* Volatile markets deter companies from raising funds, floating, M&A
* Junior investment bankers have fewer deals to cut their teeth
* 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 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 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 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 percent in the Europe, Middle East and Africa region ranked this as a critical factor, versus just 15 percent 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 $7 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.