UPDATE 1-Fincls to see worst hit to profit in 20 yrs - report
(Recasts; adds details)
April 1 (Reuters) - Profits of the global investment banking and capital market industry look set to take the worst hit in 20 years as the sector is facing the biggest crisis in three decades, Morgan Stanley and consulting firm Oliver Wyman said in a joint research report.
Nearly six quarters of industry earnings will be wiped out due to mark-to-market losses and weaker revenues by April, the analysts estimated in their report.
This already starts to rival the 1989-through-1990 downturn, which was the most severe of the five crises in the last two decades that wiped out six-and-a-half quarters of industry earnings, the analysts said.
"The knock on effect of funding markets drying up implies that this crisis will bite deeper."
For 2008, investment banking revenue is expected to be down about 20 percent before additional mark-downs of $75 billion, the analysts wrote.
"Investment banking revenues continue to tilt further to Europe, Middle East and Africa (EMEA), and Asia in 2008."
Asia and Europe could represent around 60 percent of industry pre-mark revenues by the end of 2008, analysts said, while noting that the United States now represents under half of industry profit pools.
Analysts expect longer-term return on equities to fall as banks seek to delever and regulators ask banks to hold more capital. Continuación...