The last refuge for investment bankers is under siege.
Fees in Asia are falling as stock and debt offerings evaporate and companies hold back on deals.
It is a stark contrast to 2007. Then, Asia was a bright spot as business dried up elsewhere. By the end of August last year, nine of the 10 busiest investment banks had made more than $100 million in Asian revenues from areas measured by Dealogic. This year, only Citigroup Inc. and Credit Suisse Group managed to do that.
Bankers say this isn't a crisis -- while starting to trim staff or shuffle employees off to places such as India, where the banks have traditionally been underexposed.
But the figures are grim.
The volume of funds raised on Asian stock markets has halved this year to its lowest level since 2003, according to Thomson Reuters. Stock issuance in Japan and Singapore hasn't been so low since 1998.
In the debt markets, volume is down 41%, evidence that Asia hasn't escaped the credit crunch.
There are some brighter spots. Local-currency debt markets, particularly in China, are holding up. Mergers-and-acquisitions volume is down just 3% this year. But that is because of a few big deals, such as the merger of telecommunications companies China Netcom and China Unicom, a transaction pushed through by the Chinese government. Deals driven by straight market logic have been scarcer.
Admittedly, this isn't all there is to the banking business in Asia. For example, the public-market revenue measured by Dealogic only accounted for about 6% of revenue from Asia for both Goldman Sachs Group Inc. and Deutsche Bank AG in 2007.
The rest comes from less-visible areas such as private placements, pre-initial-public-offering financing, over-the-counter derivatives and trading. But banks can't escape the reality that the big public deals are both their shop window and a key barometer for overall activity.
Even Asian bankers won't escape the pain being felt in New York and London.
Andrew Peaple / Mohammed Hadi |
|
