KUALA LUMPUR (June 27): The Edge weekly in its latest edition said that in a challenging and frustratingly slow year for the country’s investment banks (IBs), many have been forced to re-look their strategies.

Nevertheless, the Edge’s associate editor Joyce Goh and assistant editor Adeline Paul Raj said the IBs still see opportunities despite the competitive industry landscape.

In the cover story for the week June 29 – July 5, the Edge said an initial public offering (IPO)  drought — there have been only three listings so far this year — and a slowdown in mergers and acquisitions (M&A) and other fundraising activities in the capital market since the second half of last year had left IBs considerably less busy.

Citing an official at one of the larger IBs, the Edge said investment bankers were seen clocking out [of the office] before nightfall,which was a telling sign of how slow things were

The weekly said the slowdown had affected the earnings of some of the major banks.

It added that like many of the global IBs, some had resorted to retrenching staff or moving them to overseas offices that were still growing — instead of recruiting new workers — in a bid to contain costs.

The Edge cited CIMB Group Holdings Bhd, for example, which has one of the largest Asia-Pacific-based IB franchises, as starting cutting its workforce in the investment banking division in February.

“The realities of today’s capital markets require us to recalibrate,” it quoted the bank as having had said then.

“It’s a case of too many IBs chasing too few deals. Fees are coming down because IBs are undercutting each other to clinch deals, which are not even large ones — those are rare these days — but more small-to-mid-sized ones,” says a veteran investment banker.

The Edge however said that the slowdown, especially in deal value, was not unique to Malaysia, but seen throughout the region, quoting bankers.

It said that in the first quarter of this year, net revenue from investment banking in Southeast Asia (SEA) dropped to US$238 million (RM893.4 million) from US$300 million in the previous corresponding quarter, according to Dealogic, a firm that tracks such data.

This followed a weak 2014 for investment banking in SEA, with net revenue falling to US$1.3 billion from US$1.7 billion in 2012, when the region was a hotbed for deals.

For the full story on the strategies of IBS  and interviews with leading officials on how they plan to deal with this difficult phase, please get a copy of the Edge weekly edition for the week of June 29 – July 5 available at newsstands now.

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