Banks' fees slashed as M&As fall by 29%

Investment bankers' fees crashed in 2008 as a record number of deals were pulled or put off because of the credit crunch.

The total value of mergers and acquisitions completed worldwide fell by 29% in the year to just $3280 billion (£2210 billion) as companies preferred to conserve cash and deleverage balance sheets.

More than 1300 deals were never completed, according to Dealogic, which said those transactions had a combined value of $911 billion. During 2007 only 870 deals were pulled, but they had a combined value of $1160 billion.

The biggest deal that failed to make it to the altar this year was BHP Billiton's $147 billion takeover bid for Rio Tinto, which was unexpectedly killed off this month after commodity and share prices collapsed.

Dealogic calculated that fees earned by investment banks for advising on M&As dropped from $28.1 billion in 2007 to less than $20 billion in 2008. And the outlook for 2009 is little better, with many bankers forecasting activity will slump.

Much of last year's activity was forced fundraising by financial institutions such as banks and insurers.