The fall-off in dealmaking activity globally that began in August is showing few signs of abating.
The hope was that as equity markets stabilized -- which they largely have in 2012 -- and managers became inured to the European crisis, that deal volumes would pick up. But that is clearly not happening.
January was yet another a slow month globally for all types of investment banking, and February is looking unlikely to break the trend even after the announcement of the huge Glencore-Xstrata combination, according to figures from Thomson Reuters. Where prior to August 2011, global deal volumes would regularly top $1-trillion per month for all types of transactions, since August they haven't reached that level once.
In North America, activity is down 59 per cent year to date for mergers, 41 per cent for equity capital markets, 8 per cent for debt capital markets and 36 per cent for loans, according to Thomson Reuters.
The implication is clear for the investment banking firms that are trying to cope with such a drastic decline: More cost controls, pay cuts and layoffs are coming.
