The collapse of AIG’s deal to sell an Asian life insurance business to Prudential PLC of the United Kingdom isn’t just a setback for taxpayers.
It’s also a blow to big banks that were looking at a big fee payday.
Giant global banks were set to split an estimated $850 million in merger-and-acquisition advice and underwriting fees on the deal, ThomsonReuters said. The $35 billion deal fell apart this week under pressure from Prudential shareholders.
That includes $53 million that would have been split among five banks advising AIA, the AIG unit that outspoken CEO Robert Benmosche (right) was trying to sell. Those banks include Citi, Goldman Sachs and Morgan Stanley, ThomsonReuters said.
It also includes $59 million that was to be split among four banks advising Prudential, including JPMorgan Chase. Prudential isn’t related to Prudential Financial of Newark, N.J.
The 30 banks that were to syndicate a $21.7 billion rights offering to help the U.K.’s Prudential raise capital missed out on an estimated $740 million in fees, ThomsonReuters said, including HSBC, Credit Suisse and a U.K.-based JPMorgan unit.
The loss of a single deal will hardly crush any of the banks, which are still minting money at a time of low interest rates and reduced competition. But the fees would have been nice at a time when the trading business that has been so good to the banks is starting to look a lot less steady.