Wall Street Firms Collect Most Fees Ever
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Wall Street has never had it so good.
Led by Citigroup, Goldman Sachs Group, Morgan Stanley, JPMorgan Chase & Co., and Merrill Lynch & Co., investment banks are collecting the most fees since Bloomberg began keeping records.
Bloomberg News has tallied the fees securities firms worldwide collected from advising on mergers and acquisitions and underwriting stocks and bonds during 2005.The result is the second annual Bloomberg 20 list of the world’s best-paid investment banks.
Fueled by a resurgence of corporate buyouts, multibillion-dollar mergers, and rising sales of stocks and bonds, many of Wall Street’s biggest money makers shattered profit records in 2005.
Led by New York-based Citigroup, securities firms collected a total of $53.1 billion from advising on M &A and underwriting securities, according to data compiled by Bloomberg. Fees were up 25% from $42.5 billion in 2004.
In absolute numbers, the bounty was the largest in Wall Street’s history, says Charles Geisst, author of “100 Years of Wall Street” (McGraw-Hill, 1999). Fees have reached their highest levels since Bloomberg began tracking them in 1999. The 2005 total eclipsed the previous record of $46 billion, set in 2000,by 16%.
“We’re seeing the beginning of another boom,” Mr. Geisst, 59, says.
Amid such riches,no.1 Citigroup, the colossus Sanford Weill formed in 1998 by uniting an investment bank and a commercial bank, has upended the old order on Wall Street.
The Bloomberg 20’s top producer in bond underwriting for a second year in a row, Citigroup, led by Chief Executive Officer Charles Prince, has now vaulted past Goldman Sachs to become the leading money maker in stock underwriting as well. In all, Citigroup collected about $4.41 billion in fees in 2005.
Mr. Prince, 56, presides over a financial supermarket with $1.5 trillion in assets. He can offer potential clients commercial loans as well as investment banking services.
Citigroup has begun to profit from banking relationships forged with major corporations back in the 1990s, says Tyler Dickson, Mr. Prince’s head of equity capital markets.
In contrast to Mr. Prince, the CEO of Goldman Sachs, Henry Paulson, leads a 137-year-old investment bank that still makes most of its money trading currencies, stocks, and bonds; underwriting debt and equity; and advising on mergers.
