Citi's M&A bankers appear to be having a hard time, especially in America
Today is the day of Citi's Q3 results (and Goldman's Q3 results and JPMorgan's Q3 results). Even before the results came out, though, it was clear that Citi's M&A bankers aren't exactly on fire in the same way that its equity capital markets (ECM) bankers are.
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The charts below are constructed from market share data provided by data provider Dealogic. They cover the period from January through to October 7th, slightly beyond the third quarter.
As the charts show, Citi's ECM bankers are mostly thriving, especially in North America. But Citi's M&A bankers are mostly not thriving, especially in North America.
What has gone wrong? Citi declined to comment on the charts above. Its third quarter results today showed global M&A revenues falling 4% year-on-year in the third quarter, even while M&A revenues at JPMorgan were up 32% and M&A revenues at Goldman were up 18%. Citi's ECM revenues, however, were up 77%.
Bloomberg reported last week that Citi is the top IPO underwriter globally this year. It probably helps that Citi's investment bank is being run by people with an ECM background. The reason for its M&A lassitude is less clear. The US bank said today simply that revenues were down "amid a lower wallet". This might imply that Citi lacks strength in key sectors, like tech. However, as we've observed previously, Citi's historically strong sectors have included tech but also energy, industrials and natural resources.
This isn't the first time Citi's M&A weakness has been on display. The bank's issues were equally visible after the first half. At that time, we noted that the bank had said it was still understaffed and that it's busy hiring - particularly in healthcare, industrials, technology and sponsors; but it takes a while for all the new bankers to bed in.
In North America, in particular, Citi has added a new co-head of North America investment banking in the form of David Friedland, an ex-Goldman Sachs partner, who arrived in January. Friedland has recently been making pronouncements about Citi's top junior talent and appears to have been instrumental in shortening Citi's analyst program to help retain people. Working on more deals might help with that, too.
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