The list of new boutiques trying to gain a foothold in fixed-income investment banking is growing fast. It is an exciting development and one that will be closely watched: if these new firms can survive and prosper, they could dramatically alter the landscape in capital markets.
It is a measure of how broken they think the fixed-income market is that these experienced players are making such audacious moves.
The seriousness of the battle that these new boutiques face is illustrated by comparing what the investment banking world looked like until very recently with what it was like in the 1980s when many began their careers. Back then, in Europe, disintermediation was a fancy new word, generally spoken with an American accent. Only in the US had investment banks broken down the hegemony of bank lending relationships to create a functioning credit capital market.
From the late 1980s, there was a wave of banking M&A across Europe and the US as players scrambled to achieve sufficient scale to compete, even on a regional scale let alone a global one. The creation of Citigroup, when Citibank bought Salomon Brothers in 1999, signalled the end game.