OPINION: There was a time a decade ago when European investment banks could challenge their American counterparts in equity capital markets globally. Now, they have virtually disappeared from the global top 10.
Equity capital markets got off to a shaky start in the first quarter of 2022 thanks to a range of factors including Russia’s bloody invasion of Ukraine, somnolent IPO markets and investor nervousness about tightening monetary policies.
Not one European investment bank made it into the top 10 global ECM book runners measured by volume of deals. Over the past 10 years they have been pushed out by Chinese investment banks.The top 10 positions in the March quarter were Goldman Sachs, Morgan Stanley, BofA Securities, JPMorgan, Citi, CITIC Securities, China Securities Co Ltd, China International Capital Corp Ltd, Jefferies LLC and Huatai Securities Co Ltd.
The Europeans spent billions of dollars trying to match the power and reach of the US investment banks. But they don’t have a lot to show for it. Strong balance sheets gave the American investment banks an advantage in ECM compared to European banks. It meant they were more nimble and had a greater capacity to take risks.Another contributing factor to the European poor relative performance in investment banking is the switch in strategy toward wealth management and asset management, which was the natural response to increasingly heavy regulation.