Wall Street bank executives still expect a 2026 dealmaking boom despite a mixed quarter for investment banking fees, with many looking to grow their teams.
JPMorgan’s surprise 5 per cent decline in dealmaking revenue during the fourth quarter came as analysts expected a boom in dealmaking to fuel growth. Bank of America followed this up with just a 1 per cent increase in investment banking revenue during the quarter, while Wells Fargo’s dealmaking income dropped 7 per cent in the final three months of 2025.
“While we can’t recall the last time JPMorgan missed on IB (Investment Banking) we think a discussion about the robust pipeline ahead during the call could offset some of the initial ‘sticker shock’ from that point” wrote UBS analysts after JPMorgan’s results.
But Citigroup’s 35 per cent quarterly surge in dealmaking fees was followed by a 25 per cent jump at Goldman Sachs and a 47per cent increase at Morgan Stanley, which gained 100 basis points of the global fee pool on rivals during the year.
Expectations are high that 2026 will be a banner year for dealmaking, fuelled by big mergers and acquisitions (M&A) deals that are likely to push up activity in various other investment banking product lines.
Goldman Sachs chief executive David Soloman told analysts during its fourth quarter earnings call that M&A would kick a “flywheel of activity across our entire franchise”.
He said that a current backlog of deals is growing. “It is the highest in four years. It is one of the highest levels ever,” he said.
JPMorgan chief financial officer Jeremy Barnum said some deals had been pushed into 2026. “But you won’t be surprised to hear that we are obviously optimistic on investment banking fees generally,” he said.
Wells Fargo analyst Mike Mayo pointed to the return of “animal spirits” in dealmaking. “Corporate boards gained increased clarity on tax policy and trade dynamics which, combined with accommodative fiscal and monetary factors, set up a strong starting point for 2026,” he said.
Morgan Stanley chief executive Ted Pick said capital markets activity was still in the “third innings”, while Goldman’s Solomon said he expected activity from private equity firms to “unlock” and that there would be IPOs of “very, very large companies”.
Investment banks have bulked up their teams in2025 and head hunters expect a surge in recruiting in 2026.
“We’re going to continue to bring in top talent to fill remaining gaps that we have,” Citi chief executive Jane Fraser said.
Morgan Stanley’s Chief Financial Officer, Sharon Yeshaya, also said the bank had been hiring dealmakers “to help service a broadening and a widening out of a corporate portfolio and different corporate clients that we cover”, she said during the bank’s earnings call.
Wells Fargo chief executive, Charles Scharf said it was looking to bring in top people. “We are not just focused on growing the numbers. It’s about the quality,” he said.
Alastair Borthwick, Chief Financial Officer at Bank of America, pointed to its team of 200 middle market focused bankers. “We have seen the benefit of that. We expect to see that continue as their relationships continue to keep growing,” he said.
Meanwhile, JPMorgan executives have said they plan to hire selectively for its investment bank regardless of market conditions.
“Unexpectedly, JPMorgan lost noteworthy share as they missed out on a number of the largest M&A deals and several DCM (Debt Capital Markets) deals,” said Mayo. “They intend to fight back,” he added.
Oman Observer is now on the WhatsApp channel. Click here
