Record fees for investment banks

Dec 24 2009 By nebusiness

Investment banks gained record fees this year as companies raised funds to weather the recession, research showed today.

Data from Dealogic for the Financial Times showed investment banks earned US418bn (£11.3bn) from debt capital markets as companies issued bonds to investors to strengthen their finances.

Investment banks enjoyed a strong surge in profits this year thanks to fundraising moves, rising stock markets and a lack of competition - but plans for bumper payouts have sparked outrage after the taxpayer’s huge support for the sector and prompted a one-off bonus tax.

The 33% jump in revenues from debt issuance was accompanied by a 64% surge in bank earnings from equity fundraising such as the issue of new shares to US$23.3bn (£14.6bn).

The rise in revenues from fundraising offset a decline in merger and acquisition fees to its lowest level since 2003, Dealogic said.

Private equity firms - which rode a wave of cheap money in the boom to buy giants such as Alliance Boots - had a particularly difficult year with buyout volumes falling 62%.

Emerging markets were the bright spot in a depressed takeover climate, the research firm added. The sector accounted for 23% of global M&A volumes - the highest level since records began in 1995.