Western banks weather post-sanctions slump in Russian dealmaking
(Repeats story from Thursday)
By Sujata Rao
LONDON Nov 13 (Reuters) - Western banks have seen their fees from Russian deals collapse as sanctions squeeze once-lucrative bond and equity business, but buoyant demand elsewhere has already pushed fees from emerging market clients 10 percent higher than 2013's levels.
A tit for tat round of sanctions between the United States and Europe and Moscow over Russia's involvement in eastern Ukraine has seen capital raising by Russian companies forced to a virtual halt. Just $10 billion was issued in new debt for instance, a fraction of what was sold last year.
As a result, investment banks' income from syndicating Russian debt sales and share listings in 2014 stands at just over $100 million, a quarter of 2013 earnings and the lowest since 2004.
Adding fees from loans and merger/acquisition deals, they have made around $350 million - less than half last year's total as the following graphic based on ThomsonReuters data shows:
Those sums might look like small change for global banks. But every dime counts these days for lenders slammed by multi-billion dollar fines from regulators, an increasingly tight leash on once-booming forex markets and slow European growth.
The Russian deals business earned banks over $8 billion in fees over the past decade, nearly a tenth of their total emerging market business relating to capital raising or mergers and acquisitions. Continuación...