Investment bankers are not generally close students of history. But as waves of turmoil have swept through the global markets this summer, bankers on Wall Street and in the City of London have been making comparisons with previous downturns. For some executives, the current upheaval recalls the Asian crisis of 1997. Others see parallels with the painful but short-lived correction that followed the Russian government’s default in 1998 and the collapse of the Long-Term Capital Management hedge fund. Some think the investment banking business is facing a more prolonged slump, similar to that which followed the end of the stock market bubble in 2000. A small minority believes it could be much worse.

Few bankers are willing to predict how long the turmoil will last. But even if the direct impact of the liquidity crunch is limited, it is clear that the near-perfect operating conditions that have propelled almost every investment bank around the world to record growth and profitability for four years – and brought immense riches to their employees – are at an end.