 2007. Globally, ECM revenues fell to $14.2 billion in 2008, down 36% from $22.2 billion in 2007.