- US investment banking rebounded in late 2025, with Goldman Sachs and Morgan Stanley reporting sharp Q4 fee jumps as dealmaking revived.
- New IRS/Treasury rules under Section 892 broaden what counts as “commercial activity,” potentially stripping tax exemptions for some sovereign wealth fund and foreign government investments from tax years starting after December 15, 2025.
- Glencore and Rio Tinto’s renewed $260bn merger talks highlight accelerating mining consolidation driven by copper scarcity and energy-transition demand.
- In New York office real estate, Park Avenue is regaining favor with major financial firms over newer districts like Hudson Yards.
Read More
The latest data present a marked uptrend in investment banking activity, largely enabled by regulatory easing, loosening interest rates, and corporate boardrooms moving away from deal-hesitancy. Key indicators from Goldman Sachs and Morgan Stanley underscore that dealmaking drove advisory, underwriting, and trading income into double digits in Q4 2025. Goldman’s investment banking fees rose 25% year-over-year to $2.58 billion, underpinned by strong advice and debt underwriting performance; meanwhile Morgan Stanley’s revenue in the same segment surged 47%. Both firms also posted profits up approximately 12%-18%, reflecting favorable market conditions.
Regulation is emerging as a major risk pivot. The U.S. Treasury and IRS have issued final and proposed rules under Section 892 expanding what is considered “commercial activity” for foreign governments and sovereign wealth funds. The rules clarify that direct lending, certain government controlled entities, and even single loans may strip tax-exempt status for SWFs, depending on their level of engagement and control. These changes take effect for tax years beginning on or after December 15, 2025; proposed rules await finalization.
The mining sector is another hotspot. Glencore and Rio Tinto are back in talks to pursue a merger valued around $260 billion. Central factors: anticipated tight supply of copper (million-tonne shortfalls forecast by 2040), green energy transition mandates, and the need for scale. Key challenges include integrating coal assets and managing valuation and corporate culture differences.
Real estate trends among institutions also point to a reclaiming of traditional prestige zones. Park Avenue, with JPMorgan and others moving in, is resurging in appeal relative to newer, peripheral financial districts like Hudson Yards. This reflects priorities around branding, employee amenities, and consolidating visibility.
Supporting Notes
- Goldman Sachs Q4 2025 investment banking fees increased 25% year-over-year to about $2.58 billion, driven by advisory, debt underwriting, and equity underwriting gains.
- Morgan Stanley’s investment banking revenue for Q4 2025 rose approximately 47%, with substantial gains in M&A advisory fees and fixed income underwriting.
- The IRS/Treasury final regulations under Section 892 define “commercial activity” broadly; investment activities remain generally exempt, but rules expand liability where an SWF holds control or engages in direct lending or other defined activities.
- Rule changes are effective for tax years beginning on or after December 15, 2025; proposed additional regulations on debt acquisitions will apply when finalized, likely in 2027 for calendar year entities.
- Glencore and Rio Tinto resumed talks on a megamerger with a combined enterprise value around $260 billion. Copper’s supply shortfall and green metals demand are key strategic drivers.
- Penn Office leasing demand is rising for Park Avenue in NYC; JPMorgan’s new headquarters, plus Blackstone and Citadel setups, signal strong institutional preference for Midtown locations.
- JPMorgan alone reported a decline in investment banking and advisory fees for Q4 2025—down about 5%—despite strong performance elsewhere.