European Investment Banking and Capital Markets Activity Slows in H1 2025: Implications for Rating Agencies

According to data from LSEG Deals Intelligence, investment banking fees (more precisely, commissions) in Europe totaled an estimated US$13.4 billion in the first half of 2025. This marks an 11% year-over-year decline, though still higher than the levels recorded in the first half of 2023 and 2022. Debt capital markets (DCM) underwriting commissions reached US$5.8 billion, down 5% from last year’s record high. Equity capital market (ECM) revenues dropped 23% to US$1.1 billion, a two-year low, while syndicated lending commissions declined 19% to a three-year low of US$2.9 billion. Completed M&A advisory fees totaled US$3.6 billion, down 10% year-on-year and the lowest first-half result since 2013. Europe accounted for 22% of global investment banking commissions, the lowest share in three years.

Mixed Picture in M&A Activity

Despite lower fee income from completed M&A deals, total announced M&A volume involving European firms reached US$586.9 billion in the first half of 2025 — an 18% increase from the same period in 2024, and the highest first-half total in three years. However, deal count declined 9%, the lowest since 2020. Transactions targeting European firms dropped 4% to US$340.6 billion, even as global M&A rose 33%. Financial sector M&A dominated, contributing 26% of target volume, while technology led by number of deals. Notably, inbound M&A (non-European buyers acquiring European assets) fell 14%, whereas domestic M&A rose modestly by 1%. Outbound European M&A climbed 2% to a four-year high of US$116.6 billion. The largest European-involved deal was Holcim’s US$33.7 billion spin-off of its North American business, now named Amrize.

Equity Markets See Steep Decline in IPO Volume

Equity and equity-related issuance in Europe fell 19% to US$60.0 billion, with the number of transactions down 16%. Follow-ons made up 81% of the activity, IPOs 10%, and convertibles 9%. Only 46 IPOs were recorded, 15 fewer than the same period last year, raising a combined US$6.2 billion — a sharp 61% year-over-year decline. The largest IPO was Sweden’s Asker Healthcare Group, which raised US$1.0 billion in March. Proceeds from follow-ons fell 12%, while convertibles jumped 59% to US$5.3 billion. The UK was the most active issuer by volume (21%), followed by Switzerland (15%) and Italy (12%). Goldman Sachs led the ECM underwriting rankings, ahead of JP Morgan.

Slight Dip in Debt Markets, but Volumes Remain High

European debt capital markets activity totaled US$1.63 trillion, down just 1% from the first half of 2024, making it the third highest first-half total since records began in 1980. Globally, DCM activity hit US$6.36 trillion, up 13% — an all-time record. In Europe, 2,353 new bond offerings were brought to market, a 15% drop year-over-year. Germany led issuance (17% of total), followed by the UK (16%) and France (13%). Financial and sovereign issuers accounted for 82% of proceeds. BNP Paribas ranked as top bookrunner in Europe with a 6.2% market share, followed by JP Morgan and Barclays.

Implications for Rating Agencies