Record Investment Banking Revenue In 2021 Shows Benefit Of Diverse Business Mix

Published on

Strong Performance Driven by Equity Capital Markets, M&A and Equity Gains

May 17, 2022 | Stamford, CT — Equity capital markets growth, led by the special purpose acquisition company (SPAC) boom, heightened M&A activity, and improved performance by equities and spread financing products, was one of the largest contributors to a surge in investment banking revenues in 2021.

The Coalition Index for Investment Banking, which tracks the performance of the 12 largest investment banks globally, show overall revenues increased 6% year over year – a remarkable result given an unprecedented 2020.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q1 2022 hedge fund letters, conferences and more

“Last year’s strong results reflect the diversity of the investment banking business model,” says Michael Turner, CIB Head of Competitor Analytics and Insights at Coalition Greenwich and co-author of ECM, M&As and Equities Shored Up. “The main sources of revenue growth in 2021 were entirely different from the volatility-driven, macro-products-led growth of 2020.”

ECM, M&A and Equities: The Star Performers of 2021

Investment banking revenue growth in 2021 came largely from ECM and M&As. Investment banking division (IBD) revenues touched a decade high, due, in part, to the volume of M&A deal completions and equity underwriting activity.

Equities trading revenues increased 22%, excluding the $10 billion drag caused by the Archegos Capital Management collapse. Including the Archegos hit, they were still up 5%.

“The meme stocks boom, which began early in 2021, had such a positive impact on both cash equities and structured derivatives volumes at the institutional level that, for the first time in a decade, the U.S. retail structured product market exceeded the European market in size,” says Kevin McPartland, Head of Research at Coalition Greenwich Market Structure & Technology and co-author of the report.

Meanwhile, a challenging trading environment in rates, normalization in credit and muted activity in currencies and emerging markets pulled down fixed-income revenues in 2021.

Is 1QFY22 a Signal of Things to Come?

The return of volatility suggests 2022 will more closely mirror 2020.  For example, trading-side spread products that grew in 2021, such as agency residential mortgage-backed securities and high-yield credit, are down 30-50% in 1Q22.

Also, while volatility has hit the exotic end of rates, resulting in losses at some banks, vanilla or lightly structured options have done relatively well in 1Q22. More significantly, the surge in FX trading volumes, along with improved margins and spreads, means that most G10 and EM FX dealers are up 20–50% in 1Q22.

In equity capital markets, with IPO volumes dropping off, most dealer revenues are down more than 80% in 1Q22, reverting to pre-COVID levels and while M&A revenues increased 15-30% in 1Q22 new deal announcements so far this year are down 30-50%.

As for debt capital markets products, despite the rising rates, revenues are likely to remain relatively robust, since money is still quite cheap historically (for now, at least) and refinancing needs remain plentiful.

About Coalition Greenwich

We are a leading provider of strategic benchmarking, analytics and insights to the financial services industry. We specialize in providing unique, high-value and actionable information to help our clients improve their business performance.  Headquartered in London, we have 400+ professionals working in London, Paris, New York, Stamford CT, Mumbai, Singapore, and Tokyo.

Connect with us: LINKEDIN | TWITTER


CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint. It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the U.S., the UK, Argentina, Poland, China, Hong Kong and Singapore.  It is majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. For more information, visit