'It doesn’t bode well'.
Bloomberg reports that revenue from arranging mergers, loans and stock and bond offerings for clients in Europe, the Middle East and Africa fell 22% to $1.58bn last month from the year-earlier period, according to data compiled by research firm Freeman & Co. That was the worst January since 2004, the data show. Comparable fees in the U.S. fell 19% in the period to $2.5bn, the same level as 2011.
Banks in Europe are grappling with a stagnant economy, a rout in emerging markets that has crimped bond sales and regulatory pressure to shrink their operations. Fees in the region have been stagnant since the financial crisis and are at about half their 2007 peak, Freeman’s calculations show. That may force banks to cut jobs for a third consecutive year and reduce compensation for their employees.
'It doesn’t bode well,' said Paul Vrouwes, who helps oversee about $8.1bn of financial stocks at ING Investment Management in The Hague, Netherlands. 'It’s unlikely to be a strong quarter, where investment banks need it, and they already are under pressure to shrink'.
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