Weak M&A action drives slump in fees

A slowdown in M&A activity weighed on investment banking fees, pushing global revenues to a five-year low in 2023, according to LSEG Data & Analytics.

The firm reported global investment banking fees dropped by 7% last year to US$106.0 billion, which represented the weakest year since 2018.

While both equity and debt underwriting fees rose in 2023, a weak market for mergers and acquisitions saw M&A advisory fees drop 25% year over year to US$29.6 billion, LESG reported.

At the same time, fees from syndicated lending activity were also down year over year, dropping by 10% to US$25.8 billion.

These declines handily offset the 2% increase in equity underwriting fees to US$14.7 billion and the 11% rise in debt underwriting fees.

LSEG noted investment banking fees were also down by 6% on a quarter over quarter basis in the fourth quarter of 2023.

In terms of the global rankings, JP Morgan remained the top firm overall, with US$7.2 billion worth of investment banking fees generated in 2023. It gained 0.3 points in market share, growing its industry-leading share of global fees to 6.8%.

Goldman Sachs continued to rank second with an estimated market share of 5.5%, down by 0.5 points compared to a year ago. The rest of the global top five also remained unchanged with BofA Securities holding third spot, followed by Morgan Stanley and Citi.

Three Canadian firms ranked in the top 25 globally, led by RBC Capital Markets in 12th place. BMO Capital Markets ranked 20th and TD Securities Inc. was 25th.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.