Article at a glance:

Industry comment: The outlook for European corporate and investment banking

• Europe's corporate and investment banks—aided by innovation, rapidly expanding capital markets, and strategies emphasizing core strengths—have performed impressively over the last decade.
• Many trends seem likely to continue, but industry leaders worry about the risks of cyclical overheating and the remaining structural challenges.
• These industry leaders would be wise to plan for reduced returns from fixed income and for a more demanding hedge fund business.
• They also should expect continuing tensions between advisers and principals, intense competition in the midmarket, and the greatest success to accrue to those firms that attract the best talent.

This article contains the following exhibits:

• Exhibit 1: Capital markets in the eurozone are growing rapidly.
• Exhibit 2: In advisory and underwriting, Europe is catching up with the United States.
• Exhibit 3: Weather could become a widely traded asset class.
• Exhibit 4: Opportunities are expanding in the Persian Gulf region.
• Exhibit 5: Europe accounts for approximately one-third of global hedge fund revenues.
• Exhibit 6: The industry is increasingly dominated by large, multistrategy funds.