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Cazenove lives it large in ECM

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Thomson Reuters data on equity capital markets activity over the first 9 months of the year throws up some pretty exciting data if you are a Cazenove shareholder.

ECM

Top of the European league table by a country mile sits JP Morgan with $33.5 billion of deals. And that figure incorporates the ECM deals done by JPM’s UK subsidiary (50 percent plus a share) JP Morgan Cazenove. On its own JPM Caz was responsible for $24.2 billion of deals, making it top of the table by some distance. Its nearest rival was Morgan Stanley with $15.5 billion of deals.

This figure has particular resonance because of the possibility that JPM might buy out the Cazenove stake in JPM Caz.

$24.2 billion is a touch under 15 billion pounds. Underwriting fees are about 3.25 percent of value these days. Apply this to the figure and you get to about 480 million pounds. JPM Caz doesn’t get to keep all of this: it has to pay JPM for access to its balance sheet and share fees with other institutions when it sub-underwrites. There are also accountants and lawyers to pay.

Cazenove’s yield may muddy JP Morgan deal

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As your friendly neighbourhood investment bank rarely tells you, something like 80 percent of deals don’t pay off. So why do one if you don’t have to?

That is the question facing the mighty City of London firm of Cazenove. Five years after Caz poured its investment banking business into a joint venture with the U.S. bank, JP Morgan <JPM.N>, it has to decide whether to go the whole hog and sell the remainder — or to hang on.

Investment banker admits: we overcharge

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On the FT’s letters page, Robert Pickering tackles the familiar theme of bank profits and bonuses. The reason banks pay their employees so much, he argues, is because they make large profits. But why are their profits so large? 

The real marvel is that customers, both corporate and institutional, continue to be willing to pay so much for essentially commoditised services in a ferociously competitive marketplace served by multiple providers, thus generating these outsized profits.

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