Now, information provider Dealogic has come up with its snapshot of the investment banking landscape in the first half, and it's not looking that pretty. Overall, Dealogic says global IBD revenues fell 5% year-on-year in the first six months. However, some areas of IBD are looking a lot more alluring than others. If you're an M&A or capital markets banker with unprecedented career flexibility, this is what you need to know for optimal positioning until the end of the year.
1. Get yourself to the U.S.
The U.S. investment banking market is booming. This is where you want to be working in 2013. Within U.S. investment banking, you want to be in leveraged loans. The chart below explains why. On the other hand, U.S. M&A isn't doing quite so well - revenues there fell 24% year-on-year in the first half according to Dealogic. In the past six months, M&A ended up accounting for the lowest share of U.S. IBD revenues on record.
2. Get yourself to J.P. Morgan
J.P. Morgan is also looking appealing. In the first half, it accounted for 8.9% of overall IBD revenues globally (up from 7.6% in the first half of 2012) and was number one globally in debt capital markets (DCM), number one equity capital markets (ECM), and number one syndicated lending. The only IBD business area where J.P. Morgan wasn't number one globally was M&A, where it was number two.
The chart below shows the overall IBD ranking for the first half. Click to enlarge.
3. Get yourself into syndicated loans at J.P. Morgan or Bank of America Merrill Lynch
With U.S leveraged loans soaring, the sweetest of the sweet spots this year would seem to be the syndicated lending team at J.P. Morgan - or failing that at Bank of America. The chart below shows syndicated loan market shares globally (click to enlarge).
4. Get yourself into high yield bond issuance
Deutsche Bank's analysts were wrong when they predicted that 2013 would be a disappointing year for DCM, or at least they were wrong when it came to high yield bonds. In the first half of the year, the volume of all bonds issued globally fell 5% but the volume of high yield bonds issued rose 50% compared to 2012 - to the highest level ever.
In the first half, the global leader in high yield bonds was - predictably - J.P. Morgan. The chart below shows market leaders in high yield bond issuance globally. Failing J.P. Morgan, you could try Deutsche or Bank or America Merrill Lynch.
4. Get yourself out of M&A
M&A hasn't been particularly hot in 2013. In the first half, revenues were a mere $7bn globally, the lowest level since 2009.
5. Find a financial sponsor team to work for
Although M&A hasn't been happening as much as expected, M&A bankers dealing with financial sponsors (private equity funds) have been busy. In the first half, financial sponsor revenues were at their highest level since the first half of 2011 and accounted for the largest proportion of global IBD fees since 2004. See the chart below for details. The thumbnail below the chart shows market shares for financial sponsor revenues (J.P. Morgan is the market leader, again).
6. Eschew the small banks
This is already a well known meme, but it's worth reiterating: avoid small banks - they're losing market share and they're not just losing market share in sales and trading, it's happening in IBD too.
The top ten banks accounted for 57% of IBD revenues in the first half, according to Dealogic. This was up from 49% in the first half of 2012. The top banks are shown in the thumbnail under point two above. This is where you want to work, ideally.
7. Run away from Asia Pac
Despite the hype a few years ago, Asia Pac investment banking revenues aren't growing as hoped. The chart below shows why you might want to give Asia Pac a miss. This applies especially to Australasia, where revenues fell 22% in the first half. It applies equally to China, were revenues fell 14%.
8. Run away from EMEA
EMEA IBD revenues aren't falling to the same extent as Asia Pac, but they have been looking horribly stagnant for some time (see chart above). Now is not the time to be working in a stagnant market where fixed costs are about to increase substantially.
9. Eschew European banks, except maybe Deutsche Bank and Barclays
We've said this before too: European banks aren't doing well in the new landscape, even in Europe. Dealogic confirms this to be the case. U.S. banks accounted for 39% of the European IBD revenue share last year - the highest level since 2002.
10. Manoeuvre yourself into a consumer goods, real estate, or communications, media and entertainment team
The chart below shows the sector teams which are doing well this year and the sector teams which aren't. Energy's not looking very vibrant compared to 2012. Real estate is looking very effervescent, however.