US Banks Warn On Plummeting Investment Banking Revenues As Dealmaking Dries Up: FT
- The largest US banks are warning of lower investment banking revenue next week on a slowdown in dealmaking following a blockbuster 2021 supported by markets and widespread stimulus measures.
- Financial Times writes that the first quarter of 2021 was a lucrative three months in which banks minted fees from a boom in initial public offerings of special purpose acquisition companies (SPACs).
- The slowdown has been worse than expected. Bank executives have blamed Russia’s invasion of Ukraine and the subsequent market volatility.
- “For the first quarter, year over year, we were probably expecting capital markets revenue to be down 10% - 20% [at the start of 2021]. And now we’re down 30-50%. It’s pretty materially weaker,” said Matt O’Connor, head of large-cap bank research at Deutsche Bank AG (NYSE: DB).
- JPMorgan Chase & Co (NYSE: JPM) will be the first bank to disclose earnings on April 13, followed by Citigroup Inc (NYSE: C), Goldman Sachs Group Inc (NYSE: GS), and Morgan Stanley (NYSE: MS) on April 14. Bank of America Corp (NYSE: BAC) reports on April 18.
- On average, those banks are expected to report a 26% drop in investment banking fees, according to estimates compiled by Bloomberg, and overall revenues at the banks to fall around 10%.
- One positive for banks is expected to be revenue from trading, which probably held up better than many expected during the recent market swings and should experience smaller declines than investment bank work advising on deals.
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Posted-In: Briefs SPACs SPACs AttackEarnings Fintech News General
