Future of Investment Banking | Outlook Beyond 2021
Recently, JPM published a report talking about the investment banking industry and where it is headed.
Some of the key points made in the research are:
- Wall Street banks are taking significant amounts of market share from European banks, and that is expected to continue
- GS / MS will remain the top two investment banks
- JPM and Citi's retail banking presence will continue to help its IB business thrive
- Among European banks, Barclays is "the most complete player due to its strength in the US"
- CS is at the bottom of the "pecking order" of global investment banks according to the report
While most of the points made by the report are not surprising, it is interesting to see how bearish they are on the outlook of European investment banks. With the implosion at Archegos recently as well, we are seeing massive defects from the senior ranks at CS, which will be hurtful to a business once seen as traditionally dominant in Lev Fin / Financial Sponsors, leaving Barclays as the last challenger to Wall Street hegemony.
The report doesn't dive deep into M&A specifically, but here are some of the key trends that will likely play out in the next few years:
- EBs will continue to take market share as they have conclusively proven that the independent advisory model is effective and beneficial for clients
- Companies such as Evercore, Centerview, PWP who's presence in Europe is more nascent, will start to become a larger player in the M&A market there to match the strength of their US franchises
- Large BB's (especially GS) will start to lose out on talent due to issues on culture, health, bureaucracy, pay etc. Clearly, the report does not see this as a problem, but how this manifests into their ability to attract the best rainmakers in the future is yet to be seen
For anyone interested in reading more about the article: https://www.fnlondon.com/articles/goldman-and-bar…
Interested to hear what everyone else thinks
