Why Citi's investment bankers may earn half JPMorgan's
Citi’s Q3 results earlier this month seemed, on the face of it, pretty good. Its M&A bankers achieved a 22% revenue increase in Q3 of 2024 on the same period in 2023. However, they seem to have put an unusual amount of effort into doing that.
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According to data from the London Stock Exchange Group (LSEG), formerly Refinitiv, Citi bankers dealt with the fourth most M&A volume of any bank globally in the first nine months of 2024. The bank only collected the eighth most M&A fees, however.
Citi advised on $340bn in M&A volume in the first nine months of the year and collected $818m in fees. Bank of America, meanwhile, worked on $257bn in volume, but collected $921m in fees.
Citi collected 0.24% of volume that passed through its hands in fees; Bank of America collected 0.36%. That’s a substantial difference, but it gets bigger. JPMorgan, while working on twice as much volume ($633bn) as Citi, collected four times as much in fees ($2.3bn), or 0.48% of deal volume.
The implication is that Citi’s bankers have less money coming in for the work they do compared to their peers. Lower fees mean smaller bonuses.
The cause of Citi’s disparity might have something to do with its tendency to bundle services, especially financing.
CEO Jane Fraser noted the Mars acquisition of Kellanova, for which Citi was the sole advisor, as proof of positive market sentiment; she also mentioned that Citi was the lead financier of the deal, and shortly afterwards nodded to Citi’s deal with Apollo that gave the bank access to $25bn in private credit “without using our balance sheet.”
Of course, a bank catering to as many parts of a deal (or client) as possible is nothing new, and for the bank as a whole, not a bad thing at all. JPMorgan claimed at its investor day last year that for every dollar generated by an investment banking client, an additional 1.4 dollars was generated for other parts of the bank.
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