Warburg is an integrated company on the American investment banking model and was deliberately constructed that way in a series of mergers to prepare for Big Bang in 1986.
With Salomon and Lehman both reporting poor second-quarter earnings and this year expected to be a much rougher ride than 1993 for all the US investment banks, Warburg is simply following the same pattern. Next year will probably show a bounce, says Martin Cross, of UBS.
At the other extreme, last year's highly profitable boom in the markets was seen to hide growing pressures on Warburg which are reemerging again now the good days are over. If this view - held for example by Alex Robinson, of Smith New Court - is right, Warburg will have to think fast about its strategy for the future or risk losing its independence.
On its own home ground of UK corporate finance, where Warburg has long been market leader, Schroders has been mounting a convincing challenge and has done it without being an integrated securities firm.
Schroders' share price has grown sevenfold over the eight years since Big Bang, compared with 1.7 times for Warburg.
Even Kleinwort Benson, long regarded as too weak to stay both independent and integrated, has been picking up new business lately. And in securities Smith New Court has been a resounding success without owning a merchant bank.
These diverging trends have confused what used to be a simple argument about whether specialisation or integration is the way forward.
Firms such as SNC, Cazenove and Schroders still have a choice, though there are renewed rumours about a second stage realignment in the London markets that could amount to Big Bang, Part 2. But Warburg is fully committed to the integrated route and has no option but to continue developing it.
Indeed, there are signs that Warburg has become overstretched to the point of losing its touch. The bank's lead role in the failed takeover of Lasmo by Enterprise Oil may prove a turning point in the City's perceptions of Warburg as London's dominant corporate finance house.
Warburg's handling of the bid was criticised from start to finish, but it will take years for institutions to forget the market raid near the climax when, on Warburg's advice, Enterprise snapped up shares for cash from a selected group of institutions. Those left out included Mercury Asset Management, Warburg's own subsidiary, which showed its displeasure semi-publicly by withdrawing some of its business.
But these may not be the strongest pressure points. More worrying for Warburg is the growing influence of the US investment banks' London operations. Once dismissed as all talk and little action, firms such as Goldman Sachs are now a serious threat on a pan- European level as much as a British one.
This is about to have a knock-on effect through the near panic it has inspired in Deutsche Bank in its home territory of Frankfurt. Integrated American investment banks have been snapping up blue- chip German clients with promises of access to capital from US institutional investors.
The first stage of Deutsche's plans to put that right are expected shortly and are likely to include investing a lot more capital and personnel in London.
Meanwhile, the big Swiss banks - Swiss Bank Corporation, UBS and Credit Suisse - are pushing hard in London too. The pounds 300,000 Warburg paid to charity last month to settle a dispute with SBC over the cash raid on Lasmo shares is the latest manifestation of a rivalry that is far from friendly.
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