Investment banking begins to sign the resurrection. The 20 largest entities operating in Spain have earned around 25% more so far this year. It is the first quarter in which their figures overall improve since the start of the war in Ukraine, in February 2022, which caused a collapse in the business of these firms, due to increases in interest rates, the stoppage of mergers and acquisitions, the drought in IPOs and tensions in the financing markets. The commission income figures in these three months, provided by the consulting firm Dealogic, suggest that the tensions in the markets have ended and the sector is heading towards a new era of prosperity.
As explained by the sources consulted, in reality the market has volumes similar to those of 2020 and 2023 (which were not particularly good years in operations for investment banking) but they point out that while in those years the trajectory was downward, 2024 has begun. with a positive tone that invites optimism. In this sense, they point out that both in Europe and in the United States, companies are more open to going public as a means of financing. The Federal Reserve and the European Central Bank (ECB) will foreseeably undertake the first interest rate cuts this year, leaving a more interesting scenario for the stock market debut of companies that have waited for an environment of more favorable rates to be more attractive. facing investors.
In this context, JP Morgan has regained its crown as the investment bank that earns the most commissions in Spain, with 35 million euros. The American entity displaces Santander for the first time in two years. The branch led by Ignacio de la Colina justifies this position in large transactions inherited from the previous year, such as the sale of Ferrovial's stake in Heathrow airport, Telefónica's takeover of its German subsidiary and the sale of Iberdrola's combined cycle plants. in Mexico. For this year he is working on operations such as the IPOs of Puig and Tendam, among others.
“The year 2024 has begun with a very constructive tone in the investment banking market. A positive dynamic that began to become tangible in the second half of 2023 and that is crystallizing in significant operations in the coming months, both in Europe and in the Spanish market. The stability of interest rates now allows valuations to be better fixed. To which is added inflation that is gradually receding and a growing economy. This invites investors to progressive optimism, and helps decision-making in more complex operations, which require longer preparation time,” analyzes Ignacio de la Colina, president of JP Morgan in Spain.
Santander, for its part, is in second place with commission income of 34 million. The entity has given up the first position it had held in recent quarters. In fact, even in the years in which the market remained downward, the bank was one of the few entities that managed to increase commission income in investment banking. However, it maintains the pull as a reference entity for the issuance of corporate debt.
“We continue to lead the bond issuance market. The inverted yield curve in Europe is making long tranches very attractive and thus we are seeing long-term operations performing better than short tranches. We highlight the issues of Telefónica and Adif, launching two double tranches, of the Treasury, and the issue of Unicaja. On the M&A side, we see a strong reactivation of operations in telecommunications and energy and we see signs of improvement in the rest of the sectors,” assesses Ignacio Domínguez, head of Santander CIB for Europe.
In third position, Citi and BBVA practically tie, with a minimal difference between them (the first has achieved 19 million in revenue and the second almost reaches that figure). Citi is participating in the upcoming IPOs of Tendam and Hotelbeds. Also from Luz Saude and Astara, the subsidiary of the Bergé group dedicated to car subscriptions. Likewise, it has been an advisory bank in the partial takeover of Prosegur and the Antin fund in its takeover of Opdenergy.
“In Europe, we are seeing a greater number of operations and activity in investment banking as a whole. There are M&A operations that have been in the works for several months and that are beginning to close and, on the other hand, capital markets operations are taking off, both in equities as in debt, which in the last half of last year were practically closed. In general terms, activity levels are 40%-50% higher than what was seen in 2023,” explain Álvaro Revuelta and Jorge Ramos, Citi's co-heads of investment banking for Spain and Portugal.
Although these are not exorbitant growth figures, they do represent a point of optimism for the sector. Traditionally, the first quarter of the year is usually one of little activity for investment banking, since the entities' tasks focus on exploring the companies' intentions regarding acquisitions, debt issues or listings on the stock market with the aim of winning operational mandates that will crystallize throughout the entire year. Therefore, it is foreseeable that the figures achieved at the end of the year will be much more notable.
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