The number of senior dealmakers working at the world’s top 12 investment banks is at its highest level in nearly a decade, as companies have rushed to hire and keep talent during the deal boom. There were 19,600 investment bankers across the 12 banks at the end of the third quarter of 2021, according to figures from data provider Coalition Greenwich. This is the highest number since 2012 and an increase of 300 since the end of 2020.
While large investment banks have cut sales and trading staff since the financial crisis, the number of dealmakers has remained stable. On the trading floor, 12,200 jobs have been lost across equities and fixed income since 2012, according to Coalition Greenwich. Seven hundred were lost in 2020 – even as revenues surged to a 10-year high. By contrast, there were 19,200 investment bankers across the top companies in 2016 and that figure has edged up by 400.
The boom in deal fees had brought in $110bn in revenues for investment bankers between January and November 2021, according to data provider Dealogic. The surge has led to increasing numbers of bankers working 100 or more hours per week, while stretched teams have had to turn away work, according to executives.
Credit Suisse, Deutsche Bank, Barclays, Citigroup, HSBC and JPMorgan were among the banks that had added investment bankers last year, but recruitment has become increasingly challenging. Salary increases of up to 50 per cent are being resisted by senior bankers, who fear overpaying for talent.
The increase in mergers and acquisition activity in the European asset management sector has pushed deal numbers to a record high, with transaction value last year up to November almost double that recorded for the whole of 2020. Figures from Refinitiv, show there had been 362 M&A deals in the European fund management sector until end of November 2021 – well ahead of the 279 that were struck between January and December 2020, a year that was considered by many to be a bumper one for deal activity.
The value of asset management deals in Europe last year up to November stood at $12.3bn, up sharply from the $6.3bn recorded for the whole of 2020, according to Refinitiv. In the UK, 158 deals had taken place between January and November last year – 50 more than the total for the whole of 2020.
Head of M&A and capital raising at Refinitiv, Cornelia Andersson, said: “In the major fund management markets – the US and the UK – consolidation has been a key trend for some time, with deals ranging from mega mergers to smaller acquisitions. This is now a well-established strategy to secure growth, expand the client base or tap into niche sector or asset class offerings. She added: “Europe has also seen a large increase in consolidation in 2021.” There have been 1,010 M&A transactions in the fund management sector globally last year in the first eleven months, worth a combined $63.2bn – up from 923 deals that took place worldwide in 2020, valued at $49.3bn, according to Refinitiv. Separate figures from PitchBook show Morgan Stanley’s acquisition of Eaton Vance, which completed in March 2021, was the biggest asset management M&A deal globally last year at $8.7bn.
“With over 1,000 deals recorded globally in 2021, we are seeing record levels of takeover activity in the asset management space,” said Andersson. A financial services partner at PwC, Albertha Charles, said previous M&A deals had been heavily focused on asset managers building scale, but that is changing. “Scale is still important, but acquisition of skills and diversification of the revenue base has become much more important,” she said.
(The writer is our foreign correspondent based in the UK)
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