How Have Equity Underwriting Deals Closed By European Investment Banks Trended In The Last 5 Quarters?

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The four largest European investment banks saw their equity underwriting deal volumes shrink 20% quarter-on-quarter for Q3 2016 – in sharp contrast to the 7% sequential growth in the overall industry. The decline is because of a sharp reduction in equity issuances in Europe as market conditions remained depressed in the wake of the Brexit vote.

The chart below captures the total size of equity capital market deals completed by the four largest European investment banks since Q3 2015. The green-to-red shading for figures along a row show the variations in deal size for a particular bank over this period.

IB_QA_EU_ECMSizeChange_16Q3

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Equity underwriting volumes for individual banks were taken from Thomson Reuters’ investment banking league tables for the last five quarters. Notably, Q1 2016 was an exceptionally poor period for the industry as a whole, with things improving considerably in Q2.

The table below captures the respective market shares for each of these banks over this period. The green-to-yellow shading for figures in a column should help compare the relative standings of these 4 banking giants in a particular quarter.

IB_QA_EU_ECMShareChange_16Q3

It should be noted that the largest equity capital market deals employ more than one investment bank, so the market share figures are not exclusive.

Notably, the market share for these 4 banks decreased from 18% in Q2 2016 to under 14% in Q3 2016 as equity underwriting volumes in the EMEA (Europe, Middle East and Africa) region fell by more than 35%. In comparison, U.S. equity underwriting deal size grew 17% sequentially. As the European banks are primarily focused in the EMEA region, this translated into a loss in market share for them. You can see how changes in Credit Suisse’s share of the equity underwriting industry impact our price estimate for the bank’s shares by making changes to the chart below.

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