NEW YORK — Wall Street’s capital markets rebound has encountered sudden turbulence. Speaking at an industry financial conference on Monday afternoon, September 14, 2026, Bank of America CEO Brian Moynihan warned that third-quarter investment banking fees are tracking for a decline of more than 10% year-over-year. As of the close of regular U.S. trading on Monday, September 14, 2026, shares of Bank of America Corp. (NYSE: BAC) dropped 4.9% to $39.85, reflecting investor concern over a decelerating deal pipeline and tighter underwriting conditions.
The warning marks a sharp reversal from the second quarter, when major institutions benefited from a flurry of debt refinancing and advisory work. Moynihan highlighted that industry fee pools are contracting across Wall Street, citing transaction data from Dealogic. Later on Monday, Citigroup CFO Gonzalo Luchetti offered a somewhat more resilient assessment, projecting low-single-digit revenue growth in investment banking while noting that late-quarter closings in September will dictate final results.
Key Takeaways
- Double-Digit Fee Contraction: Bank of America expects third-quarter 2026 investment banking fees to decline by more than 10% compared to Q3 2025, with sales and trading revenue roughly flat.
- Broader Market Slowdown: Citing Dealogic data, Moynihan indicated that overall Wall Street investment banking fee pools are down approximately 10% across the industry in the third quarter.
- Diverging Bank Trajectories: Citigroup CFO Gonzalo Luchetti confirmed Citi’s investment banking revenue is pacing for low-single-digit growth, showing that business mix and deal timing are driving divergent results.
- Rate Pressure: Elevated Treasury benchmarks, where the 10-year Treasury yield hovered near 4.98% on September 14, have raised borrowing costs and delayed corporate debt syndications and M&A closes.
From Q2 Surge to Q3 Deceleration
The sudden caution from senior executives contrasts with the optimism of earlier this year. During the second quarter of 2026, Bank of America posted a 50% year-over-year jump in investment banking fees and a 33% increase in trading revenue as corporate borrowers rushed to complete debt issuances ahead of interest rate uncertainty.
That surge was mirrored across peers, as detailed in previous coverage of how Goldman Sachs and Morgan Stanley rode an AI deal wave to strong advisory gains. However, summer momentum has cooled. “What we’re seeing is the market generally in investment banking is down 10%,” Moynihan told conference attendees, as reported by CNBC. “We’re not as well positioned in some of the businesses that have more activity, so we’ll be down probably a bit more than that.”
Wall Street Outlook: BofA vs. Citigroup
While Bank of America’s projection triggered selling in bank equities, peer commentary illustrates a split across desks. Citigroup CFO Gonzalo Luchetti noted that Citigroup’s investment banking business is tracking for low-single-digit revenue growth in the third quarter, aided by cross-border advisory mandates. Luchetti added that trading operations are pacing for mid-single-digit growth.
This variance underscores the importance of product and geographic mix. Bank of America has large exposure to middle-market sponsor-backed transactions and domestic leveraged loan underwriting, segments hit hardest by elevated borrowing costs. Conversely, sovereign and multinational advisory mandates have held up better.
| Institution / Segment | Q2 2026 (YoY) | Q3 2026 Guidance (YoY) | Management Commentary |
|---|---|---|---|
| Bank of America (IB Fees) | +50% | Down >10% | Dealogic industry wallet down 10%; unfavorable segment exposure |
| Bank of America (Trading) | +33% | Roughly Flat | FICC activity stable; equities activity moderating |
| Citigroup (IB Revenue) | +60% | Low-single-digit | Cross-border flow supportive; late-September closings vital |
| Citigroup (Trading) | +18% | Mid-single-digit | Currencies and macro desks sustaining revenue stream |
| Wall Street Overall (Dealogic) | +42% | Down ~10% | Contraction in syndicated loans and equity capital markets |
Key Drivers Behind the Stalled Deal Flow
The slowdown in fee realization stems from distinct macro pressures across capital markets:
1. High Benchmark Yields and Syndication Costs
With the 10-year Treasury yield trading near 5%, corporate debt issuance has grown significantly more expensive. Issuers that accelerated debt financing earlier in the year have largely stood down, reducing syndicated loan volumes and debt underwriting revenue.
2. Valuation Disconnects in M&A
While strategic deal pipelines remain active, closing schedules have elongated. Private equity sponsors and corporate boards face persistent valuation gaps. Elevated capital costs make buyers cautious about paying high multiples without clear regulatory and interest-rate visibility.
3. Closing Timing Asymmetry
Luchetti emphasized that September will make or break quarterly performance. Advisory and underwriting fees are recognized upon transaction closing. Slippage of even two or three major deals into the fourth quarter can turn a flat quarter into a double-digit decline.
This dynamic mirrors patterns seen earlier in the cycle, as discussed in our prior review of Bank of America and Morgan Stanley capital markets performance.
Risks and What to Watch Next
Key factors that will shape investment banking outcomes through year-end include:
- Federal Reserve Policy Path: Any surprise rate hike or extended higher-for-longer regime could further dampen leveraged debt syndication and M&A financing.
- Private Equity Exit Backlog: Financial sponsors hold record unmonetized portfolio assets. Continued delays in IPO exits will keep equity underwriting fees subdued.
- Earnings Confirmation: Official Q3 bank earnings scheduled for mid-October 2026 will reveal whether the fee decline was contained or spread across the entire bulge bracket.
Frequently Asked Questions
Why are Bank of America’s investment banking fees declining in Q3 2026?
CEO Brian Moynihan noted that overall industry dealmaking is down about 10% in Q3 per Dealogic data. Because Bank of America is more exposed to segments experiencing slower transaction volume, management expects fees to fall more than 10% year-over-year.
How does this compare with Citigroup’s third-quarter outlook?
Citigroup expects low-single-digit investment banking revenue growth and mid-single-digit trading gains, benefiting from cross-border advisory mandates and macro trading desks.
When will official Q3 results be reported?
Major U.S. banks including Bank of America, JPMorgan Chase, and Citigroup will report finalized third-quarter 2026 financial results in mid-October 2026.
Sources
- CNBC: Bank of America expects third-quarter investment banking fees to fall more than 10%; shares slide
- Bank of America Investor Relations: Executive Presentations and Regulatory Disclosures
- Citigroup Investor Relations: Barclays Global Financial Services Conference Remarks
- Dealogic: Global Investment Banking League Tables and Analytics
- ECMSource: 10-Year Treasury Hits 4.98% as Buyback Demand Plunges
Disclosure: This article is for informational purposes only and is not investment advice.