US Banks Forecast Robust 2026 Dealmaking Despite Risks

Major financial institutions in the United States are maintaining a positive outlook for a dealmaking surge in 2026, even as geopolitical instability in the Middle East prompts a more cautious approach to execution. Investment banking fees, which are generated from merger advisory and deal underwriting, saw an average increase of 27% across the nation's six largest banks during the first quarter. While executives report healthy pipelines, the escalating tensions involving Israel and Iran are being closely monitored for their potential to disrupt market stability. Industry-wide investment banking revenue rose 14% to $28.2 billion in the first quarter, according to Dealogic data. JPMORGAN CHASE & CO secured the top position in global rankings, followed by GOLDMAN SACHS GROUP INC and MORGAN STANLEY. Despite the strong start, bank leadership remains wary of how external shocks might influence the timing of future transactions. > "Looking ahead, planning, engagement and pipelines remain healthy, but of course, developments in the Middle East could have an impact on deal execution and timing," JPMorgan Chief Financial Officer Jeremy Barnum told analysts. > "Volatility, of course, can change and impact conversations within a boardroom, but it doesnt mean that the need to strategically grow or get access to capital goes away," Morgan Stanley CFO Sharon Yeshaya told Reuters. The first quarter saw global merger and acquisition revenue jump 19% to a record $11.3 billion, with the total value of announced deals hitting $1.38 trillion. This activity has been particularly concentrated in the technology, healthcare, and energy sectors. A primary example of this trend was the $58 billion all-stock merger between DEVON ENERGY CORP and COTERRA ENERGY INC announced in February. In the infrastructure space, a consortium led by BLACKROCK INC and the Sweden-based private equity firm EQT AB agreed to acquire AES CORP for $33.4 billion in March. During the same period, AMAZON.COM INC was reported to be preparing an 11-part bond sale valued at approximately $37 billion. Executives at CITIGROUP INC and WELLS FARGO & CO noted that while client dialogue remains robust, a prolonged conflict could lead to deal deferrals in the latter half of the year. > "Of course, if the conflict were protracted and deeper for a longer period of time, that may start introducing some risk of deferrals and things like that, to the second half of the year," Citigroup CFO Gonzalo Luchetti said on a call with analysts. > "Dialogue with clients still remains very active and very strong," Wells Fargo CFO Mike Santomassimo told reporters on a call. The initial public offering (IPO) market is also showing signs of life, with a strong pipeline of high-profile companies such as SpaceX, OpenAI, and Anthropic expected to enter the public markets. While Goldman Sachs CEO David Solomon noted a slight slowdown in IPO activity in March due to Middle East tensions, he expressed confidence in the resilience of the equity markets. > "Equity markets have been extremely resilient and if that resilience continues, I do think youll see IPO activity accelerate again," Solomon added.