Corporate and investment banks in Europe got off to a strong start this year, continuing what was an impressive showing in 2005. M&A has boomed as the long-awaited cross-border restructuring of corporate Europe continues to build momentum. Fixed income remains strong, proving that predictions of its imminent demise were, once again, premature.

More recent sharp declines in the equity markets have dulled the earlier optimistic notion that a new golden age had dawned. Yet beyond the cyclical ups and downs, bankers have every reason to feel positive about the longer term.

A review of the drivers of industry growth suggests that the future remains extremely attractive for European corporate and investment banks, even if recent growth rates are likely to moderate. And a look at some of the signposts can help banking executives see where the opportunities will probably be found over the next three to five years.

How did we get here?

The industry's recent performance results from a combination of cyclical and structural factors. The cyclical ones are well understood: the recovery of equity markets, the return of corporate confidence, and a benign credit environment. Less well appreciated are two critical structural developments: the growth and development of European capital markets and the emergence of a highly competitive, innovative, and diverse set of competitors in Europe.

European capital markets come of age

Over the past decade, the European capital markets have become deeper, broader, more integrated, more innovative, and far more conducive to profitable financial-market strategies.

In 1995 the capital markets in the future eurozone countries were about 1.4 times the size of their collective GDP.¹ By 2005 these capital markets were more than 2.3 times the size of GDP, having grown at more than 1.5 times the underlying rate of economic expansion. The UK capital markets also have expanded strongly. Even so, comparisons with the United States—where capital markets have reached around 3.3 times the size of GDP—suggest that European capital markets have further potential to develop (Exhibit 1). Over 25 years, US sales and trading revenues have grown at a multiple of around two times the growth rate in nominal GDP. Since Europe's sales and trading revenues still represent just 50 to 60 percent of those in the United States (which has a similar GDP), we can reasonably expect continued double-digit growth in Europe from these core activities in the short to medium term.

Cash securities, though, are only part of the story, for Europe has led the wave of innovation in derivatives. The credit derivatives market was invented in Europe in the late 1990s. In interest rate and foreign-exchange derivatives, Europe accounts for 68 and 53 percent, respectively, of global trading. And the notional level of outstanding European equity over-the-counter derivatives is three times that of US equities. The growth of equity derivatives in Europe—nearly 30 percent a year over the past five years—partially reflects the retail investor's preference for capital-protected products, but innovation by the leading institutions (especially the French banks) has played the major part in creating this market.

In private equity Europe is now a bigger destination for investment funds than the United States. US investors may still be the primary providers of funds, but from 2000 to 2004, of the roughly $700 billion in buyout deals (measured in terms of enterprise value), some $340 billion was invested in the European Union, against $330 billion in the United States. As a result banking revenues from European financial sponsors are broadly similar to those in the United States.

And in advisory and underwriting, Europe is catching up fast. Ten years ago, it accounted for 29 percent of global advisory and underwriting revenues, against 58 percent for the United States (Exhibit 2). By 2005 it accounted for 36 percent, compared with 42 percent for the United States. During the past five years, brisk growth in Europe and in the rest of the world has offset more sluggish US growth.

In short, Europe is where it's happening.

A new breed of competitor

Europe has also benefited from the emergence of a highly competitive, innovative, and diverse set of financial-market players.

Ten years ago, European banks were struggling to compete in the premier league of corporate and investment banking. The Swiss Bank Corporation (SBC) had just taken over S. G. Warburg, the great British hope. BZW and NatWest Markets were in disarray. Many agreed with David Kynaston, the leading historian of London's financial district, when he compared London to Wimbledon: the best tennis tournament in the world, but we don't ever expect a Brit to win it. There was also widespread skepticism about the expensive plans of continental banks to grow organically.

The pessimists have been proved wrong. European banks dramatically recrafted their strategies, focusing on their innate strengths and core franchises rather than attempting to ape the US "bulge." They innovated, not least in derivatives. They retooled their human-resources policies to support meritocratic hiring and compensation and upgraded their risk management. Some of them moved quickly to implement global operating models involving large-scale offshoring. Some have maintained—and delivered on—their global aspirations. Others have successfully refocused themselves on their national franchises. The resulting landscape is dynamic, differentiated, and intensely competitive.

Ten years ago, many commentators argued that only integrated investment banks would win. But as it turned out, no single winning model has emerged. Each category has its winners: universal banks combining balance sheet strength and high skills in trading and advisory (such as Citigroup and Deutsche Bank), traditional investment banks (UBS, Merrill Lynch, and Lehman Brothers—now widely seen as the one to watch in Europe), financial-market powerhouses (Barclays Capital and the Royal Bank of Scotland), product innovators (BNP Paribas and Société Générale in equity derivatives), and independent advisory houses (Rothschild). Several continental banks have built (or retrenched to) strong national or multinational franchises and now have profitable corporate- and investment-banking businesses that generate revenues of $2.5 billion to $6 billion annually and returns on equity in the high teens (see "The McKinsey Global CIB 50," available August 31).

The fragmentation of the $50 billion European fixed-income market illustrates the diversity of the competitive landscape. Today 11 major global players have a share of just under 50 percent of the market, 9 major regional players have 27 percent, and around 40 national players have just under a quarter. Each category includes highly profitable players. Profits come from the more value-added products such as derivatives and hybrid securities and from regions such as Eastern Europe and the Middle East. As a result of intense competition, the core investment-grade bond business and other plain-vanilla product categories have wafer-thin margins.

Another consequence of that competitive intensity has been the death of the sole adviser. Clients have many mouths to feed at payback time, after months or years of diligent coverage by the major firms. Consequently, big IPO and M&A deals typically involve a number of advisers. Inevitably, this arrangement puts even more pressure on the economics of banking.

The industry's radical transformation is likely to continue as major banks in Europe, as well as global banks that do business there, seek to build winning corporate- and investment-banking franchises. The bad news is that competition will intensify. The good news is that it will likely drive further innovation, spurring primary demand as more of Europe's financial-intermediation activity moves to the capital markets.

Seven signposts for the future

For all the current success and excitement, senior industry leaders still see sources of unease. In part this reflects the natural caution of executives who lived through the downturn of 2001 to 2003. Also, for all of the positive structural trends, the industry may be at risk of some cyclical overheating—a concern that has become more intense given the recent market upheavals.

In our discussions with industry leaders, we have identified seven questions that are preoccupying them as they seek to strengthen and expand their corporate franchises.

Can fixed income continue its winning streak?

Most broadly based firms have depended on fixed-income securities to carry their overall performance. Will the trend continue?

The positive view is that it's wrong to think of fixed income as a single business, because the term covers 15 to 20 distinct asset classes. True, some easy sources of profit—notably the euro convergence play and the carry trade, which flattered many banks' trading results—have had their day. But there's still plenty of growth in certain product areas (for instance, commodities, structured products, asset-and-liability management, bonds in emerging markets, and prime brokerage), some customer segments (high-net-worth individuals, midmarket corporations, and financial institutions), and some geographies (Asia, the Middle East, and Eastern Europe). In Germany, corporations still have major recapitalization needs, which are creating opportunities for innovative mezzanine approaches. And across Europe, the pension crisis should create a huge demand for structured solutions to mitigate risks for pension funds.

But some clouds lie on the horizon. For less sophisticated players, trading is tougher when the yield curve is flat or inverted, though first-quarter results show that the leading firms, at least, are still prospering. At most of these firms, capital continues to flow into expanding trading businesses, and average returns on that capital must ultimately decline, for the laws of economics have not been suspended.

While new growth opportunities do exist, almost everyone is targeting the same ones. After a remarkably benign period, there has to be some expectation of a tougher credit environment, perhaps flowing from the European leveraged-lending market, where multiples are reaching new highs, or from the US consumer credit market. (If the US consumer loses confidence, this will quickly affect fixed-income earnings on Wall Street and will in turn be passed along to Europe.) Some major industry-wide operational failings, such as those in credit derivatives, serve as a reminder that the industry has yet to build a fully efficient and robust infrastructure. And while operational risk is better understood, many firms are discovering that it is consuming significantly more capital than they had expected. All these factors will put pressure on future returns.

Innovation probably holds the key to the future, notably in fixed income, where investments in R&D must continue. Areas attracting interest include retail credit and new, more exotic asset classes such as emissions trading, freight derivatives, mortality and longevity risk, and weather derivatives. At a conference in early 2005 a top hedge fund trader was asked about new trading strategies. With the confidence of Mr. McGuire in The Graduate, who told Ben Braddock (played by Dustin Hoffman) that plastics was the business of the future, the trader announced that the next big thing would be weather. Weather, he argued, influences 30 percent of global GDP and could become a widely traded asset class, essential to corporate risk management. Recent Chicago Mercantile Exchange volumes in weather derivatives suggest that he may well have been on to something (Exhibit 3).

Europe still lags behind the United States in the development of retail and commercial real estate as a traded asset class, but herein lies another opportunity. In retail, Lehman and other banks are actively acquiring and securitizing mortgages, replicating in Europe these institutions' successful US model. In commercial real estate, there has been rapid growth with the surge in European commercial mortgage-backed securities (issuance has grown tenfold since 2000), the introduction of new securities (for example, real-estate investment trusts in the United Kingdom), an increase in institutional allocations to property, the acceleration of cross-border real-estate investments, and innovations in property derivatives. All these may sustain further rapid growth over the medium term. With more than 70 percent of European commercial real estate held by owner-occupiers, the potential to move more such assets into the capital markets is considerable.

If you add opportunities in infrastructure finance (as governments look more often to the private capital markets to finance roads, hospitals, reservoirs, bridges, and other public-sector projects), the future potential is even greater. Indeed, the entire arena of public finance will probably be an exciting growth area. With higher budget deficits across Europe, governments are looking to the capital markets and to leading corporate and investment banks for a range of traditional and more structured financing solutions. Serving Europe's debtor nations offers high returns to the best fixed-income players. The prudent course is to assume that long-term fixed income, driven by continued innovation, will continue to be a strong contributor to growth, but with returns somewhat reduced over the medium term.

How will the principal-versus-client debate unfold?

The challenge of managing conflicts remains near the top of every bank CEO's list of concerns. It is hard enough for pure advisory firms and gets harder still in a world where banks can be both advisers and financiers. It is even more controversial when a bank is simultaneously playing an advisory role and seeking to act as a principal investor. Several recent high-profile cases have attracted attention. Hank Paulson, the former CEO of Goldman Sachs, advised its bankers to think carefully before using the firm's capital when making unsolicited approaches to public companies.

This tension will not go away. First, the industry's economics will keep it center stage. The returns from investing in a successful private equity deal far outweigh the returns from advising on it. Second, private equity firms are set to become still more important in Europe. It is now quite conceivable that within the next year, they could take private a listed company with a market capitalization of $20 billion, bringing into range all but the top 50 to 60 nonfinancial corporations in Europe. Third, principal investors, whether hedge funds or private equity funds, will assume even more of an activist role as they target underperforming large-cap companies—often the core clients of the banking department—and seek to bring about changes in governance or strategy. Finally, talented practitioners will continue to force the issue. The best advisers will want to avoid having their ability to serve clients compromised by perceived or real conflicts of interest with the in-house private equity business. Equally, the best investors will want to prevent their freedom to invest from being hampered by the need to avoid upsetting corporate clients.

Under one radical scenario, the advisory and principal roles could separate institutionally. The winning advisory firms would be the independent ones and the boutiques, and winning principal investors would operate independently. Large integrated houses would have to choose which path to pursue.

We doubt that this scenario will unfold. No corporate and investment bank of any scale can avoid competing as a principal. Indeed, clients often invite these firms to invest in deals and use their capital to help ensure that deals happen. Instead, the leading firms will have to follow clear principles guiding their involvement as advisers and principals, just as they have in their trading and financing activities. Clients will accept their bankers acting as principals, but only within reasonable limits. If a firm is seen to have crossed the line, clients will punish that firm by withdrawing their business. This line will be largely a matter of perception, making the reputational risk extremely hard to manage.

Meanwhile, the private equity industry is likely to concentrate further. The top 15 firms are taking a bigger share: 33 percent by deal value globally, up from 25 percent from 2000 to 2002. Most of the firms in this group are independent houses; only two are part of major corporate and investment banks. Given the recent round of oversubscribed fund-raising in Europe, we can expect the major private equity firms and leading hedge funds to be hugely influential in reshaping European corporations and to remain among the most important client segments for these banks to serve well.

Are we doing enough to win in the resource-rich Great Crescent?

From Noril'sk, on Russia's Arctic Coast, to Algiers, on the Mediterranean, imagine a great crescent laid out upon the globe, running through Russia, the 'stans,² the Middle East, and North Africa.

By a quirk of geology, 12 nations along this crescent have 60 to 70 percent of the world's proven oil reserves³ and more than 70 percent of its natural-gas reserves. The crescent is rich not just in energy but also in other scarce resources: Russia accounts for 40 percent of the world's platinum reserves, 35 percent of its nickel reserves, and 27 percent of its iron and tin reserves. Extraordinary wealth and value will continue to accumulate along this resource-rich crescent.

By a quirk of geography, London is the natural financial center to benefit from this enormous wealth. Aided by the burdens imposed on companies by the Sarbanes-Oxley Act, London is an attractive center for listings. As a cosmopolitan, international city, it is an attractive home for expatriate billionaires. The opening up of the Great Crescent could, according to some estimates, expand the European corporate- and investment-banking market by 25 to 30 percent—which if true would be the equivalent of adding, over the next three to five years, one and a half or even two Germanys to the accessible market. Our more cautious estimates of new revenues from Africa, Eastern Europe, and the Middle East highlight the potential for strong growth and attractive margins but suggest a more modest addition, growing from around 9 percent of customer-driven revenues today to 12 to 15 percent within seven to ten years. This source of growth will be important, but it won't be transformational. Yet given the possibility of political risk, such estimates are prone to huge uncertainty.

We have already seen some early signs of this region's potential, such as the UK listing of Kazakhmys, a copper producer from Kazakhstan and a new FTSE 100 constituent. Gazprom is now one of the world's ten largest companies by market capitalization⁴—and looking to expand aggressively in Europe. Bankers are already chasing the advisory opportunities opening up in Russia and the other former Soviet republics.

Rapid expansion is also taking place in the Persian Gulf region, centered on Dubai, which is surely now emerging as a major financial center. This year's budget surpluses of the seven Gulf Cooperation Council (GCC) states are likely to exceed $100 billion, or about as much as the gross inflows into European retail mutual funds in 2005. Saudi Arabia alone will have an estimated $1.4 trillion in project finance and privatizations over the next 15 years (Exhibit 4).

As in any rapidly opening market, there are major risks, not the least of them reputational risk—the overriding concern of many leading firms operating in the region. Remember too that it has been only six years since the Russian crisis of 1998 ended. Even so, the Great Crescent is likely to be a major focus for investment over the next two to three years.

Should banks compete more in the middle market?

One vision for European investment banking is that consolidation and restructuring will create an elite group of European corporate clients representing the most attractive wallets. Currently, the largest 250 European clients account for around 60 percent of industry fees, against 50 percent in the United States.

Under this scenario, the leading banks, following the "client focus" strategies that have underpinned the success of firms such as Goldman Sachs and Lehman Brothers, will direct ever more resources to this group. Even allowing for the huge wallets, however, these clients may well end up being overserved by the leading global investment banks.

Other firms are resisting this approach. National players in Europe have reinvested in their domestic franchises, building up product skills to close the gaps with the global firms in most areas. They are content to let those global firms—which lack the cost structure, the patience, and the local-market commitment to break into their markets—fight to serve the top-tier clients.

An alternative outcome is that several global firms, lured by higher margins and the apparently lower competitive intensity, will decide to make big moves into the major European midmarkets. Indeed, there have been early successes, such as RBS's strategy of expanding across Europe, taking advantage of a strong position with financial sponsors and leveraged finance. In the United States, Bank of America, Citibank, and J. P. Morgan Chase, compete effectively both in the large corporate segment and the middle market.

In addition, we may see some new multilocal winners emerge as European cross-border consolidation gathers momentum. The merger of UniCredit and HVB, an early example of such a multilocal franchise, has created a $6.7 billion corporate- and investment-banking business with a strong starting position to benefit from growth in Eastern Europe.

Overall, we expect Europe's midmarket to be intensely competitive over the next three to five years. The local and multilocal players will defend their franchises very effectively. Some global firms may succeed in building strong product franchises with midsize corporations across Europe—for example, in leveraged finance, equity derivatives, or cash management (a rapidly growing and profitable segment for several global players in Europe). But we believe that a broad-based midmarket strategy will be very hard to pull off for any player without an existing strong local-market position.

How will the European hedge fund industry evolve?

Over the past five years, hedge funds have been a key source of revenues for the corporate- and investment-banking industry. Globally, revenues paid to the sell side are probably in the range from $20 billion to $25 billion—about a third of it in Europe (Exhibit 5). Hedge funds, which provided a lifeline to struggling European cash equities businesses, now account for around 30 to 35 percent of commissions at many firms. Add in prime brokerage and fixed-income revenues, and it is clear that corporate and investment banking and the hedge fund industry are truly symbiotic.

The continued vibrancy of the hedge fund business is therefore critical to the health of the sales and trading activities at most major firms. But is this vibrancy a given? Strong arguments support the continued growth of alternative investments as an asset class. Demographic trends underpin the need for absolute-return investments. The lack of correlation (at least historically) between the returns of hedge funds and those of traditional asset classes further fuels the case for investing in alternatives. In Europe institutional allocations to alternatives still lag behind those in the United States, and there is evidence that major European institutions are moving to "total return" investing strategies—witness recent announcements by the Cambridge and Oxford endowments. If you believe that all these trends are sustainable and extrapolate them, bank revenues from hedge funds could total more than $40 billion globally by 2010, with faster-than-average growth in Europe, assuming a degree of catch-up with US allocations.

Yet it is not all "ever onward, ever upward" in the world of hedge funds. Recent returns have been less impressive than the long-term trend. Higher interest rates limit the potential from some trading strategies—consider the demise of the famous carry trade. Style drift is diluting the traditionally highly focused proposition hedge funds offer. Growing evidence suggests that their returns are increasingly correlated with those of traditional asset classes.

Steady concentration is occurring, so that large, multistrategy funds increasingly dominate the industry (Exhibit 6). These more institutional entities will likely prove tougher in negotiating the fees and commissions paid to the broker-dealers. As funds move into more illiquid asset classes (such as second-lien credit, private equity, and whole loans), commissions from the trading of traditional asset classes may decline, at least relatively. And as some funds move into originating their own assets, they may have less need for the sell side.

Some pessimists think we may have seen the peak of the hedge fund boom. Recent trends do echo the late stages of some financial bubbles as described by Charles Kindleberger:⁵ the proclamation of a new paradigm, rapid expansion fueled by high leverage, tales of the creation of extraordinary personal wealth attracting a rush of new aspirants, insiders selling out at high prices, and retail investors piling in without fully understanding the risks. However, other telltale signs of a bubble (such as fraud and rapid price escalation caused by panic buying) are still absent in Europe.

Most practitioners see a steady evolution from the gold rush of the past five years to a more institutionalized market. Yes, closures may accelerate among the tail of small, undifferentiated hedge funds. But overall, the industry is here to stay and will remain a hugely important customer segment for the sell side—though one that is increasingly demanding and difficult to serve.

What is the future of cash equities?

The past five years have been a torrid time for most cash equities departments. First, they underwent radical cost restructuring in the great bear market of 2001 to 2003. Recently, unbundling, automated execution, and more demanding buy-side clients have applied new economic pressure. Fortunately, rising markets, strong M&A activity, the ad valorem pricing model, the return of the retail investor's confidence, and higher hedge fund allocations to Europe have helped put most cash equities departments into the black. The year 2006 is off to a flying start, with equity trading volumes up nearly 60 percent year to year. Add good returns from derivatives and proprietary trading, as well as aggressive cost restructuring and refocusing, and the typical equities department is in much better shape now than it was two or three years ago. The top firms are doing extremely well.

Still, most of these factors are cyclical, and underlying challenges remain. How many cash equities businesses does Europe need in a world of automated execution? Is traditional sell-side broker research economically justified, or will a further radical redesign be needed once the current tide goes out? Will execution, like custody, become a pure commodity, causing smaller players to exit and focus on more value-added activities such as algorithms and specialized research? In short, will European cash equities go the way of the European steel industry? Many practitioners expect such a shakeout. We may be entering its start if the setback in May proves to be a market turning point, although a return to strong markets may delay the inevitable a while longer.

On a brighter note, the final stage of consolidation among exchanges is imminent. Whatever the final dance pairings, we can expect trading costs to fall and the products and functions that the exchanges offer to proliferate more quickly. Further, the distinctions among the roles of exchanges, brokers, and interdealer brokers will become increasingly blurred; witness ICAP's emergence as a major player in electronic fixed-income and foreign-exchange trading.

Likewise, after five years of stalemate, the posttrade infrastructure across Europe looks to be on the edge of becoming more rational and efficient—so, at least, the banks hope. And the European Union too is pushing hard. Commissioner Charlie McCreevey has set an ambitious agenda for the industry to deliver on greater price transparency and other measures to improve completion in clearing and settlement. Users in London and Paris are reaching a consensus about a desirable endgame structure, modeled on the hourglass proposals by the London Investment Banking Association (LIBA), involving horizontal consolidation and moves toward a single European Central Counter Party.⁶

With a more efficient exchange and posttrade infrastructure, the industry should achieve further cost savings. Falling marginal costs should also facilitate an even more rapid expansion of automated trading. More quantitative trading strategies will become viable, fueling the next wave of innovation and growth in the equities business.

In such a world, the industry may polarize further. A few very large-scale leaders in automated execution would offer extremely low-cost and sophisticated trading capabilities. Meanwhile, a broad range of more specialized firms would provide valued research or sector-specific insights. We would also expect to see more "white labeling" of cash equities, with the large-scale market leaders providing an equities platform for national, and even regional, players that can't compete in this new world.

Can we win the war for talent?

The winning firms of the past decade have ultimately been those that attracted and retained great talent. That this will continue to be true for the next decade is one of the few predictions we can make with total confidence.

But for all the industry's success, the war for talent remains as challenging as ever. Many senior bankers highlight it as their biggest challenge—and the biggest threat to growth. Many practitioners (especially in banking) lament the relentless pressure of ever-higher revenue budgets, intense competition for business, and the grind of meeting targets for call volumes and share of wallet. But, they sigh, this is not the year to chuck it all in for a second career. Rather, they feel the pressure to put in a big year in 2006 so that they will have a secure position if markets turn in 2007 and the pendulum swings from aggressive hiring to equally aggressive head count reductions.

Will life in small boutiques prove more exciting for the top advisers than life in a large, integrated house? Will a hedge fund with 20 colleagues prove to be a more attractive place for top traders to work than a fixed-income department with thousands of employees? Will private equity firms attract the best talent, given their ability to "offer carry" in their funds? Will hedge funds, as they institutionalize, become less exciting for people who were initially attracted to them because of their very lack of an institutional culture?

One response has been to become ever more discriminating in targeting compensation to the best producers. Ranges of 30 or 40 to 1 in the compensation of managing directors are common. Such high levels of discrimination presume very effective evaluation processes to determine individual performance accurately and can interfere with efforts to build a culture of teamwork. The targeting of compensation also extends to hiring. Even seasoned executives, long accustomed to paying the market price for talent, must take a deep breath when considering the packages currently necessary to attract a star banker or team.

Many senior bankers believe that the organizational and cultural challenges facing the large corporate and investment banks are getting more acute. The scale and complexity of the leading firms can only increase. By 2015, assuming growth at 7 to 10 percent a year, the leading global firms will generate corporate- and investment-banking revenues of $40 billion to $50 billion. Organizational complexity is a particular challenge in Europe, with its triple-layer-cake matrix of product, country, and industry axes. Weave in the ever-more-demanding regulatory challenges and rising levels of litigation, and it is far from clear that scale is an advantage.

Few firms can be confident that they have really cracked the code for managing a global corporate- and investment-banking franchise at this level of scale and complexity. That remains the biggest single challenge facing the industry, both globally and in Europe.

Back in 1990, in a presentation to the Securities Industry Association, Goldman Sachs's Stephen Friedman argued that the keys to profitability in the 1990s would be "people and culture, culture and people, people and culture." His guidance remains valid for the next ten years as well.

The long-term future for European corporate and investment banking remains very attractive. During the past decade fundamental changes in market structure and the competitive landscape generated sustained growth. There is no reason to think that the next decade will not be just as exciting. That said, we should expect some moderation of the growth rates posted in the first quarter of 2006. History suggests that periods of very rapid growth in this industry are followed by temporary setbacks. We should certainly expect some bumps in the road. Tempering some of the recent exuberance with a degree of prudence could be the smartest path. Equally critical will be taking care not to overreact when the next cyclical downturn strikes. A willingness to persevere with long-term investment plans through the last cycle marked out today's winners in the European corporate- and investment-banking markets.