banks in India. Fewer deals and a falling equity market have caused a
31.6% drop in i-banking fees in the country in the first six months.
Except a few large local banks, most foreign i-banks and smaller
domestic banks have shown a fall in fee income.
Both inbound and outbound deals have seen a 74% and 47% drop,
respectively , in the first six months. The Ranbaxy deal announced on
Wednesday will not change the number dramatically.
I-banking fees in the country for the first six months were at $354.3
million against $518.3 million last year, according to Thomson
Financial. The maximum drop in fees was in the equity capital market,
where fees dropped by 40.3% to $93 million while fees from M&A
activities fell 33.9% to $205.7 million. The debt market has also seen
a 36% drop to $16.4 million. The only division, which has seen a rise
in fees, is loan syndication where fee income rose by 53.2% $39.2
million.
Incidentally, for Asia, ex-Japan , the year-on-year decline has been
the lowest at 12.4% ($4.3 billion). However, global i-banking fees
declined 36.8% while for the Americas and Europe, it crashed 37.5% and
46.2%, respectively.
For the first time, only Indian banks like State Bank of India, ICICI
Bank and Kotak Mahindra have reported a rise in their fees for the
first six months, dominating the league tables at the first, second
and fourth slots, respectively. Their fees have gone up by 264%, 54.5
% and 13.9%, respectively. Foreign players like Merrill Lynch, Citi,
Deutsche Bank, Stan-Chart , Goldman Sachs, HSBC and Morgan Stanley
have seen a drop in fees of 34.5% to 82.9%.
Last year, i-banking fees from India had crossed the $1-billion mark
to $1.39 billion for the first time. Senior bankers feel the number
may not cross the $1-billion mark for the full year.
ICICI executive director Sonjoy Chatterjee says, "Our core fees come
from advisory , structuring and syndication desks. Currently,
structuring is the name of the game. Most corporates don't have
options which are linked to the equity market ." He points out that
some of the midmarket transactions, where companies used to look at
companies much larger themselves, are no longer feasible since no
funding available. A tight credit situation in global markets and
falling equity markets have seen a dip in deal flows.
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