Goldman Sachs Group Inc. edged past Morgan Stanley Dean Witter & Co. in investment banking revenue in 2000, while Credit Suisse First Boston and J.P. Morgan Chase & Co. climbed in the rankings through acquisitions.
A string of financial industry mergers last year, led by Chase Manhattan Corp.s $32 billion purchase of J.P. Morgan & Co., resulted in increased concentration. That left fast-growing firms such as Lehman Brothers Holdings Inc. fighting for a smaller share of revenue. The margin among the leaders also narrowed, according to data compiled by Bloomberg.
In 1999 we were a nose ahead, said Tarek Abdel-Meguid, Morgan Stanleys head of investment banking. In 2000, we were a nose behind.
If we had been involved in two to three more equity transactions, this relationship could have been reversed, Mr. Abdel-Meguid said. The difference always is going to come down to who does a few more large equity or merger and acquisition deals.
Goldman Sachs collected $5.37 billion from advising on mergers and underwriting stock and bond sales, up 23% from 1999. Morgan Stanley took in $5.01 billion, up 11%.
Morgan Stanley would have slipped to third if Credit Suisse First Bostons numbers had included all the revenue generated by Donaldson Lufkin & Jenrette Inc., which the Credit Suisse Group unit bought in October.
The renamed J.P. Morgan Chase & Co. would have vaulted to No. 4 ahead of Merrill Lynch & Co. and Salomon Smith Barney if fees collected last year by J.P. Morgan and Chase Manhattan were combined.
Goldman spokeswoman Kathleen Baum said, Were pleased with the 2000 results. Now were focused on 2001.
Lehman had the fastest growth among firms that did not make an acquisition. Its investment-banking fees rose 32%. Bear Stearns Cos. was the only firm where such fees declined, sliding 3%.
The revenue data show acquisitions by Credit Suisse, Chase, and UBS AG led to increased concentration. In 1999, the top five of 14 banks accounted for 59% of $30.9 billion of revenue. For 2000, the top five of the remaining 11 accounted for 67% of a fee pot of $36 billion.
Goldman Sachs and Morgan Stanley maintained their combined market share of 28.8% of investment banking revenue, when comparing 2000 with 1999 data.