The recent moves to eliminate the worst-performing 10 percent of brokers and rein in the training program are a good start to improving margins. But these are just the first steps.

As this problem is unlikely to resolve itself quickly, we remain concerned that 2006 forecasts could be too aggressive.

The miss appears to be weakness in the trading portion of the Investment Bank unit, a frequent culprit due to its excessive volatility versus peers.

They really have built a very impressive investment-banking capability. They won't always be No.1, but they clearly have been effective in merging their investment and commercial banks.

The U.S. origination business may be slowing while it is growing in other markets.

Warburg has been taken by surprise by the strength of Morgan Stanley, Merrill and Goldman in M&A underwriting in Europe.