The most significant recent development in the Investment Banking industry is changes in government regulations. Basel III requires banks to have higher capital ratios and since the amount of risk-weighted assets for Investment Banks is high, the result might be lower ROE. However, the positive side is that smaller banks might not be able to comply with these regulations and give up their investment banking ambitions, resulting in the industry becoming more concentrated. This will divide more business amongst the remaining “big” investment banks, resulting in higher ROE.