This content is from: Portfolio

Capitalizing on Advising Banks

Financial institutions hit a fee bonanza by advising one another on equity issues.

Is there a silver lining to every financial cloud? Perhaps. Even banks, which have taken the brunt of the global financial crisis, can find a glimmer of hope. They are doing a booming business by counseling each other on the best way to recapitalize their depleted coffers. Banks raised $289.5 billion in equity capital globally during the 12 months ended on May 15, according to research firm Dealogic. Although volume is down, from $313.7 billion in the preceeding 12 months, issuance has jumped in recent weeks. Banks made a flurry of ten equity offerings from the start of April to mid-May. The issues coincided with growing demand for an increase in bank capital from worldwide regulators, led by the Federal Reserve Board, which last month, as a result of its stress tests, ordered the 19 largest U.S. banks to raise $75 billion in capital. HSBC Holdings, Europe’s biggest bank, paced the herd, raising $19.5 billion with a rights issue on April 6.

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