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The heart of Canada’s financial district at the corner of King and Bay streets in Toronto.

KEVIN VAN PAASSEN/The Globe and Mail

The carnage from the financial crisis continues to wreak havoc on Canada's boutique investment banks.

For more than a year there have been reports of the damage, but too often they've focused on problems at individual dealers such as GMP Capital and Canaccord Financial, rather than the industry as a whole.

Now, the Investment Industry Association of Canada has released figures for the entire industry, and they aren't pretty. The boutiques' total revenues of $4-billion in 2012 remain $1.7-billion, or about 30-per-cent lower than the pre-crisis levels in 2006 and 2007.

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The big hit came from equity investment banking, where revenues are down more than half from their pre-crisis levels. Boutiques accounted for just a quarter of these fees in 2012, down from 44 per cent during the boom times. Commissions earned from offering advice to retail clients also slipped 20 per cent.

But the most shocking statistic of all comes when you compare the boutiques' experiences to those of the large bank-owned dealers. The industry's total revenues came in at $15.3-billion in 2012, just a smidgeon off the $15.9-billion peak in 2006 as revenues at what IIAC dubs the 'integrated' investment banks are higher than they were before the turmoil.

Driving this surge are fees earned from debt capital markets activities and derivatives trading and financing, both of which are rare at the boutiques. As IIAC notes, "debt capital markets business now accounts for 15 per cent of overall revenue, 50 per cent higher than the revenue share in the middle of the last decade."

Early into 2013 the picture is gloomy; the junior mining and energy financing that drive the boutiques are still suffering. Scaled-back energy deals are particularly troublesome because mining was already in the dumps, and a prolonged oil and gas hiccup will only compound the problem.

Yet there's reason to be optimistic. As we pointed out earlier this week, energy fundamentals are picking up with natural gas prices rising and the Canadian dollar falling relative to its U.S. counterpart, which should boost revenues for explorers and producers. Sometimes just a little confidence can open the financing window wide open.

(Tim Kiladze is a Globe and Mail Reporter.)

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