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Investment banks must decide where to pull the plug

With activity and profits falling, they cannot be in every global market. The question is where they should cut

Last month, when Nomura announced it planned to hire a few dozen senior investment bankers in the US, it looked like another attempt at banking harakiri by a Japanese bank with a short memory and an unhappy record of overambitious expansion outside its home market. In fact, Nomura could be bang on the money. As its global head of investment banking, Kentaro Okuda, said at the time, there are “tons of deals” in the US.

Over the past few years, investment banks have been grappling with how to restructure their investment banking divisions (that is, their advisory and capital markets business, as opposed to their sales and trading operations) to adapt to lower levels of activity, particularly in Europe and Asia, and lower profitability.

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