Investment banks point to 2025 revenue boom as Trump pushes for deal revival
- Raising $27.6 billion in fees
- An optimistic future
- A possible increase in deal approvals
- A positive outlook
- Bankers’ pay could keep pace with rising incomes
President-elect Donald Trump’s return to the White House means expectations of a resurgence in deals, which would have the potential to boost investment banking revenues by $316bn globally by 2025.
This is expected to be an increase of around 5.7 per cent over 2024, according to records noted by Reuters.
Raising $27.6 billion in fees
Mergers and acquisitions (M&A) finance assets are currently forecast to reach $27.6 billion in fees, according to previously unseen data from analytics and information provider Coalition Greenwich, which could be their second-best year in at least two decades.
Over the past 20 years, it exceeded only five times the $300 billion in global revenue generated by investment banking, the reports show. However, the benefits of this performance would have been stifled by the pandemic, inflation and global political tension of recent years.
An optimistic future
Bankers anticipate that the already thriving US economy will be supported by Trump’s pro-business interests, which in turn could multiply international deals and investment from European companies looking to expand.
Similarly, Bank of America’s head of corporate banking for EMEA, Richard King, said that while we may be at the most optimistic time of the year for bankers, it is actually believed that ‘the current climate, political clarity and macroeconomic stability will help drive mergers and acquisitions’.
On private equity, he said that ‘there is a lot of pent-up demand that is likely to come in 2025’, also alluding to active buyers in various sectors, including healthcare, technology and energy.
A possible increase in deal approvals
Bankers believe that, thanks to the incoming Trump administration, it is very likely to see an increase in the approval of deals, which had been rejected under the Biden administration because of concerns about the strategic value of the US over the market.
In this case, not only investment generators would increase their already large workloads, but also bankers who handle debt sales for companies and government entities. This could generate a record $49 billion, according to Coalition Greenwich.
A positive outlook
Revenues from financial asset swaps would be the highest since 2022, forecast at $220 billion by 2025. In addition, loan-related products and emerging economies are expected to see an increase of 6 per cent each by 2025 compared to 2024 figures. On the other hand, trade in interest rate-linked goods could decline by up to 3.5 per cent.
Meanwhile, Barclays Global Banking co-head Taylor Wright predicted that private equity firms will be as active as corporate buyers and sellers. He said: ‘We have healthy corporate balance sheets, but we have a rate environment that has increased the cost of capital… so companies can’t be lazy.
He also added that geopolitical risk, in his view, was the wild card: ‘It’s hard to plan for that, but in the absence of that, we see a lot of factors that suggest that the next 12 to 24 months should be very good for investment banking.
Bankers’ pay could keep pace with rising incomes
Bankers, too, appear to be the likely beneficiaries of all this rising income. While it is true that their pay could rise, however, bonuses would remain below 2021 levels for the time being.
To reinforce this assumption, New York-based financial sector consultancy Johnson Associates mentioned last month that it planned to increase bankers’ pay in almost all business areas, with the exclusion of real estate investment.
The consultancy also reports that, in the wake of Trump’s re-election, hiring mandates have emerged at some banks during the first quarter, conventionally a period of downsizing.
Similarly, Robert Walters UK’s senior manager of distribution and front office, Natalie Nicolaou, told Reuters that the increase in staff acquisition ‘has increased in equities trading and from junior to senior roles’.
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