Investment banking is known as an industry where the solution to big problems involves an all-night shift or spending the entire weekend at the office. Not this time.
Little evidence the UK bankers were contingency planning at the office on the weekend after Brexit
When asked what staff at his bank were doing over the weekend in response to the referendum result, a senior ECM banker at one large US firm said “nothing”, while the global head of debt capital markets at another big bank said “calls were happening to share views” but his team was not expected to be in the office.
The head of the investment banking business at one major bank said that, while staff had been “incredibly shocked” by the referendum result, there was “no fire drill of emergency teams doing anything in the office at all” over the weekend.
Global markets were rattled on Friday following the UK’s historic decision to end its 43-year relationship with the EU, prompting the world’s biggest banks, including Goldman Sachs, JP Morgan and Morgan Stanley, to rush out statements from chief executives in a bid to calm clients.
Many talked about “serving our clients’ needs” (that from Goldman Sachs chief executive Lloyd Blankfein) or how it was “an opportunity for us to stay close to our clients” (from Credit Suisse CEO Tidjane Thiam).
However, there isn’t any evidence after getting a reassuring phone call from their bank, the clients actually need any work done. And with questions about the future shape of financial regulation shrouded in fog, there seemed little point in spoiling a sunny sporting weekend.
An executive at one of London’s specialist advisory boutiques said: “There’s nothing to do over the weekend. It’s way too premature to speculate about new deals, that’s bonkers.”
Investment bankers who spoke to FN in the hours after it was confirmed the UK had voted for Brexit agreed that clients would hit the pause button on planned deals – potentially drawing out what has already been a lean year for traditional advisory businesses in Europe, with capital markets and advisory volumes either down or struggling to keep pace with year-ago levels.
A survey of almost 1,500 M&A professionals published by technology provider Intralinks in the run-up to the vote found that 67% of respondents felt a decision to exit the EU would negatively impact M&A levels across Europe.
The head of one US firm’s European investment banking business said “a couple of transactions” for its ECM team would be delayed “pending some more stability”, while another top investment banker at a European bank said bond issues were “certainly on hold”.
But UK dealmaking did not entirely dry up on June 24. Although no UK issuers ventured into the bond markets in the aftermath of the result, London-based mobile marketing company Proxama raised £2 million in an accelerated bookbuild, while AIM-listed UK/US software company Imaginatik confirmed that it had raised £90,000 through an open offer that had been announced in May.
A senior debt banker serving financial clients said that bankers had worked long hours in the days leading up to, and including, the referendum but that “in reality the hard work will come over the next days, weeks and months”.