Investment Banks Likely To Merge

The smart money is now predicting that the credit crunch and the current economic downturn is likely to result in stand alone investment banks having to merge with commercial rivals.

Joining the debate Thursday was Bank of America CEO Ken Lewis, who, according to Reuters, said at a business school graduation event at New York University that 'the stand alone investment banks of Wall Street will become a rarer breed. More will choose or be forced to combine with integrated commercial banks to gain balance sheet strength and (the) ability (to navigate) through economic cycles'.

UK 'think-tank' the Centre for Economic and Business Research came out this week and predicted that bonuses for London-based bankers could fall as much as 40% this year. And Reuters now reports that, according to a report produced by US compensation consultants Johnson Associates, bonuses for some bankers in the US could fall 35% this year. M&A bankers are thought likely to to see their 2008 bonuses fall between 15 - 25% on last year, whilst fixed income trading bonuses could be cut by as much as 35%. Equity traders are thought to be looking at cuts of up to 15%.

Finally, Reuters reports that Deutsche Bank CEO Josef Ackermann has said that he is not interested in the chairmanship of rival UBS. Speaking on Switzerland's Radio Suisse Romande, Ackermann, a Swiss national, said: 'No, no. I don't think so. I am very happy in Germany, and I already 60'.

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