Why isn’t Corporate Banking a Seller’s Market?

Why isn’t corporate banking a sellers’ market? Greenwich Associates asks (and answers) that question in a new report, one that springs from the following factoid:

A handful of large banks are each named as lead bank or co-lead bank by 30% to 40% of U.S. companies with revenues and market capital over $2.5 billion. On a national basis, the data suggests these banks together hold roughly 60% of lead corporate banking relationships and 70% of lead credit relationships with these companies.

So, with that kind of concentration, you’d expect the bankers to be muscling corporaate clients all over the place — but they aren’t. So why not? Mostly because of easy money. Bankers have too much money and are more than happy to bid for each others’ business, despite the market concentration. It’s an interesting anomaly for over-orthodox monopoly theorists to keep in mind.