German bank Berenberg wants to bolster its UK investment bank after a year when many of its closest rivals in the City were forced into mergers or takeovers by larger players.
The 433-year-old German lender, which houses much of its investment banking business in the UK, views consolidation within the corporate broking sector as a chance to grab market share, according to its managing partner David Mortlock.
“We see a significant opportunity in UK investment banking, particularly given industry consolidation is now taking hold,” Mortlock said as Berenberg released its 2023 results. “We have grown to almost 70 corporate broking clients and continue to invest in the UK, which is becoming a key pillar of our broader investment bank.”
The bank has increased the number of UK specialists in its ranks from 30 in 2020 to 60 last year, it added in a statement. Berenberg is also looking to expand in Munich, with plans to add around 30 employees in the German city.
Berenberg reported net profit of €55.4m for the year, largely on a par with 2022.
The bullish sentiment towards the UK stands in contrast to 2022, when Berenberg cut 85 people in the country across two rounds of redundancies. Last year, the bank also cut around 20 employees in the US as it shuttered its mid-market research function there.
READ Berenberg shuts US research team, cutting 20 front-line jobs
Berenberg ended the year with 1,536 staff, down 3% on 2022, with 392 of those in London.
Berenberg’s UK expansion drive comes after a year of consolidation for City brokers focused on mid-cap companies. Numis was taken over by Deutsche Bank in April for £410m, while UK brokers Cenkos and FinnCap merged to create a new investment bank called Cavendish. In January, Panmure Gordon and Liberum revealed that they were merging to create a new firm called Panmure Liberum, with former Barclays investment bank boss Rich Ricci at the helm.
A dearth in UK IPOs, which hit a two-decade low last year, combined with slumping research fees and reduced trading revenue continued to hit pure-play brokers hard.
“Capital markets activity remains at multi-decade lows, brought about by an unpredictable macroeconomic environment, elevated inflation and interest rates, as well as significant geopolitical uncertainty,” said Mortlock. “Despite continued fee pressure, our income in research advisory and in high-touch trading, where we are top ten ranked in both, demonstrates that we were able to defend our strong position.”
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