Finance: Investment banks see pickup in deals
Wall Street dealmakers are back in business after a “long slowdown,” said Telis Demos in The Wall Street Journal. The largest investment banks this week “finally started to report a pickup” in quarterly earnings. Revenue from “sales of stocks and debt, and for advising on mergers and acquisitions, was collectively up 27 percent at the five largest Wall Street banks from a year earlier.” Bank of America’s investment-banking revenue soared 35 percent in the first quarter, while Goldman Sachs saw a 24 percent increase. Many deals had been put on hold after the Federal Reserve began hiking interest rates in 2022, but two years in, there are “signs of capitulation.”
Bankers’ advice to clients: “Stop waiting out the Fed.” Hold the champagne, said Paul J. Davies in Bloomberg. “Beneath the surface,” the mergers and acquisitions recovery “is patchy.” There’s still “plenty to keep executives and investors nervy given conflicts in the Middle East and Europe,” as well as the stalled momentum on inflation and interest rates. Private-equity activity also remains conspicuously quiet. PE firms, which buy and sell companies, are a big source of the banks’ dealmaking fees, but many “are still struggling to exit” earlier investments. Bank CEOs sound confident, but this rebound is far from complete.