2004 began as a year of great promise. After three years of cost cuttings and downsizings, this year was to be a time of great rejoicing and recovery. M&A was to come back strongly, the big money was supposed to still be there from fixed income and, Heaven forbid, even the global stock markets were going to start to climb. But 2004 has turned out to be a damp squib, ending with several firms looking at their business models and many staff in fear for their jobs.
January started off so well, too. M&A deal volumes came in at $215.24bn, but sadly have not reached those lofty heights since. First quarter IPO levels rivalled those seen in 2001, but the deals soon fell away.
Nevertheless, fixed income revenues remained strong for a while and some firms, including Merrill Lynch, were able to pull in record quarters in the first half. But rising interest rates soon put paid to the easy money in fixed income. And then came the higher costs of oil and the notion that John Kerry might actually beat George W for The White House. Equity markets simply stalled as a result.
So, the year ends with CSFB, Commerzbank and Deutsche reviewing and restructuring and staff worrying about whether they will soon have a job. Other firms, like Calyon (the old Credit Lyonnais/Credit Agricole investment banking business) is said likely to lay off staff before Christmas. And rumours abound that others, like UBS, have imposed hiring freezes.
Oh well, there's always next year.