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Investment banking fees and jobs may be reviving, but not everywhere

If you're an investment banker who's been waiting for deals and hiring to revive so that you can find a new job, your time may soon come. Figures from Dealogic indicate that the first quarter of 2024 wasn't bad, but the recovery is geographically patchy and sector specific.

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If banking hiring revives, it seems the revival will come to the Americas first 

Based on year-on-year fees in Q1, if banking jobs come back, they will do so in the Americas first of all. If more banking jobs are cut, the cuts will come to Asia more than anywhere else.  

New Financial Institutions Group (FIG) bankers may not be needed. New healthcare and chemicals bankers may be preferred 

In M&A specifically, Dealogic says some sector teams had a better quarter than others. At the senior end, a bad quarter can encourage hiring as banks add new rainmakers to generate deals. At the junior end, however, it discourages hiring as there's less need for people to execute deals.  

Bank of America might overcome its hiring freeze, in Europe at least

Bank of America's M&A bankers appear to have had some big wins in Europe in the first quarter. Dealogic says their league table rankings have soared. In Germany, BofA went from 50th in Q1 '23 for M&A deals; in the UK it went from 10th to 3rd; in Spain it went from 10th to 4th and in Italy it went from 32nd to 1st.

Bank of America has been wary about adding new costs while its existing staff won't leave. The recent quarter might change its collective mind.

Leveraged loans are back baby, and so is hiring - sort of

There's been a resurgence in leveraged loan activity after last year's leveraged finance nadir. As the charts below (from Dealogic) show, the first quarter is looking pretty impressive for leveraged finance professionals in Europe and the US. This might explain why banks like SMBC have been strengthening their teams, and how it is that Barclays wants to grow in leveraged finance again.

However, not all leveraged finance bankers are equal. Dealogic says new leveraged buyouts are still way below historic norms.

Debt capital markets bankers are doing amazingly in Latin America, poorly in Asia

Much has been made of the revival of debt capital markets (DCM) issuance in the first quarter, but once again the resurgence was not the same everywhere. In Latin America and the Caribbean, Dealogic says DCM fees were up 82%. In Asia ex-Japan they were down 5%. 

The US and Europe were good, but not great: fees were up 34% and 28% respectively year-on-year in Q1.

Equity capital markets are doing amazingly in India and North America, terribly in Asia

It's a similarly patchy story for ECM fees. Year-on-year, Dealogic says they were up...420% in India and 97% in North America, but down 66% and 37% respectively in North and South East Asia. Europe scraped in with an 11% rise.

Does this mean hiring is coming back?

Maybe, although last time we asked recruiters (in March) they said hiring was still unusually quiet, and it was only a few weeks ago that Barclays and Citi trimmed some junior bankers unexpectedly. This might be in preparation for hiring some new and better ones, or it might be a sign that banks need more than one good quarter before getting back into the market for talent.

Dealogic's figures aren't the only things suggesting a revival. When Jefferies reported its first quarter results last week, it revealed a 20% year-on-year increase in investment banking and capital markets revenues and spoke of "improved performance across advisory, and equity and debt underwriting." Deutsche Bank's European banking analyst Benjamin Goy has an equally optimistic note out today. Banking activity is up, notes Goy, especially when you look beyond M&A. M&A could eventually benefit from its strong pipeline, which he says was up circa 33% in the first quarter.  

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AUTHORSarah Butcher Global Editor

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