Editor's letter: Survival of the fittest
Will investment banks in Asia be able to survive another difficult year? That is a big question as firms enter 2023 on a weaker footing than in 2022.
Investment banking revenues across the board have plummeted in the past year, with declines in equity capital markets, debt capital markets and advisory – all core parts of any investment bank’s business.
In the first three quarters of 2022, Asia-Pacific IB revenues tumbled 29% to $12 billion. Fees from M&A were similar to those in the same period in 2021, according to data from Dealogic.
ECM fees shrank by 33% to $5 billion, while bond fees fell 33% to $4 billion. Fees from Asia-Pacific’s syndicated loan business amounted to $1 billion, almost on a par with those in 2021.
The numbers are bleak if seen in isolation. So it is worth noting that Asia Pacific performed better than other regions: IB fees fell by 45% in the Americas and by 34% in EMEA.
The biggest losers in the past year have been the banks that had aggressively pursued Chinese property companies
However, the dearth in deal flow has pushed large banks to reduce their headcount. Morgan Stanley, Goldman Sachs, Citi, Credit Suisse and many more have cut jobs in investment banking, particularly those focused on Greater China.