"I anticipate it will be a smaller superleague of banks competing for large cross-border transactions," said King. "For the first time in 20 years we're seeing capacity come out of the market. If you fast forward five years we'll only have five or six banks that are really competing for global financial and advisory flows." King's argument has some basis in recent difficulties. Five years after the financial crisis, many of the big banks are still reeling from a variety of woes. Blamed for causing the crisis and pilloried for bailouts, the major banks have struggled to make a profit in recessionary economies while facing re-regulation and higher capital requirements. And to make matters worse, they have had to cope with a five-year slump in M&A. As a result, many -- particularly in hard-hit Europe -- are cutting back dealmaking activities to refocus at home and retreating from the ambitions of being truly global banks. For instance, both Swiss giants Credit Suisse Group ( CS) and UBS ( UBS) have announced plans to exit certain markets and regions, following Royal Bank of Scotland Group's ( RBS) earlier withdrawal from M&A advisory in the U.S. and from several European markets.
Will those pullbacks erode their positions on the M&A league tables? The evidence is mixed. Credit Suisse had crept up in global Dealogic rankings from between 7th and 8th in 2003 to 2009 to 3rd and 4th in 2010 and 2011, respectively. But last year it dropped back to 7th and it ranks 9th so far this year. UBS also appears to be faltering. It rose from 7th and 8th in 2003 and 2004 to between 5th and 6th place from 2005 to 2009. But since 2010, it has tumbled back to between 9th and 11th.
But for all the furious dealmaking, that small -- four to six -- league of elite big banks never really emerged. Why? The universal banks ran into debilitating management issues and conflicts, some of which continue, such as the trading disasters at JPMorgan Chase ( JPM) and UBS, or the 2008 breakdowns. In many cases, corporate customers resisted the one-stop-shop for competition and specialization. Globalization and development opened up new regions -- Brazil, China, India -- with potentially new bank competitors. And consolidation of the biggest banks was shadowed by the proliferation of specialty M&A boutiques, headed by star advisers. Many of these boutiques went public in the 2000s and elbowed onto the league tables. Boutiques such as Lazard, Greenhill & Co., Evercore Partners, Moelis & Co. and Jefferies & Co. bolstered their share of global deal volume advisory to 20.8% last year from 15% in 2003. Meanwhile, titans such as JPMorgan Chase, Goldman, Morgan Stanley ( MS), Bank of America ( BAC) (with Merrill Lynch) and Barclays saw their combined share of M&A advisory fees slip from 90.7% to 89.5% over the same period. While bankers argue about the capabilities needed to advise on large global deals, the discussion is largely hypothetical as volumes remain anemic. Deal volumes in the first quarter were the lowest since the fourth quarter of 2011 and well below the mid-2000s, despite headline-grabbing "megadeals" and bids such as Berkshire Hathaway's ( BRK.A) $12.1 billion takeover of H.J. Heinz ( HNZ) and a $24.4 billion bid by Michael Dell and Silver Lake to take DELL ( DELL) private.