Disjointed national policies on financial regulation are threatening to Balkanise the capital markets and may cost investment banks’ return on equity by up to three percentage points, according to influential research on the wholesale sector.

Morgan Stanley and Oliver Wyman have today published their latest Wholesale and Investment Banking Outlook, which warned about an absence of a unified global response to financial regulation. The report said that national attempts to insulate their banking systems from high-risk overseas lending and markets activities could knock up to two or three percentage points off return on equity across the industry