European Investment Banking Fees Set for Rebound in 2026 Driven by IPO Recovery

The primary article from Financial News reports that City investment bankers are anticipating a material rebound in European fees in 2026, underpinned by anticipated upticks in private equity transactions and IPOs. Europe’s investment banking fee base in 2025 is described as having grown by only ~2% YoY—US$22.4 billion—compared to ~14% in the US (US$49.5 billion), highlighting the lag in deal momentum. [1]

Corroborating evidence supports both the weak IPO environment in Europe and strengthening signals for recovery. Data for H1 2025 shows that ECM revenues dropped ~23%, IPO proceeds collapsing ~61% YoY, and completed M&A advisory fees declined ~10%—though announced M&A volumes rose (US$586.9 billion) even as deal counts fell—indicating large deals making up the bulk of value but fewer transactions overall. [6]

Private equity emerges as the most reliable lever for growth. Europe saw a strong recovery in PE buyouts and exits during 2024, though still off pre-COVID norms. Key indicator tools like continuation vehicles are increasingly adopted as PE firms seek liquidity and address LP return demands. [5] The primary article details that despite valuation mismatches and volatility, both buy-side and sell-side sponsors expect exits to pick up and generate advisory and underwriting work. [1]

IPO revival is also anticipated, although from a depressed base: only ~US$19.4 billion raised in 2025, and equity capital markets revenue well below historical averages. But firms report backlog building, investor thirst, and more conversations with sponsors and issuers around public offerings. [1][3]

That said, the optimism is not without caveats. Key constraints include political and economic risk in Europe (inflation, interest rates, policy uncertainty), weaker central bank easing paths than in the US, and the risk that issuer appetite remains suppressed if valuations, liquidity, or macro stability do not improve. [1][4][10]

Strategic implications for banks: those with strong private equity advisory & sponsor relationships are best placed to benefit; ECM desks need to rebuild credibility and execution capacity; cross-border and sector specialists (e.g. infrastructure, healthcare, clean energy) may see disproportionate opportunity; risk and compliance functions need to monitor rate risk, regulatory shifts, and client behavior. Open questions involve timing of IPO pick-ups, potential size and number of megadeals in Europe, and whether the EU/UK can compete with US attractions for IPOs given regulatory and liquidity differences.