This is a tough time to be an investment banker. Investment banking deal volumes came to a screeching halt at the end of this quarter (2Q12). We are now back to trough 2009 levels for M&A volumes. In the second quarter of 2012 M&A volumes were down 30% year over year and about flat compared to the first quarter. Equity issuance also showed a steep decline, down 10% compared to the same quarter last year.
Sandler O’Neill is out with a note reducing estimates for almost all of their industry coverage, this is what they had to say: “We are reducing our 2Q12 estimates for the majority of our coverage. Declining equity markets and receding risk appetites drove a deterioration in the capital markets momentum that began to build in early 2012. As we noted in our mid-quarter capital markets update note (click here for a link to the note), the quarter got off to a difficult start for investment banking volumes and activity levels only seemed to deteriorate from there. Given the relatively depressed levels of investment banking activity, muted trading volumes, and a 6% decline in the S&P 500 QTD, we are lowering our estimates for the majority of the group. Specifically, we are reducing estimates for ten companies, driven in most cases by more conservative equity underwriting and financial advisory revenue assumptions. We are maintaining our estimates for two companies.”
M&A Volumes Down 30% YoY:
Fixed Income Also showed huge declines: