Wells Fargo Readies for 2026 M&A Rebound as AI Reshapes Fees and Credit Risk

Banks face a turning point as AI reshapes fees and credit risk

Wells Fargo is positioning its investment bank to capture a rebound in mergers and acquisitions in 2026 even as rapid AI advances create new pressures across lending and wealth management, executives tell a UBS conference. The bank’s CFO, Mike Santomassimo, says the investment bank is finally showing “actual growth” after years of build, helped by the first full year free of the Federal Reserve’s $1.95 trillion asset cap. That regulatory relief gives Wells Fargo more flexibility to expand its balance sheet and pursue higher‑margin corporate activity, he adds.

Wells Fargo is doubling down on dealmaking at a moment when artificial intelligence is intensifying scrutiny of business models that underpin large swathes of private credit and advisory fees. Recent launches by AI firms aiming to automate complex professional tasks prompt questions about how incumbents and their borrowers — notably enterprise software vendors that are a big borrower group for private lenders — adapt. For Wells Fargo, the opportunity lies in advisory and financing roles on restructurings and transactions that follow industry disruption; the bank’s expanding investment banking capacity aims to capture advisory, underwriting and lending needs as companies reconfigure product strategies and capital structures.

At the same time, Wells Fargo must manage elevated credit and liquidity risk tied to private credit exposure and to clients whose revenue models face AI disruption. Market analysis highlights that a sizeable share of private credit loans back software firms often financed through illiquid structures such as unitranche loans, and that concentrated exposure can magnify stress if adoption of AI erodes cash flows. UBS and other analysts warn that aggressive disruption scenarios could push default rates materially higher in private credit, underscoring the need for tighter covenant protections and active portfolio monitoring — operational priorities that Wells Fargo is emphasizing as it scales its lending and advisory franchises.

Private credit stress ripples through asset managers and lenders

The AI-driven shakeup is prompting broader industry reassessments of fee pools in wealth management and the resilience of private credit portfolios, with several large asset managers and brokerages revisiting product road maps and risk controls in response to faster-than-expected AI adoption.

Macro backdrop and deal flow outlook

Market participants say upcoming economic data, corporate earnings and Federal Reserve commentary will shape whether banks, including Wells Fargo, secure outsized revenue from revived deal activity or face further rotation — making 2026 a pivotal year for banks’ strategic positioning.