(Bloomberg) -- It’s “one of the worst first-quarter environments in recent history.”
So says UBS Group AG’s top banker, Sergio Ermotti. At a conference Wednesday, he said the Swiss firm’s investment-banking revenues are down about a third compared with a year ago, hit by a dearth of non-U.S. mergers and IPOs. UBS’s main business, wealth management, was also hit as billionaires played it safe with their cash.
Across Europe, weakness in several lines of business are hitting the big banks, like a hangover from the fourth quarter’s market turmoil.
IPOs
Even as the Stoxx Europe 600 Index added more than $1 trillion in since hitting December lows, firms have remained reluctant to pull the trigger and list on European exchanges. That takes away the lucrative fees from arranging initial public offerings. Investors and companies alike remain traumatized by the sudden and hair-raising sell-off at the end of last year that shut down equity deals and left traders reeling.
Companies have announced 522 million euros ($593 million) of IPOs in Western Europe in 2019, compared to 9.7 billion euros in the same period last year, according to data compiled by Bloomberg.
High Yield, M&A
The market for mergers and acquisitions relies on high-yield funding. That debt market remains stunted after a strong bout of volatility late last year unnerved prospective issuers and investors alike.
Sales of speculative-grade bonds in Europe have dropped 58 percent year on year. Volumes for leveraged loans in Europe have also suffered, with 2019 issuance -- of 11.3 billion euros -- down 44 percent as of the end of February. In the same month, M&A loan volume was down 36 percent year on year.
The knock-on effect on M&A: Bidders have spent $124 billion on European acquisitions so far this year, according to data compiled by Bloomberg. That’s down 38 percent from the same period a year ago, and it’s dragging down global deal volumes, which are down 5 percent from 2018, the data show.
©2019 Bloomberg L.P.
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