The beginning of 2023 could be an unrewarding start to the year for many bankers on both sides of the Atlantic. Estimates that have been banded around indicate bonuses, which are awarded during the first quarter, could be 30 to 50 percent lower than the huge amounts delivered last year, some predictions suggest there will be no bonuses at some institutions at all.
Amid the global downturn, political uncertainty, rampant inflation and higher interest rates, appetites for the mergers and acquisitions that fuel earnings for investment banks in New York and London have been dampened. The total value of global mergers and acquisitions in 2022 was on course to be sharply lower than the record £4.9trillion achieved in 2021. Higher interest rates are now making it harder to use debt to fund takeovers.
Corporate Britain also had the added problem of a damaged reputation for sober economic governance that was caused by Kwasi Kwarteng’s disastrous mini-Budget
International investment bank DC Advisory has predicted that global valuations will come down as that debt becomes more expensive and less available, at the same time as falling confidence in the ability of businesses to be able to deliver on their plans.
DC Advisory forecasts a slow first quarter and a first half flat compared with 2021 but activity will start picking up again in the second half of 2023.
Although some pockets of the industry are seeing a downturn in recruitment levels and some layoffs, at Harrington Moore we are seeing many smaller and boutique investment companies looking to take advantage of the shifting climate and are looking to snap-up talent for themselves. Recruitment in environmental social and governance (ESG) and impact investing is especially busy.
Harrington Moore’s Oliver Harrington commented “‘Once the market is perceived to be stable and the impact of inflation is better understood there is a great chance confidence will be restored. UK listed companies that derive most of their revenues overseas could prove very attractive, and I’m sure an influx of new deals will wake up the investment bank market again.”