Bankers are getting ready for a disruption to summer season vacation plans to make up for a lacklustre begin to 2022 in capital markets, as they hope for enterprise to choose up within the second half of the 12 months.
Markets have been shaken by warfare in Ukraine, the influence of China’s zero Covid coverage on the world financial system, the specter of international recession and snarled provide chains in 2022.
Tricky financial situations have led to a 30 per cent drop in borrowing by European firms in 2022 in comparison with the primary half of 2021, whereas there was a precipitous fall in preliminary public choices and secondary problems with shares, down greater than 90 and 70 per cent respectively, in line with knowledge from the London Stock Exchange Group.
As a results of cooler buying and selling situations, UBS is anticipating larger than normal workload in summer season months to organize for extra debt issuance. “We’re going to have to work all the way through the summer,” mentioned Barry Donlon, head of debt capital markets Emea at UBS.
“Banks haven’t fallen behind in issuance plans despite the slowdown but market windows have been less frequent and shorter due to volatility, so banks will issue when markets are there,” he mentioned.
“The traditional idea of a quiet August won’t happen this year.”
It will observe a “highly unusual” interval of subdued exercise, Donlon mentioned. The tough situations imply bankers might spend extra time at desks this summer season, as they search to reap the benefits of any calm durations to concern debt.
A senior banker at one other European lender added: “If there’s work to be done, there’ll be people to do it, no question. We’ll service clients throughout the year — whether it’s August or December.
“If [clients are ready to issue] I’ll be here; we’re all more flexible in terms of where and how we work.”
Liquidity is at its worst stage throughout markets because the early days of the coronavirus pandemic in 2020, buyers and US banks instructed the Financial Times this month.
Guy Stear, head of mounted earnings analysis at French financial institution Société Générale, mentioned there was pent-up demand from issuers to promote bonds.
“We might well see a busier than normal August, assuming the market stabilises by then,” he mentioned, however added: “The real problem is whether the bear market has run its course by then, and I’m afraid it is unlikely to have done so.”
Working into the summer season would cap a tough few months and delay the upheaval to working situations brought on by the pandemic, in line with Alison Harding-Jones, head of M&A Emea at Citigroup, who mentioned bankers have been “exhausted” and “looking forward to a long-overdue holiday”.
“If things happen over the summer, we will always be flexible and make sure stuff gets done,” she mentioned. “But this has been an incredibly hard few months, coming off the back of an exhausting 2021 and Covid.”
Citi is within the strategy of establishing an funding banking hub in Malaga for junior employees that in future years might assist relieve among the summer season workload. But it is not going to open till later this summer season, so is not going to be prepared to assist extra senior bankers in August.