* Bank sees "wall of liquidity" across asset classes
* Barclays a credible new rival, scepticism about Nomura
* IPO wave could start in fourth quarter
By Quentin Webb
LONDON, June 15 (Reuters) - The dramatic recovery in risk appetite should mean more mergers and capital raisings, and a wave of flotations later this year, according to senior European investment bankers at JPMorgan.
However, JPMorgan also said its investment banking rivals, like investors, were again getting a taste for danger, echoing the "foolishness and foolhardiness" in the years leading up to the financial crisis.
"We are seeing a wall of liquidity in every asset class in the capital markets," Viswas Raghavan, the bank's head of international capital markets, told at a media briefing in London on Monday.
"For the first time in a long time, every asset class is wide open ... this has not been the case for almost 18 months now."
Raghavan said the bank was "bracing ourselves for the next IPO wave". He said these initial public offerings (IPO) could come as early as the fourth quarter, and would be led by private equity companies taking strong portfolio companies public, and corporations spinning off units.
Hernan Cristerna, JPMorgan's head of mergers and acquisitions (M&A) for Europe, the Middle East and Africa (EMEA), said the bank expected more mergers and aquisitions in industries with solid credit profiles, and more industrial partnerships involving sovereign wealth funds.
"The pipeline is gathering very good momentum over the last six to eight weeks, and therefore we are cautiously optimistic with regards the second half of the year," Cristerna said.
"When we speak with our clients, there's no question that the huge liquidity in capital markets is also emboldening CEOs and CFOs to consider transactions in what we still perceive to be an attractively priced market."
COMPETITION
The second half of the year would also see many more rights issues to strengthen balance sheets and fund growth, Raghavan said.
However, Raghavan said he also detected the first signs of "the foolishness and the foolhardiness which accompanied the raging bull market of two years ago", with rival banks pressuring prices and margins to win business in equity capital markets.
Enrico Bombieri, the bank's head of investment banking for EMEA, said JPMorgan faced competition from both established and new rivals, such as Barclays, which is hiring hundreds of staff to build Barclays Capital into a top-class global investment bank.
"Frankly, Barclays is a competitor we take very seriously. They have been extremely aggressive in their recruiting for the businesses they do not have today," Bombieri said.
He said that despite surprisingly bad "teething problems", the combined Bank of America Merrill Lynch was likely to prove itself a very strong competitor.
But he was sceptical about Nomura's efforts to build an international investment banking franchise based on the European and Asian operations of Lehman Brothers, and questioned whether Lehman bankers would stay once guaranteed pay packages ended.
"I think Nomura has a much bigger cultural challenge to resolve," he said. "Nomura has been trying to get into the investment banking world for the last 30 years. Frankly I saw them come and go too many times," Bombieri said. (Editing by Karen Foster)