European Investment Banking Sees Fee Rebound in 2025, IPOs & PE to Drive 2026 Growth

The European investment banking landscape in 2025 was one of cautious recovery. Despite Europe’s advisory and fee income rising only marginally (~2 %) relative to the U.S.’s 14 % jump, signs point to a more pronounced upturn in 2026. Core drivers include reopening IPO windows, renewed private equity (PE) activity (especially exits and continuation vehicles), and a growing pipeline of large‐ticket deals [1].

M&A deal volume in Europe saw a solid 22 % year‐over‐year increase to USD 894.5 billion in 2025, reinforcing confidence in advisory revenues. However, deal sizes remain skewed toward the mid-market, in contrast to U.S. megadeals, which pushed U.S. M&A to USD 2.4 trillion this year [1]. The lack of megadeals in Europe, especially those above USD 10 billion, suggests fee pools are yet to see the uplift that comes with blockbuster transactions.

Equity capital markets (ECM), specifically IPOs, remain a weak spot. With only about USD 19.4 billion raised in 2025, IPO activity has not kept pace with private expectations or need. But multiple sources confirm a meaningful pipeline for IPOs and large ECM offerings in sectors like energy, healthcare, fintech, and industrials as we move into 2026, aided by improved macroeconomic visibility and signs of rate stabilization [2][4].

Private equity’s delayed exit cycle — driven by valuation mismatches, macro volatility, and tight capital conditions — is turning a corner. Tools such as continuation vehicles are helping PE firms retain optionality, while pressure to realize returns is intensifying [1]. Strong fundraising has also been seen in European private credit, suggesting broadening capital flows into alternative financing structures [11].

From a bank’s internal perspective, revenue trends are improving globally. By 2025, global investment banks are projected to see ~10 % revenue growth, propelled by an equities trading boom and improving advisory/origination fees. For 2026, advisory/origination is expected to rise another ~9 %+ YoY [5][7]. Still, this assumes macro stabilization — particularly around interest rates, inflation, political risk — and that IPOs regain investor confidence.

Strategic implications for banks include: investing in ECM and PE client coverage teams, strengthening mid-market capabilities where Europe is stronger, increasing focus on sectoral themes (e.g., infrastructure, sustainability) tied to policy initiatives, and gearing up for ramp-up in IPOs by improving execution readiness (governance, pricing, disclosures).

Open questions remain: will macroeconomic and rate volatility (especially ECB and Fed policy) derail the IPO recovery? Can Europe generate enough megadeals to rival U.S. fee pools? And how sustainable is the PE exit environment amid global competition and valuation pressures?