For many of those working in Europe's equity capital markets, the 1999 league tables will make depressing reading. Volumes may have gone through the roof, but the spoils have been far from evenly shared.

Last year saw the development of a distinct super-bracket of two investment banks, comprising Morgan Stanley Dean Witter and Goldman Sachs, which each worked on more deals by value than the next three firms combined. Some way behind is another group of powerful players, led by a charging Merrill Lynch. This concentration of business among an even smaller number of firms accelerated markedly last year. While overall volumes have risen 50%, the value of deals managed by each of the top five bookrunners has at least doubled. Morgan Stanley's volumes have risen more than fourfold, while Merrill Lynch's volumes have increased nearly five times. The euro accelerated the growth in volumes, but it has also accelerated this consolidation. The head of equity capital markets at one US house says: "Issuers want to access investors across Europe, the US and Asia, instead of just their domestic markets. "A smaller and smaller number of houses can genuinely claim to provide that level of distribution and, sadly for them, very few of those, however, are European.' Morgan Stanley, whose European equity capital markets effort is headed by the urbane Franck Petitgas, has taken the markets by storm this year. The firm has established itself almost as the default bookrunner in European equity capital markets and has developed a habit of appearing on virtually every big deal. The firm's total of E14.4bn ($15.7bn) of international issues is more than double the $7.1bn which propelled Warburg Dillon Read to the top of the rankings last year. It helps, of course, if you are selling stock in a company which you own and if you manage more than one issue for the same company in a single year. Last year Morgan Stanley ran the books on two issues by Equant, the data network and communications company, raising a combined E6.71bn. Morgan Stanley has earned the lion's share of around $300m in fees while realising a profit of around $4bn for Morgan Stanley Dean Witter Capital Markets. It was also involved in both the issues by UPC, the Dutch cables company, which raised a combined E2.2bn. HSBC also owes its eighth place ranking to an "in-house', leading the multi-billion pound secondary issue for its parent company in the spring. Goldman doubled its volumes compared to 1998, and with a total of 40 bookrunning positions under its belt worked on more deals than any other firm. The sheer volume passing through the firm's syndicate desk did, however, raise question marks over the quality of execution on some deals. Merrill Lynch poses perhaps the biggest threat to the top two, having finally managed this year to leverage off its dominant franchise in European secondary markets. Helped by Enel and Telecom Eireann, Merrill leapt from ninth to third place in the league table, and in the second half of the year won more mandates by value than any other firm. Ominously for the competition Merrill has its sights set on the number one slot. Dante Roscini, co-head of European equity capital markets says: "We are hopefully only seeing the beginning of the change. We are aiming for the top slot. In the US market we are the top underwriter, and there is ultimately no reason why we shouldn't be here.' The dominance of the bulge- bracket is forcing some of the smaller houses to reappraise their approach to the business. Lehman Brothers, which climbed into the top 10 from 13th in 1998, has, for example, focused keenly on the technology and telcos sectors, with deals such as Software AG, STMicroelectronics and Versatel under its belt. Commerzbank, one of the leading houses in the Neuer Markt, has decided not to pitch head to head with the big boys, while Salomon Smith Barney is launching into UK and eventually continental corporate broking in a bid to generate a relationship-based dealflow. It was not a rosy year for everyone. ECM is a notoriously lumpy business and some firms suffered in comparison to 1998. By its own exacting standards, Warburg Dillon Read had a disappointing year, ranking sixth with E5.8bn of international deals, but at the halfway stage Warburg was running in ninth place. The firm's consistency and depth of franchise in European secondary markets should, however, keep it in the top few firms for some time to come. JP Morgan, fourth in 1998 on the back of Swisscom, fell out of the top 10. Paribas was nowhere to be seen after an impressive seventh place in 1998, and Salomon Smith Barney, after a strong first half, slipped back in the second.