Crisis fails to dent largest banks' market shares
Massive changes in the investment banking industry over the last year have had surprisingly little effect on individual banks' share of the global fee pool, according to a report by Credit Suisse, with few firms showing noticeable gains or losses.
The findings appear in a report published this morning by Credit Suisse analysts on the investment banking industry, which compares the positions of the top banks in the equity, debt and advisory markets on October 1 with their shares four years ago.
Bank of America Merrill Lynch, Citigroup and UBS have lost between one and 2.5 percentage points of their share of these markets over the period, but several other large banks, including Credit Suisse, Goldman Sachs and Morgan Stanley, still have market shares close to their levels of four years ago.
Goldman Sachs’ share of the global investment banking fee pool stands at 7% versus 6.8% in 2004, while Credit Suisse’s share is 5.2% today against 5.3%, and Morgan Stanley’s share is flat at 6.5%.
JP Morgan, which has a market share of 10.2%, a two percentage point gain on its position in 2004, has been the most notable winner among the larger banks. The other banks to record gains over the period were mainly those with smaller investment banking operations.
Credit Suisse's analysts wrote: “Across the industry, the surprise is perhaps that there has been so little change in market shares, rather than so much.”
The aggregate market share of top-tier banks' sales and trading businesses increased less than five percentage points over the period, according to the report. The top firms enjoyed sustained growth in their share of the market for foreign exchange trading.
Credit Suisse analysts said it was likely that many of the larger banks would stage a recovery in their markets shares over the next 18 months with Bank of America Merrill Lynch and UBS both likely to fight hard to regain their lost positions.
The analysts wrote: “The next few years are likely to see a significant struggle for market share; in our opinion, but historical experience suggests that it is not too cynical to believe that the eventual outcome will be that all major players settle down within a couple of percentage points of their long-run average market shares, with margins having been driven down (and salaries up) in the meantime.”
--write to hwilson@efinanacialnews.com
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