Investment banking in Asia is overcrowded, with too many institutions putting too much pressure on fees, according to senior bankers, giving the industry a longer-term problem than the fall in market activity at the end of 2011.
There are growing questions over how long institutions are prepared to hold out for the promise of greater growth while continuing to take lower fees on capital raisings and other work than they would in their domestic markets of the US, Europe, Australia or Japan.
“Running an investment banking business in Asia is costly because of the region’s geographical complexities,” said Gaby Abdelnour, Asia-Pacific chairman and chief executive for JPMorgan. “Typically, the cost structure for a newcomer into the industry will be a lot steeper than someone who’s already established.”