Years of quiet deal markets in Europe have left a generation of junior investment bankers with little opportunity to cut their teeth, and, with many senior staff let go, banks are finding themselves short on experience as business stirs again.
With stock markets volatile during the financial crisis and European sovereign debt woes, many companies have held back from raising new funding, going public, or attempting big merger deals.
While the European mergers and acquisitions market is still sluggish, with 2013 its slowest year in a decade, the volume of share 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 exposed some of their junior counterparts as a little wet behind the ears.
"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 senior teams," 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 to sales of secondary shares by already listed companies, has shrunk by around 30 per cent 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 the banker.
The 2014 outlook for investment banking services survey published by Thomson Reuters and Freeman Consulting this month found corporate decision makers ranked detailed industry knowledge as by far the most important factor when selecting a bank.
Of those surveyed, 80 per cent in the Europe, Middle East and Africa region ranked this as a critical factor, versus just 15 per cent citing a competitive fee structure as key.
Bankers say fewer advisors are now being invited to pitch to work on upcoming deals, with the higher ranked advisory banks widening the gap within the European top 10 league table.
The ECM rankings for 2013 showed an almost US$7 billion ($8.53 billion) gap between the financing raised for clients by sixth-placed UBS and seventh-placed Citi. At the same point in 2012, the top 10 banks were more closely matched, with gaps of only $2-3 billion.
"The bulge bracket is getting smaller, not bigger," said one senior ECM banker, adding that a willingness to commit capital to deals was also contributing to the widening of this gulf.
"If you do not want to play the risk deals it has an impact on the ranking."
In M&A, some are adapting to the lack of activity by moving down 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 on smaller deals ... and the deal flow is also important for our junior bankers to get experience."
But fewer banks are now offering all investment banking products across all regions and are instead narrowing their focus, a decision some bankers say is not sustainable as clients will choose those able to offer them the full range.
"If you are not a top-tier advisor it is going to be increasingly difficult to make a go of it in Europe," said one senior banker.
"You will continue to see large banks pulling out of things, restructuring their business model."