Tomorrow is the day that U.S investment banks kick off their first quarter earnings announcements, with JPMorgan and Goldman Sachs both revealing how well they did in the three months to March 2021. Citi, Bank of America and Morgan Stanley will follow before the end of the week.
While 2020 was an excellent year for fixed income salespeople and traders - particularly across G10 rates, credit, G10 FX, EM Macro, securitization and commodities - 2021 looks like being the year of equity capital markets (ECM) bankers.
Banking analysts at KBW are predicting that ECM divisions will be the "stand out" performers for the first quarter. They forecast a 261% year-on-year increase in ECM revenues in the three months to March, and expect this to drive overall investment banking division revenues up by 60%. M&A bankers' (advisory) revenues are expected to be up by a lower 17%, and debt capital markets revenues are expected to rise by a relatively slender 12%.
The boom in equity capital markets divisions come as banks rush to staff-up SPAC teams. Deutsche Bank is currently advertising multiple London roles in 'Special Purpose Acquisition Company (SPAC) Advisory and Execution' at vice president level, for example. Goldman Sachs created a new London and Hong Kong SPAC teams in March. In the U.S., where the SPAC boom is more advanced, William Blair and others have been getting in on the game.
While ECM has been a booming - if exhausting area to work in this year, fixed income sales and trading has quietened down and is facing challenging comparables from 2020. KBW's analysts are predicting that JPMorgan's fixed income sales and trading division will reveal year-on-year revenue growth of just 4% tomorrow. Equities revenues are expected to be up 20% over the same period.
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