《《Roland_Berger_Investment_Banking_20160710》.pdf

Competence Center Financial Services 1 Markus Böhme, Kiarash Fatehi, Pierre Reboul Investment Banking Outlook Summer 2012 – At a turning point? Competence Center Financial Services Our theses in a nutshell Global investment banking revenues continue their roller coaster ride. After a soft second half of 2011, they strongly rebounded in the first quarter of 2012. We project a weaker Q2 with full year revenues in the EUR 200-260 bn range, depending on how the sovereign debt crisis in Europe unfolds. Performance strongly differed both within and among peer groups: Global universal players with a higher focus on the fixed income business on average outperformed investment banks with a lower focus on fixed income. Many midsized and smaller players in developed markets came under pressure. At the same time many peers in emerging markets roared full steam ahead. Even though these trends reflect structural changes such as revenue shifting to emerging markets and new regulations such as Basel 2.5/3, they are also harbingers of the squeeze that investment banks are going to face. Unless banks make major changes to their business models, their Return on Equity is likely to remain in single digits and many peers underperforming today may see their economic model even more challenged over the next 3 to 5 years. Fixing individual and industry economics will not come easy. Even with rounds of productivity measures, structural overcapacity still largely exists. We believe that around 75,000 jobs and one third of industry risk taking capability are still on the line. Value chains, therefore, will undergo transformation and true exits – which we have hardly seen so far – will be inevitable over the next 3 to 5 years. We think that now is the time for banks to step decisively up to this challenge to reap early mover benefits by a bespoke