Three of the biggest US investment banks, Morgan Stanley, Goldman Sachs and Lehman Brothers, are expected to disclose a drop in earnings because of the slowdown in corporate activity when they report first-quarter results this week.

Dean Eberling, a banking analyst at Keefe, Bruyette & Woods, estimated that overall the US houses will be down by nearly 25% in earnings terms in this first quarter, compared to last year. He forecast that Morgan Stanley will report earnings down by 30% to $1bn (&euro1.08bn) compared to $1.3bn last time Goldman Sachs will be down to $1.4bn from $1.8bn and Lehman will show a 25% fall in revenue of $1.4bn.