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* Volatile markets deter companies from raising funds,floating, M&A
* Junior investment bankers have fewer deals to cut theirteeth
* Many senior bankers let go during the lean years
* Banks short on expertise as business picks up
* Gap widening between top bookrunners and the rest
By Kylie MacLellan
LONDON, Dec 22 (Reuters) - Years of quiet deal markets inEurope have left a generation of junior investment bankers withlittle opportunity to cut their teeth, and, with many seniorstaff let go, banks are finding themselves short on experienceas business stirs again.
With stock markets volatile during the financial crisis andEuropean sovereign debt woes, many companies have held back fromraising new funding, going public, or attempting big mergerdeals.
While the European mergers and acquisitions market is stillsluggish, with 2013 its slowest year in a decade, the volume ofshare sales has picked up, according to Thomson Reuters data,with companies raising more this year than any year since 2009.
Bankers working in the sector say this has already exposedsome of their junior counterparts as a little wet behind theears.
"For the next couple of years the people point will be key.There really is a lack of experienced talent almost everywhere.It will be a real issue. Only a few banks have kept seniorteams," said one senior London-based investment banker.
Bankers say the size of many equity capital markets (ECM)teams, who run deals ranging from new stock market flotations tosales of secondary shares by already listed companies, hasshrunk by around 30 percent during the years of lean deal flow,and the pick-up in volumes has not yet spurred new hiring.
"It takes a long time to build a team that works," said thebanker.
The 2014 outlook for investment banking services surveypublished by Thomson Reuters and Freeman Consulting this month found corporate decision makers ranked detailed industryknowledge as by far the most important factor when selecting abank.
Of those surveyed, 80 percent in the Europe, Middle East andAfrica region ranked this as a critical factor, versus just 15percent citing a competitive fee structure as key.
Bankers say fewer advisors are now being invited to pitch towork on upcoming deals, with the higher ranked advisory bankswidening the gap within the European top 10 league table.
The ECM rankings for 2013 showed an almost $7 billion gapbetween the financing raised for clients by sixth-placed UBS and seventh-placed Citi. At the same point in2012, the top 10 banks were more closely matched, with gaps ofonly $2-3 billion.
"The bulge bracket is getting smaller, not bigger," said onesenior ECM banker, adding that a willingness to commit capitalto deals was also contributing to the widening of this gulf.
"If you do not want to play the risk deals it has an impacton the ranking."
In M&A, some are adapting to the lack of activity by movingdown the size scale.
"We have a strategy of doing smaller deals," said a banker."It's important to be in the flow and follow clients even onsmaller deals ... and the deal flow is also important for ourjunior bankers to get experience."
But fewer banks are now offering all investment bankingproducts across all regions and are instead narrowing theirfocus, a decision some bankers say is not sustainable as clientswill choose those able to offer them the full range.
"If you are not a top-tier advisor it is going to beincreasingly difficult to make a go of it in Europe," said onesenior banker. "You will continue to see large banks pulling outof things, restructuring their business model."
