A look at the latest earnings numbers for investment banks have shown that investment banks continue to profit from the crest of the merger and acquisition wave.
New York-based investment bank Goldman Sachs, for example, reported a blowout second-quarter earnings on Tuesday more than doubling its second-quarter profit to $2.29 billion. In particular, Goldman registered net revenues in its financial advisory division at $608 million, 58% higher than the second quarter of 2005. The number reflects a jump in industry-wide completed mergers and acquisitions.
Competing investment bank, Lehman Brothers, did well also reporting its second-best quarter ever on June 12, recording a 47% rise in its profits. The increase was buoyed by a rise across the company's units, including its investment banking division where revenue increased 28% to $741 million due to an uptick in M&A advisory services. Lehman was the financial adviser to AT&T Corp. in its $89.4 billion merger with BellSouth — it's interesting to note that Goldman was the investment adviser to BellSouth.
While the deal hasn't closed yet, both investment banks will be sure to add those fees to their pots, reaping yet another significant reward for the largest telecommunication M&A deal in the U.S. — Gerald Magpily
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