Quiet years leave European lenders with less experienced investment bankers- report

December 23
6:40 AM 2013

After years of quiet deal markets, European lenders had to let go of many senior investment bankers and now that business has come to life again, they are left with a generation of junior investment bankers who are a little short on experience.

During the financial crisis when Europe was dealing with sovereign debt woes and stock market volatility, a lot of firms scaled down its fundraising efforts, held back on IPOs and avoided large mergers. However, Thomson Reuters data revealed that even if 2013 is still the slowest year in a decade for the mergers and acquisitions market, share sales volume has increased as firms have raised more this year compared to any year since 2009.

The report said this has already exposed the lack of experience of junior investment bankers working in the sector, according to a senior investment banker.

A senior London-based investment banker was quoted in the report as saying, "For the next couple of years the people point will be key. There really is a lack of experienced talent almost everywhere. It will be a real issue. Only a few banks have kept senior teams."

Bankers have also said that the size of many equity capital markets teams has decreased by about 30% during the period of scanty deals. The increased volumes have not yet encouraged new hiring. The banker said, "It takes a long time to build a team that works."

Citing a Thomson Reuters and Freeman Consulting investment banking services survey published this month, the report said that detailed industry knowledge was ranked by corporate decision makers as the most important factor when choosing a bank. This was ranked as a critical factor by 80% of the respondents in Europe, Middle East and Africa region as opposed to 15% who said competitive fee structure is critical, the report said.

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