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Last Updated: Monday, 25 February 2008, 16:57 GMT
Record fees for investment banks
HSBC and Barclays buildings in London
Investment banks earned record fees despite the credit crisis
Fees earned by investment banks worldwide hit a record in 2007 for the fifth year running, despite the losses caused by the credit crisis.

Fees rose 21% to $84.3bn (42.8bn), half of which came from advising on mergers and acquisitions (M&A).

The US was the main source of revenue, meanwhile Europe generated a third, according to International Financial Services London (IFSL).

But revenues are set to drop in 2008 as the world economy slows.

"Last year was a very good year for M&A, especially in Europe, but 2008 has got off to a weak start," said Marko Maslakovic, senior economist at IFSL.

By the end of last month, bank losses related to the sub-prime crisis totalled around $130bn and some analysts expect overall losses to reach $450bn in coming years, IFSL said.

Many big investment banks have reported huge write-downs on the value of investments related to the US sub-prime mortgage market, which lends to those with poor credit histories.

The credit squeeze has also made it harder for companies to borrow, which could lead to a decline in corporate takeovers and the fees they generate for investment banks.

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