Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Expecting Slower U.S. Growth, Investors Look Abroad in 2007

NEW YORK -- Facing a U.S. economy expected to grow at a moderating pace in 2007, Wall Street's biggest investment houses are aggressively turning overseas in hopes of sustaining record profits reached during the past year.

Economic and business growth surged in Europe and Asia in 2006, and that trend is projected to continue this year. Stock markets from Paris to Hong Kong have outpaced the gains produced on U.S. exchanges, and foreign firms are increasingly using acquisitions to grow.

This has motivated the major New York-based investment banks to expand their operations in global financial centers. Without plans to increase their business outside the United States -- either through organic growth or acquisitions -- executives said their companies would fall desperately behind.

"As a general matter, there are more opportunities to grow outside the U.S.," Merrill Lynch chief financial officer Jeff Edwards said.

Edwards said 37 percent of Merrill's $34.7 billion in 2006 revenue came from overseas operations. Last year showed continued outperformance from outside the United States, with Europe and Asia setting new full-year records for both revenue and earnings. And he expects this trend to continue.

In 2006, Goldman Sachs Group, long considered the most European of U.S. investment banks, reported a record $37.7 billion of revenue, and 45 percent of that came from abroad. A spokesman for the company said overseas operations had long been a focus for growth, but that it would use internal expansion rather than acquisitions to grow.