Banks have enjoyed a surge in revenues related to helping capital-starved financial institutions -- including themselves -- raise money so far in the second quarter, but the party may be brief, according to a report from Sanford Bernstein analyst Brad Hintz.
Citing data from
, Hintz notes equity underwriting volumes are up 86% through Wednesday compared to the first quarter.
is the top underwriter in the quarter with $516 million in revenues, followed by
Bank of America
holds the fifth-place spot with $129 million in revenues, according to the
Hintz says margins are "surprisingly solid": 2.6% in the quarter vs. an average of 2.2% in 2008. However, financial companies are accounting for 50% of the equity issuance as the
pushes banks to strengthen their capital bases. That is a higher percentage than usual and, as such, appears unsustainable, Hintz argues.
On a further negative note, Hintz observes that revenues get an artificial boost as banks effectively pay themselves for underwriting their own equity offerings.
"Parent company underwritings among broker/dealer subs generate revenue at the subsidiary level, but these revenues are eliminated in the consolidated financial statements," the report states.