At the world’s investment banks, 2005 will be celebrated as a vintage year. Merger and acquisitions volumes and equity markets have revived while the fixed income boom has continued beyond all expectations. Many markets experienced ideal trading conditions, with big, well-flagged movements – for example, in US interest rates.

In the traditionally slow third quarter, Goldman Sachs, Lehman Brothers, Merrill Lynch and UBS all announced their best ever revenues and profits – beating records set during the internet bubble. For the US houses, the bonanza continued in the fourth quarter with another set of excellent figures.
Globally, investment banking revenues will have risen 13 per cent to $205bn this year, estimates Morgan Stanley. While employees will be hoping for fat bonus cheques, shareholders have also done well. With the exception of Morgan Stanley, Citigroup and JP Morgan, the listed investment banks have handsomely outperformed the markets. Greenhill, the US boutique, saw its shares nearly double, while Lehman, Australia’s Macquarie and Nomura of Japan are up by almost 50 per cent.