http://www.telegraph.co.uk/finance/b...from-view.html
The failure of the US firm sent the industry into a tailspin. Losses piled up and the streets of Manhattan and London were strewn with discarded bankers. But the upheaval doesn’t seem to have marked the trough. It now looks as though it was merely a signpost to steeper descent.
December is turning out to have been devastating. Would-be survivors already have revealed deeper worries. Deutsche Bank, which had navigated the crisis more deftly than most, lost nearly 5bn euros in the fourth quarter on bad bond and equities trades. Barclays, which had been aiming to maintain flat headcount to grab market share in investment banking, made 2,100 redundant from the division on Tuesday – and another 2,100 the next day from its retail and commercial bank.
Bank of America, which rode to the rescue of Merrill Lynch, is reportedly close to receiving billions of dollars more of taxpayers’ funds to help it shore up the stumbling Herd. Even JPMorgan’s investment bank posted sizeable losses.
Most aspects of the business have suffered. Prime brokers will be reeling from the news that a record $150bn – or 10pc of the industry’s assets – was yanked out of the hedge funds they service last month alone.
It was the worst December for equity issuance since 2002, according to Thomson Reuters, and November and December were the two worst months for M&A since September 2004. Jamie Dimon, the JPMorgan boss, has even suggested the formerly lucrative businesses of leveraged lending and securitisation will never come back.
These could be especially bad omens for Goldman Sachs and Morgan Stanley. The bank holding companies formerly known as investment banks already have suffered losses and slashed jobs. But their quarters began – rather than ended – in December. This means if the emerging snapshot of the markets is accurate, Goldman and Morgan Stanley may have started off in yet another hole.
More broadly, the growing pile-up of bad news suggests conditions throughout investment banking could get worse before they get better. Profits will be more elusive than previously thought. Job losses will mount. The bottom once in sight may have slipped from view.
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Usually the darkest bit is just before dawn.
The failure of the US firm sent the industry into a tailspin. Losses piled up and the streets of Manhattan and London were strewn with discarded bankers. But the upheaval doesn’t seem to have marked the trough. It now looks as though it was merely a signpost to steeper descent.
December is turning out to have been devastating. Would-be survivors already have revealed deeper worries. Deutsche Bank, which had navigated the crisis more deftly than most, lost nearly 5bn euros in the fourth quarter on bad bond and equities trades. Barclays, which had been aiming to maintain flat headcount to grab market share in investment banking, made 2,100 redundant from the division on Tuesday – and another 2,100 the next day from its retail and commercial bank.
Bank of America, which rode to the rescue of Merrill Lynch, is reportedly close to receiving billions of dollars more of taxpayers’ funds to help it shore up the stumbling Herd. Even JPMorgan’s investment bank posted sizeable losses.
Most aspects of the business have suffered. Prime brokers will be reeling from the news that a record $150bn – or 10pc of the industry’s assets – was yanked out of the hedge funds they service last month alone.
It was the worst December for equity issuance since 2002, according to Thomson Reuters, and November and December were the two worst months for M&A since September 2004. Jamie Dimon, the JPMorgan boss, has even suggested the formerly lucrative businesses of leveraged lending and securitisation will never come back.
These could be especially bad omens for Goldman Sachs and Morgan Stanley. The bank holding companies formerly known as investment banks already have suffered losses and slashed jobs. But their quarters began – rather than ended – in December. This means if the emerging snapshot of the markets is accurate, Goldman and Morgan Stanley may have started off in yet another hole.
More broadly, the growing pile-up of bad news suggests conditions throughout investment banking could get worse before they get better. Profits will be more elusive than previously thought. Job losses will mount. The bottom once in sight may have slipped from view.
=========================================
Usually the darkest bit is just before dawn.
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