Bankers' misery as mergers dry up

TAKEOVER work in the City has collapsed amid the gloomiest markets in more than a decade, says a report published at the weekend. Lucrative corporate merger and activity business, the lifeblood for most investment banks, fell 72% in Britain this year, says the Global M&A Survey by financial services group KPMG. The value of deals between UK companies was £156bn, just one-fifth of 1999's levels.

Nor has there been an uptick this autumn, with deals in the second half down 41% from last year's poor levels. 'There are no signs of a quick recovery,' said KPMG's John Griffith-Jones. November was nearly as bad as September, snuffing out a brief October rally. Even the few deals being done today are largely 'distressed disposals and defensive consolidation' plus some bottom fishing, he said.

Domestic deals account for just 26% of the remaining business. The picture is grim elsewhere, too. Global deal values halved this year.

Previous years' bumper results partly reflected a few big takeovers by the likes of Vodafone chief executive Sir Chris Gent and BP's Lord Browne. The companies have been much quieter since.

City fees are closely linked to deal values, and the Square Mile faces a gloomy holiday season. Banks have already laid off 20,000 workers this year, according to the Centre for Economics and Business Research think-tank. City bonuses will be a fraction of last year's £400m.

London's overheated property market may at last come off the boil. The CEBR predicts prices at the top end will fall 25% by the summer.

KPMG believes the merger and acquisition market has hit bottom, but warns that a 'significant recovery' is unlikely until the stock market stabilises, the real state of the UK economy becomes clear, and companies restore