360° Coverage : Strong Equity Market Activity In Q4 Boosts Underwriting Fees For...

2 Updates
Strong Equity Market Activity In Q4 Boosts Underwriting Fees For Banks

Strong Equity Market Activity In Q4 Boosts Underwriting Fees For Banks

Jan 10 2014, 2:57pm CST | by

Global equity markets saw a marked turnaround from the extremely slow Q3 to record the strongest quarter in three years for Q4 2013, according to data compiled by Thomson Reuters. Companies across...

Filed under: news

 
 
 

33 weeks ago

Strong Equity Market Activity In Q4 Boosts Underwriting Fees For Banks

Jan 10 2014, 2:57pm CST | by

Global equity markets saw a marked turnaround from the extremely slow Q3 to record the strongest quarter in three years for Q4 2013, according to data compiled by Thomson Reuters. Companies across the globe raised $264.4 billion through IPOs and follow-on offerings in the last quarter – a good 82% higher than the $145.1 billion figure for the third quarter and the best since the bumper $350 billion proceeds seen in Q4 2010. Solid performance over the first half of the year helped equity underwriting deals worth just under $800 billion go through in 2013.

The trend witnessed in equity capital markets for the second half of the year is readily justified by the fact that corporate firms grew wary of raising fresh capital in the third quarter. That’s when the Fed’s initial announcements of a tapering plan cast a shadow of uncertainty over global markets. Once the markets stabilized in Q4, these firms went ahead with their equity offerings – boosting underwriting activity for the period.

A great quarter for the equity markets would obviously translate into higher equity underwriting fees for the investment banks. Thomson Reuters’ data estimates a 34% jump in equity underwriting fees for the industry as a whole compared to Q4 2012 and a 65% increase sequentially – making this one of the most profitable quarter for the banks’ equity underwriting desks in three years. In this article, we detail the equity capital market performance of the country’s five largest investment banks in Q4 and also estimate the change in each of their fee revenues compared to Q3.

See the full Trefis analysis for Goldman Sachs | JPMorgan | Morgan Stanley | Bank of America | Citigroup

The table below summarizes the performance of the equity underwriting unit at each of the five largest U.S. investment banks based on data released by Thomson Reuters last week. Notably, these banks occupied the top five spots in global rankings in terms of deal size – a recurring trend over the years.

Bank Deal Size Mkt. Share # Deals Avg. Deal Size Q4’13E Fees Q3’13 Fees
Goldman Sachs $31.4 B 11.9% 138 $227 M $573 M $276 M
Morgan Stanley $21.7 B 8.2% 145 $150 M $470 M $236 M
Bank of America $20.2 B 7.6% 126 $160 M $418 M $329 M
JPMorgan $18.8 B 7.1% 133 $141 M $434 M $333 M
Citigroup $15.0 B 5.7% 101 $149 M $313 M $174 M

Goldman Sachs reclaimed the top spot in terms of market share by deal size after being pushed to second place by JPMorgan in Q3. The bank topped the list of book-runners in the U.S., Europe as well as Asia to achieve a commanding 11.9% share for Q4. Goldman also has a substantially larger average deal size than any of its competitors – indicating that the bank played a role in most of the largest equity underwriting deals over the quarter.

With an 8.2% market share, Morgan Stanley came in second with a total deal size which was roughly 30% lower than Goldman. However, the investment bank had a role to play in more deals this quarter (145) than any other bank. This achievement went to JPMorgan more often than not over recent years, as the diversified banking group ranked #1 in this regard for 5 of the last 8 quarters.

Goldman’s role in a bulk of the equity deals for the quarter, including the biggest ones, also helped it amass more fee revenues than the other banks with imputed fees of well over half a billion dollars. That’s more than double the $276 million in equity underwriting fees the investment bank pocketed in Q3 (see Q3 2013 U.S. Investment Banking Round-Up: Equity Underwriting). The last time Goldman made more than $500 million in fees was in Q4 2010 ($555 million).

As can be seen from the table, all the banks are expected to earn at least 30% more fee revenues than they did in Q3. It should be noted here that imputed fees are merely an estimate based on historical data about banks’ fees for a particular role in the equity underwriting process, and the numbers the banks actually report would differ from these figures. But these numbers do give a good indication of what to expect. What remains to be seen is what numbers the banks actually come up once the earnings season gets underway next week.

Submit a Post at Trefis Powered by Data and Interactive Charts | Understand What Drives a Stock at Trefis

Like our charts? Embed them in your own posts using the Trefis WordPress Plugin.

Source: Forbes Business

 
Update
2

2 days ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashin ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

3 days ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and M ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Japan to aid connectivity upgrade in northeast India
Tokyo, Sep 1 (IANS) India and Japan Monday decided to strengthen cooperation for improving connectivity and socio-economic development in northeastern states of India.
 
 
Three Ebola cases recorded in Nigeria oil hub
Abuja, Sep 1 (IANS) At least three cases of Ebola virus disease (EVD) have been recorded in Nigeria's oil hub of Port Harcourt, where a fatality was confirmed last week, the country's Minister of Health Onyebuchi Chukwu said here Monday.
 
 
India, Japan to elevate strategic partnership
Tokyo, Sep 1 (IANS) Prime Minister Narendra Modi Monday said relations with Japan were of the "highest priority" for his government and announced a slew of initiatives, including turning the strategic partnership into a "special" partnership and a fast-track channel for Japanese investors.
 
 
Indian in UAE unable to pay hospital bills
Abu Dhabi, Sep 1 (IANS) An uninsured Indian man in the UAE has run up more than $160,000 in medical bills after he suffered a brain haemorrhage and spent about six months in an Abu Dhabi hospital, a media report said.
 
 
 

Latest from the Network

'Ukrainian conflict has escalated into war'
Kiev, Sep 1 (IANS) Ukrainian Defence Minister Valeriy Geletey Monday said the conflict in eastern Ukraine between government troops and pro-independence insurgents has escalated into a "war". "A great war came at our...
Read more on Politics Balla
 
IS slogan found on school walls in Saudi Arabia
Riyadh, Sep 1 (IANS) Slogans praising Sunni militant group Islamic State (IS) were found on the walls of some schools in the Saudi Arabia capital following Saudi King Abdullah bin Abdulaziz's call for coordinated...
Read more on Politics Balla
 
Japan to aid connectivity upgrade in northeast India
Tokyo, Sep 1 (IANS) India and Japan Monday decided to strengthen cooperation for improving connectivity and socio-economic development in northeastern states of India. According to an Indian government release issued...
Read more on Politics Balla
 
Words cannot describe Abe's hospitality, says Modi
Tokyo, Sep 1 (IANS) Prime Minister Narendra Modi Monday said he could not describe in words the hospitality he received in Japan, saying it was an indication of Japanese Prime Minister Shinzo Abe's special affection...
Read more on Politics Balla
 
PTI president says political crisis in Pakistan scripted (Roundup)
Islamabad, Sep 1 (IANS) In a clear sign of a revolt brewing within, Pakistan Tehreek-e-Insaf (PTI) president Javed Hashmi Monday claimed that the ongoing political crisis in the country was scripted amidst more clashes...
Read more on Politics Balla
 
Three Ebola cases recorded in Nigeria oil hub
Abuja, Sep 1 (IANS) At least three cases of Ebola virus disease (EVD) have been recorded in Nigeria's oil hub of Port Harcourt, where a fatality was confirmed last week, the country's Minister of Health Onyebuchi...
Read more on Business Balla
 
Blake Shelton and Miranda Lambert reject $1m Vegas offer
Blake Shelton and Miranda Lambert rejected a $1 million deal to perform three shows in Las Vegas. The country couple turned down the offer and tried to negotiate a $1.25 million deal, meaning they would earn $416,000...
Read more on Celebrity Balla
 
Adam Levine splashes out $4.55m on new home
Adam Levine and his wife Behati Prinsloo are set to splash out $4.55 million on their first apartment together. The Maroon 5 frontman and the Victoria's Secret Angel - who tied the knot in July - are said to be in...
Read more on Celebrity Balla
 
Seth Rogen says stolen celebrity photos shouldn't be posted
Seth Rogen has urged people not to post the naked photos stolen from Jennifer Lawrence's phone. The 'Knocked Up' star is disgusted by the leak of explicit images of the Oscar-winning actress and is adamant that what has...
Read more on Celebrity Balla
 
Miley Cyrus: Elvis was the original twerker
Miley Cyrus has claimed Elvis Presley was the original twerker. The 'We Can't Stop' singer has attracted much attention and criticism for her penchant to perform the butt-shaking dance on stage in various flesh-flashing...
Read more on Celebrity Balla