London, United Kingdom (PRWEB) February 25, 2013
The Investment Banking & Securities Brokerage industry has been on a roller-coaster ride over the past five years. After an unpleasant 2008-09, the industry bounced back in 2009-10 as volatile conditions drove both trading volumes and margins higher. However, this proved only a brief upturn as the deteriorating economic outlook and ongoing turbulence on financial markets sapped investor confidence and caused revenue to slump once more. According to IBISWorld industry analyst Iyman Uvais, “the industry returned to weak growth in 2011-12 and revenue is estimated to go up by 2.4% during 2012-13 as the continuing European debt crisis and new regulations stifle profitability and lead to further job cuts”. IBISWorld estimates industry revenue will contract by an annualised 1.6% over the five years through 2012-13, to reach £41.6 billion.
The industry is expected to continue facing challenging conditions over the short term because of poor economic conditions and a restrictive regulatory environment. Although the continuing volatility on capital markets will improve trading revenue, growth will be subdued as investors remain cautious and prefer to put their funds in safer assets. The feeble economy will also result in a low level of initial public offerings (IPOs) and merger and acquisition (M&A) activity. The recently introduced Basel III will increase capital requirements and limit revenue and profit growth.
However, all is not lost. Investment banks have shown an extraordinary capacity for reinvention following the many crises and changes that have affected the industry since the Great Depression. Uvais adds, “in the longer term, the outlook for investment banks and brokers should brighten as the economy recovers and investors rediscover equities and other riskier assets”. Banks will benefit from the upturn in M&A activity and the number of IPOs. Despite these favourable conditions, industry growth will be limited because investment banks will have to adhere to Basel III regulations, which are expected to come into full effect in the next five years, while possible ring-fencing of retail banking from investment banking will also constrain industry revenue and profit growth. As a result, revenue is expected to return to modest growth over the coming five years to 2017-18.
IBISWorld estimates that the top four firms in the Investment Banking & Securities Brokerage industry have a combined market share of under 35% which gives the industry a low level of market share concentration. Major companies include Barclays and Goldman Sachs.
For more information on the Investment Banking & Securities Brokerage industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Investment banks and brokers act as intermediaries between those wishing to raise capital (the sell side) and those able to provide it (the buy side), and facilitate the secondary trading of securities. Services to the sell side include underwriting capital raisings and advising on mergers and acquisitions. On the buy side, services include research and trade execution. Investment banks also undertake proprietary trading on their own account.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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