Can specialized banks compete with universal banks in the long-term?

I understand that certain specialty shops, such as GS, have done extremely well for themselves. I'm curious, however, how these banks can fare in the long term, especially in an era of bank consolidation. As we see deal size exponentially grow, companies are increasingly requesting, and banks are increasingly obligated to provide, financing for these deals. Banks who put their large balance sheets on the line to provide financing can always woo a dollar or two in M&A fees. If credit eases and we enter a new era of $100bn+ transactions, I can easily the likes of JPMorgan, Citi, BofA or HSBC leverageing their balance sheets into exclusive financial advisor roles.

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I don't see credit easing enough for $100bn transactions to go on. That's at LEAST 12 months away, if not more. Until then, places like Lazard, Greenhill, and Rothschild can use their mobility to grab deals. The companies least bitten by capital problems from too many bad bonds on their B/S will be able to get the most deals, meaning you'll likely see GS, JPM, CS, and the smaller places I just mentioned start to take market share away from the big B/S banks that are facing some issues (Citi, BoA, Merrill, Lehman).

 

umm... 12 months is not that long of a time period...

I was thinking several years, but whatever...

...and neither Lehman nor Merrill have big balance sheets...

 

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