Wall Street’s private equity freeze
More bad news for the investment banks. Wall Street’s fees from private equity dealings plunged more than 75% from a year ago in the first quarter, Bloomberg reports, as the once-hot takeover and loan underwriting businesses showed sharp slowdowns. Among the biggest losers were Deutsche Bank (DB), Europe’s largest investment bank, which saw its fees plummet to $5.8 million from $165 million a year earlier, according to data compiled by Freeman & Co. and Thomson Financial. In the United States, the biggest decline was at Goldman Sachs (GS), whose fees dropped 83% from a year ago to $42 million.
The drops come as private equity firms pull back from a market that has grown quite risk averse since last summer’s mortgage mess. Blackstone (BX), last year’s biggest revenue generator for Wall Street, paid out just $21million in fees in the first quarter, a 90% drop reflecting last year’s buyout boom and this year’s nearly empty deal calendar. With investors already worried about heavy leverage across the financial sector, signs that important earnings sources are drying up only adds to the sentiment overhang.
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