# Investment banks pay a high cost for carrying a heavy load

1 Opinion March 31, 2016 Financial News ![Roy C. Smith](/sites/default/files/styles/246w/public/assets/images/uat_025572.jpg?itok=Kn4Ckx0s) By Roy C. Smith and Brad Hintz > By the end of 2015, all of the four largest Europeans had installed new management with no ties to past legacies and charged them with transitioning to a workable business model that could once again be attractive to investors.

**Though none have announced their results yet, European capital market banks will surely experience a quartus horribilis. Preliminary first quarter investment banking revenues are down 36% from the prior year, according to Dealogic, the lowest since 2009, led by sharp declines in M&A, high yield and IPO activity.**

It also appears that trading revenues will be disappointing. Several US banks have discussed the challenging market conditions that have impacted market-making and Jefferies, which serves as a harbinger of performance in trading in fixed income, currencies and commodities, announced a dismal trading performance in its first quarter.

For a while 2015 looked like a year that would signify the end of the post-crisis slump for the banks: mergers, equities, debt and leveraged buyouts all were firing away, and some predicted that the long wait for a profits recovery would soon be over. But, the first quarter data shows it was not to be. The oil glut rattled stock, debt and currency markets and recession fears forced unexpected credit write-downs.

Read full article as published in [Financial News](http://www.efinancialnews.com/story/2016-03-31/investment-banks-pay-high-cost-for-carrying-a-heavy-load).

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*Roy C. Smith is the Kenneth G. Langone Professor of Entrepreneurship and Finance and a professor of Management Practice. Brad Hintz is an adjunct professor of Finance.* ## More Opinions from Roy C. Smith

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